EU to set CO2 offset limits in ETS in 6 weeks

BRUSSELS (Reuters) - The European Commission will within six weeks propose how to restrict the use of U.N. backed carbon offsets in the third phase of its emissions trading scheme (EU ETS), it said at a conference on Tuesday.

The 27-nation bloc plans to limit the number of offsets called certified emissions reductions (CERs) from industrial gas projects that can be used in its carbon market from 2013-2020, Jos Delbeke, director general DG Climate Action, said at an industry event in Brussels, Point Carbon reported.

He added the bloc will publish a proposal ahead of U.N. climate change talks in Cancun, which start on November 26.

“It is not going to undermine the belief that international offsets play an important role in the EU ETS,” he said, but added action needed to be taken against projects that were seen to be manipulating the system in order to preserve the credibility of the U.N.’s Clean Development Mechanism (CDM).

“Debate (on industrial gases) is not leading to action in the CDM,” Delbeke said. “If they are unable to take action then we will have to do it.”

The EU proposals will then be taken to the commitology committee for approval, and would be likely to apply to offsets being used in the post-2012 period, he added.

The CDM’s Executive Board is investigating allegations that some HCFC 22 producers, who earn carbon credits from the destruction of the byproduct HFC 23, have been ramping up production in order to gain credits.

Green group CDM Watch also questioned the amount of credits being awarded to N20 destruction projects at adpic acid plants on Monday, but Delbeke would not be drawn on the specifics of which industrial gas offsets the EU was planning to clamp down on.

Restrictions on the use of carbon credits from destroying industrial gases could have a big impact on post-2012 carbon credit supply and prices.

Credits generated by HFC 23 projects have accounted for around 50 percent of all CERs issued so far, while destroying N2O from adipic acid plants has yielded more than 20 per cent of all 493 million CERs issued.

However, Delbeke rejected claims that moves to restrict the use of these credits was an attempt to boost carbon prices.

“Our quality restrictions have no bearing in our mind on the price. For us it is about the continuation of the CDM, but a good CDM that is defendable,” he said. (Reporting by Nina Chestney; editing by James Jukwey)