EU Nations Said to Vote on Carbon Registry Rules in December

European Union member states will vote in December on a draft proposal to revise the bloc’s carbon registry rules, in which the EU regulator seeks to include a provision to limit the use of certain international credits.

The agenda for the next meeting of the EU Climate Change Committee on Nov. 15, composed of representatives of national governments, includes a “state of play” point on the registry regulation, without a vote on the draft measure, according to a document obtained by Bloomberg News. The vote will take place in December, said an EU official, who declined to be identified, quoting policy.

In a draft modified amendment to the registry regulation, submitted to member states last month, the European Commission proposed to ban from its market United Nations Emission Reduction Units issued from next year by countries that fail to adopt new carbon goals. Other planned changes include rules on banking aviation allowances and provisions on offset swaps.

The proposal on ERUs would bar emitters in the EU cap-and- trade system from holding in their accounts credits issued after 2012 by non-EU countries such as Russia, two people familiar with the matter said last month. That nation is not planning to adopt a new set of binding climate goals under the Kyoto Protocol after its first phase expires. It generates ERU credits under the UN Joint Implementation program in a procedure overseen by the government and known as Track One.

Track Two

ERUs from countries without new emission-reduction targets in place until 2020, and whose greenhouse-gas cutting projects are approved by UN regulators, would be allowed for use in the EU as long as they were issued before the end of April 2013, and covered emissions reductions achieved before the end of 2012, according to the people. This procedure, where issuance of ERUs under the Joint Implementation program is supervised by UN authorities, is referred to as Track Two.

The EU law allows about 12,000 factories and power plants in the bloc’s emissions trading system to use tradable UN offsets, including ERUs and Certified Emission Reductions generated under the Clean Development Mechanism, as a cheaper way to comply with pollution quotas.

Any changes to the registry regulation proposed by the commission, the EU’s regulatory arm, need qualified-majority support from member states to pass. Some member states voiced concerns about the commission’s plans to limit the use of ERUs, the people said.

Climate Summit

The Dec. 13 meeting of the Climate Change Committee will take place after the next UN climate summit, at which negotiators worldwide are due to discuss rules for Kyoto Protocol mechanisms after 2012. The commission said last year on its website that in line with the principle of the treaty the continuation of JI “is subject to new quantified emission targets being in place.”

The planned revision of the EU registry regulation will also clarify rules for the banking of aviation permits from the current trading period in the bloc’s emissions trading system into the next stage, known as Phase 3 and starting in 2013.

Under the current rules banking is carried out by deleting Phase 2 allowances and creating an identical amount of Phase 3 permits in the same registry accounts. That would allow aviation permits, which can be surrendered for compliance only by airlines, to be converted into standard Phase 3 allowances, which can be used by carriers as well as power plants and manufacturers in the EU cap-and-trade system. The U.K. said earlier this month it didn’t think that was the original intention and was discussing the issue with other governments.

Offset Swap

The commission also proposed that the revised version of the registry regulation allow emitters from May 1 to swap international carbon offsets into EU allowances eligible for compliance in Phase 3, according to a draft obtained by Bloomberg earlier this month. In the next phase of the ETS companies will need to exchange imported carbon-reduction credits into EU permits before surrendering them for compliance.

Exchanges of eligible offsets generated for emission reductions before 2012, up to the allowed limit, are guaranteed until the end of March 2015, the commission said on its website.

At its November meeting the Climate Change Committee is also scheduled to give an opinion on the commission’s draft decision on aid to clean energy projects under a program known as NER300, according to the agenda of the meeting. The program aims to raise funds for helping new technologies through selling carbon permits from a special post-2012 reserve.

To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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