Call for Member States to extend EU Industrial Gas Ban (Newsletter #14)

On 21 January this year, EU Member States banned offsets from industrial gas projects from being used under the European Emissions Trading Scheme (EU ETS). The ban, which takes effect in 2013, was approved by all 27 EU member states and was hailed by environmental campaigners as a shining example of the willingness of Member States to prioritise the integrity of the emissions trading system over the financial interests of a handful of corporate investors.

As the decision currently stands, the ban only applies to the EU ETS but does not cover EU Member States’ national targets in the non-traded sectors (such as agriculture and transport). This is significant given that under the Effort Sharing Decision, up to two-thirds of the total emissions reductions required of EU Member States from 2013-2020 can be met though offsets.

Environmental groups fear that in the absence of a clear commitment, some Member States may continue to use these credits to count towards their national targets, while companies are banned from using them to meet their emissions reduction targets under the EU-ETS.

Alarmed by this loophole, the Danish government was the first to launch a voluntary initiative that extends the ban to their national targets. They are expected to ask other Member States to sign a declaration at the upcoming Environment Council in June.

Meanwhile a large coalition of NGOs, including WWF, Greenpeace, Friends of the Earth, CDM Watch, the Environmental Investigation Agency, Sandbag Climate Campaign and many others have called on all EU Member States in a press release and open letters to take immediate action to exclude these credits from national registries as soon as is feasible.

The background story

Last year a coalition of environmental NGOs led by CDM Watch took on major carbon market players in an effort to purge the CDM from spurious carbon credits. CDM Watch commissioned several scientific studies that assessed the integrity and quality of HFC and N2O projects (both are highly potent climate gases). Credits from the destruction of these two gases make up well over two thirds of all CDM credits issued so far.

The HFC study revealed that HCFC-22 production facilities purposely maximised HFC emissions (HFC is a waste product in the HCFC-22 production process) in order to destroy them to increase their already huge CDM profits (see the following article on updates of the story).

Another CDM Watch study revealed that CDM adipic acid projects made so much profit from the sale of their credits that a significant shift of adipic acid production occurred from plants in industrialised countries to CDM plants in China and South Korea. This created ‘carbon leakage’, adding millions of phantom emission reductions to the market.

The European Commission confirmed our findings and banned carbon credits from HFC-23 and adipic acid destruction projects. The European Commission noted that such credits had been issued in breach of the European Union’s international and domestic commitment to reduce greenhouse gas emissions as stated under Article 2 of the UNFCCC, the Kyoto Protocol and Article 1 of the ETS 2003/87/EC Directive.

However, the ban does not cover EU Member States’ national targets in the non-traded sectors. It would be hypocritical if governments were allowed to keep using the unethical credits while they have endorsed regulation that prohibits their covered industries to do so. CDM Watch calls on all EU Member States that have not yet done so, to broaden the ban to include national targets to ensure that the ban on industrial gas offsets is comprehensive and effective