United Nations carbon offsets dropped before a vote by European Union member states on a proposal to ban some imported industrial gas credits from the world’s biggest emissions market.
UN Certified Emission Reductions for delivery in December fell 0.5 percent to 11.08 euros ($14.90) a metric ton amid low volumes as of 8:53 a.m. on London’s ICE Futures Europe exchange. They are down 15 percent since Aug. 25, when the European Commission said it was preparing a draft to restrict the use of UN offsets linked to hydrofluorocarbon-23 and nitrous oxide from adipic acid production.
More than 11,000 facilities in the European cap-and-trade program can now use UN offsets as a cheaper way to comply with their pollution quotas. The commission, the EU regulator, has said that credits related to the two industrial gases may create windfall profits for investors and undermine the integrity of the carbon market.
The ban would affect credits from the UN Clean Development Mechanism, the world’s second-biggest emissions market, and the Joint Implementation program as of Jan. 1, 2013. The CDM- supervised credits are awarded to investors in projects that cut greenhouse gases in developing nations.
The EU Climate Change Committee, including representatives of the bloc’s 27 national governments, is due to vote on the commission proposal on Friday. The measure will then be subject to a three-month scrutiny by the European Parliament and member states before it is officially adopted by the commission.
‘Broad support’
National governments showed “broad support” for the proposed ban and “are not discussing whether to do this but when to do this,” EU Climate Commissioner Connie Hedegaard told a hearing in the European Parliament in Brussels on Jan. 12.
The current five-year phase in the EU emissions trading program ends in 2012 and the deadline for surrendering allowances for that year is the end of April 2013.
The International Emissions Trading Association called last year on the commission and the EU governments to consider delaying the planned ban to May 1, 2013, and provide for banking of international credits from emission reductions achieved up to Dec. 31, 2012.
The Climate Change Committee may delay the date of implementation, Trevor Sikorski, an analyst in London for Barclays Capital, said yesterday. “I think there is a growing expectation that the Climate Change Committee will ask for a change in the date in order to pass the proposal,” he said.
UN premiums
Hedegaard said last week that after a first meeting with member states in December, the commission was sticking to its position on starting the ban on Jan. 1, 2013.
The premium of United Nations emissions credits for March 2013 reversed to a 13 cent discount compared with those for December 2012, according to the spread contract traded today on London’s ICE Futures Europe exchange. That’s the first such discount since Dec. 13.
EU carbon permits for December 2011 delivery were little changed at 14.64 euros a metric ton. The EU cap-and-trade system requires companies to have a permit for each ton of CO2 they emit, with those that exceed their quotas having to buy more allowances and businesses that emit less being able to sell their surplus.
