Isra-Mart srl:Enel, RWE Lobbying Delays EU Curbs on Carbon Offsets

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The European Union’s effort to restrict imported carbon credits is dragging on because of “relentless” lobbying by companies including Enel SpA, RWE AG and E.ON AG, the climate group CDM Watch said.

The European Commission, regulator for the 27-nation EU, is drafting a proposal to curb the use of United Nations-sponsored offsets related to industrial gases including hydrofluorocarbons and nitrous oxide. The commission said they may create windfall profits for investors and undermine the environmental integrity of the region’s emissions system, the world’s biggest.

“Industry is holding the European Commission hostage by playing different departments against each other,” Natasha Hurley, a Brussels-based policy adviser at CDM Watch, said today in a statement. “There is a very real danger that its initiative will be nipped in the bud as a result of cynical manipulation by corporate investors.”

Officials at Enel, RWE and E.ON weren’t immediately available to comment on the CDM report.

UN credits, awarded for investing in projects that cut pollution in developing nations, may be used for compliance with the EU cap-and-trade program, which includes more than 11,000 companies. The UN offsets are a less expensive way than EU allowances for companies to meet emission restrictions.

The commission has indicated plans to present a proposal this month on restrictions on UN offsets generated by projects that cut nitrous oxide and HFC-23, which can trap as much as 11,700 times as much heat per molecule as carbon dioxide. The commission is considering an option to ban such credits from the use in the EU emissions-trading system as of January 2013.

‘Crystal Clear’

The case for a ban on credits linked to HFC-23 and nitrous oxide from adipic acid plants is “crystal clear,” Hurley said.

Italy is defending the use of the credits in Europe, according to the Environmental Investigation Agency, a London- based lobby. The nation’s government allows 15 percent of its emissions cap be met with offsets. It holds a stake in two HFC- 23 reduction projects. Enel, a Rome-based utility, has invested in six projects, according to the group.

“Italy is putting self-enrichment ahead of the common good and should not be allowed to dictate EU climate policy on the basis of greed,” Fionnuala Walravens, an EIA campaigner said, in an e-mailed statement.

Ramped-Up Scrutiny

Regulators of the UN Clean Development Mechanism, the world’s second-biggest carbon market, are also ramping up scrutiny after allegations that some plants with HFC-23 abatement installations may be increasing output simply to generate credits, handing investors windfall profits. The CDM executive board plans to decide later this month whether the methodology for awarding those offsets should be changed.

Concern about the EU proposal was compounded by the UN decision last week to hand out 871,079 emissions credits to a HFC-23 reduction project in India, CDM Watch said. This was the first issuance for such a project since June 2.

The issuance “contradicted previous assurances from the executive board that issuance for HFC-23 projects would remain suspended until the board had discussed the methodology panel’s conclusions,” CDM Watch said.