21 January 2011
Europe bans HFC23 credits but thieves steal €28.7m
THE European Commission has finally voted to ban emission offset credits for the destruction of HFC23, produced as a by-product of R22 production, but it will not come into force until May 2013.
The ban, which also includes nitrous oxide from adipic acid production, was originally proposed to come into force from January 1, 2013, but was delayed after resistance from a small number of countries including Italy and Spain.
Just 23 such industrial gas projects are said to account for roughly two-thirds of all the credits generated through the Kyoto Protocol's Clean Development Mechanism (CDM), with most of the projects carried out in China and other advanced developing countries.
The EC proposed the ban last November after it was widely recognised that the EU's cap-and-trade system perversely encouraged developing countries to over-produce R22 in order to cash in on credits available for destroying the high GWP by-product HFC23.
The London-based Environmental Investigation Agency (EIA) last year estimated that the destruction of HFC23 could be carried out for just €0.17 per tonne of CO2 equivalent but when sold on the EU market it could command as much as €12 - around 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.
Climate campaigners hailed the European ban as a significant step forward.
'Despite the delay, which may allow further use of about 50 million carbon
credits, this is indeed an historic day,' said EIA Global Environment Campaign
leader Fionnuala Walravens. 'Less than a year after NGOs exposed
the fraudulent and problematic nature of industrial gas credits, the world's
biggest carbon market has banned their use.'
Today's decision comes after the EU instigated a seven-day freeze on spot trade in its carbon markets after an estimated 475,000 emissions allowances worth €28.7m in carbon allowances were stolen in a string of cyber attacks.
In the biggest ever fraud aimed at the EU's Emissions Trading Scheme, Computer hackers gained access to computers at carbon registries in the Czech Republic and Austria and transferred the credits to separate accounts.