November 18, 2010 / 5:48 PM / 9 years ago

Italy, energy firms stall EU carbon reform: critics

* Italy accused of acting against emissions trading reform

* Some energy firms trying to delay legislation-CDM Watch

By Nina Chestney

LONDON (Reuters) - Italy and some energy firms are out to thwart efforts to restrict the use in the EU Emissions Trading Scheme of carbon credits from controversial projects to destroy industrial gases in developing countries, two green groups said.

The European Commission was due this month to propose curbs or a ban from 2013 on the use of offsets from industrial gas projects in the European Union trading scheme (EU ETS), the bloc’s system for reducing emissions of greenhouse gases.

It wants to stop exploitation of the system by project developers, in countries including China and India, who are suspected of adjusting plants to produce more of potent greenhouse gas hydrofluorocarbon-23 (HFC-23) and then destroying it to claim profitable carbon offsets.

HFC-23 is a waste by-product from manufacturing refrigerants.

On Thursday, British campaigning group the Environmental Investigation Agency accused Italy of trying to sabotage efforts to reform the EU ETS.

“With the EU prepared to institute a much-needed reform, Italy seems intent on snatching defeat from the jaws of victory,” said Clare Perry, senior campaigner at EIA.

Italy has said it rejects the EU’s plan because the curbs may threaten some of its investments. Instead, it prefers a gradual phasing out of the credits.

The EIA said the Italian government holds a stake in two HFC-23 projects, and Italian energy company Enel is financially involved in six others, including one through its Spanish unit Endesa.

Italy allows up to 15 percent of its emissions reductions under the EU ETS to be met by offsets and relies heavily on HFC-23 credits, it added.

Enel said on Thursday that the EU’s proposed reform would undermine the authority of the United Nations, which issues the credits from the HFC-23 projects.

Separately, the group CDM Watch accused some other energy companies of lobbying to delay the legislation.

EU member states were due to vote on proposals in mid-November but private sector interference has caused delays in the internal consultation process, the group said.

An EU Commission spokeswoman said the proposal was still being discussed.

“We are optimistic about having it on the table before Cancun,” she told Reuters, referring to a U.N. climate summit in Mexico starting on November 29.

Any delays in consultations threaten to add to confusion in the carbon market.

A United Nations panel, which suspended issuing credits to HFC-23 projects in September, issued 871,000 credits to an Indian project last week and cannot rule out doing so again.

Additional reporting by Pete Harrison in Brussels; Editing by Anthony Barker

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