Carbon Too Cheap to Support Acid Projects, Johnson Matthey Says

United Nations carbon emission prices need to more than triple to keep nitric-acid factories from halting projects that reduce their greenhouse-gas emissions, according to Johnson Matthey Plc. (JMAT)

“The Certified Emission Reduction price needs to be up in the range from 2 euros ($2.61) a metric ton to 5 euros to make the projects viable,” Garry Crooks, sales & marketing manager of nitro technologies at Johnson Matthey in London, said today by phone. The credits traded at 55 euro cents a ton on July 12 at ICE Futures Europe exchange in London.

CERs, issued by facilities that reduce greenhouse-gas emissions, plunged 84 percent in the past year amid a surplus of the credits and allowances in the European Union carbon market, the world’s biggest. Projects that cut emissions at nitric acid plants have supplied about 7.9 percent of the credits in the UN’s Clean Development Mechanism, according to UN data compiled by Bloomberg.

Companies and governments buy UN carbon offsets to help comply with domestic limits on the amount of greenhouse gases they are allowed to emit. One offset represents the reduction of one metric ton of carbon dioxide equivalent.

Nitric acid producers have already stopped using the catalyst to cut nitrous oxide emissions in the manufacturing process because the cost is more than they get for issuing the CERs, Crooks said. Nitric acid is used to make fertilizer, explosives and to purify gold and platinum.

“As things stand, all of the CDM projects are under review and the majority are likely to either suspend or terminate these projects by the end of 2013,” he said. “I would be surprised if more than 20 percent of the 37 projects Johnson Matthey are supplying the catalyst with are running by the end of the year.”

Should the factories stop curbing emissions, heat-trapping gases in the atmosphere will rise, Crooks said. “We all will lose out.”

Nitrous oxide has a global warming potential about 310 times carbon dioxide, according to the U.S. Environment Protection Agency.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.