UN May Complete Review of HFC-23 Credits by August (Update1)
Source: BloombergBusinessweek
[ added 24 June, 2010 ]
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June 22 (Bloomberg) -- The United Nations may complete by August its review on the awarding of carbon credits for the emission of greenhouse gases more damaging than carbon dioxide, an official said.
By Dinakar Sethuraman
A UN panel will present its findings on the methodology for issuance of carbon credits for hydro-fluorocarbon (HFC) combustion plants when the UN Clean Development Mechanism board meets in Bonn in end-July, Clifford Mahlung, chairman of the UN CDM executive board, said in an interview today. HFC credits make up about half the total CDM supply since 2005.
“We are investigating the methodology of HFC-23 credits,” Mahlung said in an interview today at the Carbon Markets Asia conference in Singapore. He declined to say if changes are being made after allegations that developers are misusing HFC-23 projects to secure credits.
The European Commission, regulator of the EU program, said last month that projects related to two industrial gases -- HFC- 23 and nitrous oxide -- create significant windfall profits and may be banned after 2012. A proposed U.S. energy law bans HFC credits.
The gas is a byproduct of HCFC-22, which is used for refrigerators and air conditioners. HFC-23 plants combust the potent greenhouse gas HFC-23 that can trap 11,700 times more heat per molecule than carbon dioxide.
The UN has also started a move to trim the time required to register carbon-credit projects under the CDM mechanism to 28 days from as long as two years after developers complained of delays in securing approvals for issue of Certified Emission Reduction units, Mahlung said.
Reduction Credits
EU allowances for December delivery rose 0.4 percent to 15.84 euros ($19.48) a metric ton on London’s European Climate Exchange yesterday. UN Certified Emission Reduction credits for December rose 1.13 percent to 13.44 euros a ton.
The UN is questioning the suitability of emission-reduction projects as the U.S., Japan, Australia and other nations consider trading programs that might allow use of offsets for compliance. CDM offsets known as Certified Emission Reductions credits are currently used for compliance in the European Union’s carbon market, the world’s biggest.
The CDM mechanism allows companies in developed countries to offset their greenhouse gas emissions by paying for reductions in pollution output in developing nations. The CDM market was valued at about $20.2 billion last year, the World Bank said last month.
World carbon-dioxide emissions from energy use fell about 1.4 percent last year on reduced economic activity, according to an analysis of BP Plc data. Nations released a combined 31.2 billion metric tons of the greenhouse gas in 2009, down from 31.64 billion tons in 2008, according to Bloomberg calculations based on data and conversion factors in BP’s annual statistical analysis. That was the first decline since 1998. Global emissions rose about 1.8 percent in 2008, BP estimated.
Scrutiny and potential new UN restrictions will probably curb issuance slightly for HFC-23 credits through 2012, Emmanuel Fages, a Paris-based analyst with Orbeo, a venture of Societe Generale SA and Rhodia SA, said on June 9. Total issuance of CDM credits may fall as much as 30 percent to about 381 million tons through 2012, Fages said on June 8. That’s because limits could potentially curb HFC credits by as much as 60 percent, he said.
HFCs gained favor in the 1970s as an alternative to chlorofluorocarbons, or CFCs, which scientists linked to the depletion of the ozone layer. While HFCs don’t interfere as much with the earth’s shield against damaging sunrays, they trap heat and contribute to global warming.
