The European Commission said on Monday a proposal to limit the use of some carbon credits from industrial gas projects in its emissions trading scheme might be unveiled during a United Nations climate summit in Mexico next week. The European Union Emissions Trading Scheme is the largest multi-national emissions trading scheme in the world. The trading Scheme currently covers more than 10,000 installations with a net heat excess of 20 MW in the energy and industrial sectors which are collectively responsible for close to half of the EU's emissions of CO2 and 40% of its total greenhouse gas emissions. Under the Trading scheme, large emitters of carbon dioxide within the EU must monitor and annually report their CO2 emissions, and they are obliged every year to return an amount of emission allowances to the government that is equivalent to their CO2 emissions in that year. In order to neutralize annual irregularities in CO2-emission levels that may occur due to extreme weather events (such as harsh winters or very hot summers), emission credits for any plant operator subject to the Trading Scheme are given out for a sequence of several years at once. Each such sequence of years is called a Trading Period. The 1st Trading Scheme Trading Period expired in December 2007. Since January 2008, the 2nd Trading Period is under way which will last until December 2012.
The carbon market is looking for clarity over the use of U.N.-backed carbon credits from some controversial projects which destroy the potent greenhouse gas
A U.N. panel is scrutinizing such projects over fears that some project developers were adjusting their plants to produce more of the gas and then destroying it to climate profitable carbon credits.
The EU Commission is discussing whether to propose curbs or a ban from 2013 on such offsets in its carbon trading scheme.
The European Commission was due this month to propose curbs or a ban from 2013 on the use of offsets from industrial gas projects in the European Union trading scheme. It wants to stop exploitation of the system by project developers, in countries including China and India, who are suspected of adjusting facilities to produce more of potent greenhouse gas hydrofluorocarbon-23 (HFC-23) and then destroying it to claim profitable carbon offsets.
HFC-23 is a waste by-product from manufacturing refrigerants.
In January 2008, the European Commission proposed a number of changes to the scheme, including centralized allocation by an EU authority, a turn to auctioning a greater share (60+ %) of permits rather than allocating freely, and inclusion of other greenhouse gases, such as nitrous oxide and perfluorocarbons. These changes are still in a draft stage; the mentioned amendments are only likely to become effective from January 2013 onwards. Also, the proposed caps for the 3rd Trading Period foresee an overall reduction of greenhouse gases for the sector of 21% in 2020 compared to 2005 emissions.
By. Andy Soos of Environmental News Network