European Union agrees deal on U.N. "hot air": Commission

DOHA Fri Dec 7, 2012 7:46am EST

DOHA (Reuters) - European Union countries have resolved a long-standing row over surplus sovereign pollution permits, the EU Commission said on Friday, a dispute that has slowed progress at U.N. climate change talks in Qatar.

The Commission, the European Union's executive, declined to disclose detail on the deal.

However, sources speaking on condition of anonymity said the deal will restrict the use of surplus carbon credits called Assigned Amount Units (AAUs) from the first commitment period of the Kyoto Protocol, but not cancel them.

"We have reached a good agreement which will also strengthen Europe's negotiating position, because we have an agreed position," said Isaac Valeron-Ladron, a spokesman for the Commission, the European Union's executive.

Green groups, meanwhile, questioned the strength of the deal.

The issue of so-called "hot air" is among the issues that has threatened progress at United Nations' climate talks taking place in Doha, Qatar, which are meant to end on Friday, but could be extended.

Some 13 billion AAUs, each worth one tonne of carbon dioxide equivalent, remain unused from the first commitment period of the Kyoto Protocol, which ends this year, because of reduced demand for carbon permits after the economic slowdown.

AAUs can be sold or used to offset emissions.

Developing nations and some EU member states want surplus AAUs to be cancelled, to avoid harming the effectiveness of future pledges on climate action.

Countries like Poland and Russia have refused to cancel their unused AAUs, wanting to carry them over into a new Kyoto period for use against a future climate pact.

This could flood already over-supplied carbon markets and drive low prices down further.

Already, European Union law does not allow EU states or companies to use AAUs to comply with emissions targets.

The sources said there would be "a political declaration" that nations including Australia, the European Union, Japan, New Zealand, Norway and Switzerland could not buy AAUs, ensuring they had very limited value.

Poland has said it could not ratify a second Kyoto commitment period, if it had to cancel the AAUs it has accrued, the sources added.

Environmentalists urged the developing world to reject the EU deal.

"It's too weak," said Samantha Smith of the WWF conservation group said. "We will encourage developing countries to reject it."

Campaigners and politicians have said the "hot air" issue has undermined EU attempts to lead the global effort on climate change and has derailed the already painfully slow U.N. process to try to curb planet-warming emissions.

(Additional reporting by Marton Kruppa and Andrew Allan; Editing by Nina Chestney and Alison Birrane)

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