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UPDATE 3-Bulgaria to be cut from carbon trading-minister

* Bulgaria to be barred from emissions trading under Kyoto

* EU carbon trading impact limited -EU Commission

* June ban could be lifted by November -environment minister

* Could affect volatility, little EU price impact expected

(Updates throughout with European Commission reaction, analyst comment, background)

By Tsvetelia Tsolova

SOFIA, May 13 (Reuters) - Bulgaria will be suspended from carbon emissions trading under the Kyoto Protocol as of June 30 if a United Nations’ committee revokes its accreditation under the treaty, the country’s environment minister said on Thursday.

The suspension, expected to last until at least November, comes after UN checks showed its national system for recording greenhouse gas emissions, key for ensuring compliance under Kyoto, was not transparent and trustworthy, Nona Karadzhova told an energy forum in Sofia.

She said the ban will exclude Bulgarian companies from trading in greenhouse gas trading schemes under Kyoto, and would also affect their participation in the European Union’s emissions trading scheme.

“The UN Convention report is devastating. We are likely to lose our accreditation as of June 30, due to the criminal inaction of the previous government,” Karadzhova said.

However, a European Commission spokeswoman said the suspension would have only a limited effect on Bulgaria’s participation in the EU emissions trading scheme.

“The suspension would not extend to trade in (EU carbon) allowances, but would temporarily prevent the delivery of allowances,” the spokeswoman said in an email.

“In the short-term, the only effect would be that allowances could not be moved into and out of the Bulgarian (emissions) registry, which would hamper spot trading in allowances for Bulgarian companies as allowances could not be delivered until the suspension is lifted.”

VOLATILITY

Spot EU permit trading and Bulgaria’s share of permits both account for only a small portion of the total EU carbon market.

“It could impact day-to-day volatility but I don’t think it will have a significant effect on prices,” said Trevor Sikorski, director of carbon research at Barclays Capital.

Spot EU carbon prices BNXCO2-2 on French exchange BlueNext were unchanged at 15.50 euros a tonne by 1445 GMT.

Karadzhova had said earlier that Bulgaria would be excluded from trading under the EU scheme, and a ministry statement said firms must stop trading from June 30 until the country is reaccredited.

The ban also means Bulgaria cannot sell the surplus sovereign emissions rights, called Assigned Amount Units, it has accumulated under Kyoto. It had hoped to sell at least 40 million tonnes this year, worth upwards of 400 million euros ($508 million). [ID:nLDE63R0HX]

Karadzhova said the centre-right cabinet, which took office last July, has increased efforts to set up new emissions verification system and hopes to restore the accreditation as early as November.

Last month, the European Commission finally approved Bulgaria’s long-delayed 2009-12 carbon dioxide plan and the Balkan country joined the EU’s trading scheme, the 27-nation bloc’s key weapon in fighting climate change [ID:nLDE62313W].

The plan distributes an average of 42.4 million tonnes of EU carbon permits a year between 2008-2012 to 132 Bulgarian firms.

Preliminary EU data for 2009 shows the European recession slashed Bulgaria’s industrial emissions by 16.5 percent to around 32 million tonnes of carbon dioxide, giving participating firms a permit surplus of up to 10 million tonnes.

Greece received a similar suspension for seven months in 2008, but Greek companies were able to continue trading in the EU market as it was not yet linked to the Kyoto schemes. (Additional reporting by Michael Szabo and Nina Chestney in London; Editing by Sue Thomas)

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