UN halts carbon offset allowances

There has been a two-week issuance break from the UN preventing the distribution of Certified Emissions Reductions (CERs). This break was ended on 29 July when the UN issued three Asian clean energy projects with 228,400 Kyoto Protocol carbon offsets; this has been the largest allocation since June 16.

CERs are carbon credits issued by the Clean Development Mechanism Executive Board for emission reductions. The scheme obliges countries to comply with emission targets by asking them to calculate their projected emissions and paying for them in advance by purchasing CERs to offset the emissions they release. There are a limited number of CERs for distribution however, and there are concerns as to what this break means alongside other issues that have arisen within the scheme.

Currently if parties invest in green technology in developing countries they are rewarded with additional CERs from the UN, which they can then use, or sell within their own country. At the end of the week the Clean Development Mechanism (CDM) scheme are meeting and are will discuss this break in the issuance of CERs.

The number of CERs handed out in June has dropped sharply from the two previous months. CERs worth 2.7 million Euros have been distributed in July compared to 3.4 million in June and 10.5 million in May. Niels von Zweigbergk, CEO of Tricorona, a Swedish-based developer that was recently bought by Britain's Barclays bank claims:

"It's taking longer to get CERs, so that delays project developer revenues and makes them harder to predict."

It has been asserted by a UN spokesman that the lack of CER allocation is due to the launch of new procedures to limit waiting time and streamline issuance. Despite this feedback hasn't been positive regarding these improvements, this may in part be due to a shortage of staff that dates back to last year.

Another issue that may arise at the meeting will be the subject of refrigerant gas plants that destroy the waste gas HFC. Should the CDM decide to invest heavily into these projects the number of CERs available to other investors will be lessened.

Decisions should be made at the meeting and be finalised on Friday however there are those that believe the problems may remain unsolved and have to be reassessed at the UN Conference of Parties (COP16) in November later this year.

 

Author: Rachael Bristow | Climate Action

Image: Phot43 | Flickr