U.N. to rule on carbon offsets from coal plants

LONDON Tue May 8, 2012 3:52am EDT

Smoke billows from the chimneys of a coal-burning power plant in Ulan Bator October 14, 2011. REUTERS/Carlos Barria

Smoke billows from the chimneys of a coal-burning power plant in Ulan Bator October 14, 2011.

Credit: Reuters/Carlos Barria

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LONDON May 8 (Reuters Point Carbon) - The main U.N.-appointed panel that regulates supply of global carbon offsets could this week decide whether to approve rules that would lead to the award of millions of CO2 credits to coal-fired power stations in developing countries, according to meeting agenda notes on the UNFCCC website.

The Executive Board (EB) of the Clean Development Mechanism (CDM) could this week decide whether to re-instate the methodology that developers use to calculate emission reductions made at coal power plants, a move which would enable them to request carbon credits.

Last November the board halted the methodology and registration of new offset projects from efficient coal-fired power plants after finding some had exaggerated the emission cuts that would be made.

Coal-fired plants can earn U.N.-backed Certified Emission Reductions (CERs) if they prove they have reduced emissions by displacing older, more polluting stations in developing countries.

But there are concerns that the rules allow developers to compare their power stations with the oldest plants rather than more modern units, potentially earning millions of false credits.

The CDM Methodology Panel has made draft revisions to the project blueprint, so-called ACM0013, to try to rectify the problem and suggested project owners should use fresh data that would force them to measure the efficiency of their plants with newer, cleaner plants.

However, approval for the methodology revision can only be given by the board.

Six cleaner coal projects, which would not be affected by the revisions, have already been registered by the U.N. and have the potential to generate a combined 9.5 million CERs by the end of the year, according to Thomson Reuters Point Carbon data.

Meanwhile, a change to the rules would affect the other 42 projects using the methodology currently in the CDM pipeline.

The Stockholm Environment Institute said in a paper last year that changes to the baseline reflecting the most recent technology used in China and India would mean the entire sector would earn 132 million credits by 2020, rather than the 451 million estimated in project design documents.

Despite the dramatic cut to the plants' potential to earn CERs, green groups believe the revisions do not go far enough and have called on the board to reject them.

"Even if the technical shortcomings could be addressed, coal projects are clearly neither clean nor sustainable," said Justin Guay from U.S.-based lobby group Sierra Club in a press release on Monday.

PROGRAMMATIC

According to the agenda of this week's meeting the EB could also decide whether to hand CERs to a programmatic scheme that was registered in July 2009 and which seeks to replace incandescent lightbulbs with energy efficient ones in Mexican households.

A first request for credits was last year rejected by the panel which demanded more proof showing how long the lightbulbs are switched on and more precise figures for the number of bulbs and households involved.

Unlike standard CDM projects, programmatic projects, or Programmes of Activities (PoAs), group several emission reductions activities under one project design document, making smaller emission cutting initiatives cheaper to fund.

PoAs were touted as a way to help channel and scale up carbon finance in countries that have been neglected by the CDM such as many of the poorer African nations.

But so far just 17 PoAs have been registered by the U.N., less than 0.5 percent of all projects approved, and none have been issued with CERs.

The 67th meeting of the EB will be held this week (May 7-11) in Bonn, Germany.

(Reporting by Susanna Twidale)

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