March 15, 2010

“Used” CO2 permits sparks EU concern

Filed under: climate — Tags: , — inece @ 6:05 pm

Reuters reports that Hungary is selling 2 million U.N.-backed carbon emissions permits which have already been surrendered by companies, raising concern that their buyers could use them again to comply with the EU’s Emissions Trading Scheme ETS.

Jos Delbeke, the Commission deputy director general for environment said in a statement that he was concerned about government sales of such CERs even though such sales were possible under the rules of the Kyoto Protocol. “However, European legislation does not allow for such CERs to be re-used for compliance in the EU ETS to avoid double counting of emission reductions,” Delbeke said. “Furthermore, a company buying such CERs in good faith and for compliance use in the EU ETS could incur economic losses.”

Miles Austin, director of the Carbon Markets and Investors Association said Hungary’s deal used a gap in EU regulations by selling CERs and covering it with AAUs which have a lower price. “There is the risk that other countries might go to market and buy the AAUs and pocket the price difference,” he told Reuters. “This is the first instance of this happening,” he said. “If this becomes a widespread practice it could double the volume of CERs available to the market which would have an effect on the CER price and therefore the (ETS trading unit) EUA price.”

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