THE European Commission has announced plans to close the loophole in the EU's cap-and-trade system which perveresely encourages developing countries to over-produce R22 refrigerant in order to cash in on credits available for destroying the high GWP by-product HFC23.
The Commision yesterday (Nov 25) presented plans to bar HFC23, a refrigerant with a GWP of 11,700, from its emissions trading scheme (EU ETS) from 1 January 2013, reports the Euroactiv.com website.

Projects that destroy HFC-23, mainly in China and India, have so far produced the majority of international offset credits surrendered to the EU ETS and have provided European companies with a cheap way to comply with their emissions reduction obligations.

According to a report by the Environmental Investigation Agency, published earlier this year, the destruction of HFC23 can be carried out for just €0.17 per tonne of CO2 equivalent but when sold on the EU market it can easily command as much as €12 - 70 times more than it costs to destroy the gas. And the projects are so valuable that they exceed the worth of the R22 being produced by as much as five times.

The Commission said the restrictions on HFC23 would provide an incentive to reform the UN's carbon market mechanisms, which the EU sees as a prerequisite for their continuation. It would also remove obstacles to developing sectoral crediting mechanisms by creating sufficient demand for them, it said.

The proposal will now have to get the endorsement of member-state representatives, after which it will undergo a three-month scrutiny period by the European Parliament before final adoption.