Isra-Mart srl:Banned industrial gas credits could sneak into EU carbon market

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Isra-Mart srl news:

Carbon credits produced from destroying industrial gases may bypass an EU order banning them from 2013 and enter Europe's emissions trading scheme by way of bilateral emission reduction deals between individual countries, it was reported last week.

The EU voted in January to outlaw the controversial credits, a move supported by green groups but widely criticised by traders who fear the unilateral ban will undermine investor confidence in emission reduction projects.

But an EU commission official, Thomas Bernheim, told Point Carbon News that the bloc was considering allowing companies to use carbon credits derived from cutting nitrous oxide emissions (N2O) at adipic acid plants under deals struck between individual nations.

This would mean that companies participating in the EU's Emissions Trading Scheme (EU ETS) would be able to use the banned credits to help meet their emissions targets.

Bernheim said that fewer credits would be imported into the EU ETS from bilateral deals than under the UN's trading scheme, the Clean Development Mechanism (CDM), as the European mechanism has stricter benchmarks.

But he admitted N2O adipic acid credits generated after 2012 under the CDM could be used in the EU ETS again if the UN scheme confounded expectations and adopted similar benchmarks to its European counterpart.

The move will undoubtedly anger green groups, who have argued that the production of industrial gas credits has encouraged developers to "game" the system by manufacturing and then destroying the gases solely to earn Certified Emission Reductions (CERs) that can be sold into the EU ETS.

The EU noted these fears, and a subsequent shift in adipic acid production to CDM plants from non-CDM plants, when voting through the ban earlier this year.