quality restrictions in the eu ets: hfc and n 2 0
DESCRIPTION
Quality Restrictions in the EU ETS: HFC and N 2 0. 12th January 2011 Fionnuala Walravens – Environmental Investigation Agency Rob Elsworth – Sandbag Climate Campaign. Introduction. Sandbag / EIA supports the Commission’s proposal to ban HFC and N 2 O offset credits from 1 st Jan 2013. - PowerPoint PPT PresentationTRANSCRIPT
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Quality Restrictions in the EU ETS:HFC and N20
12th January 2011Fionnuala Walravens – Environmental
Investigation AgencyRob Elsworth – Sandbag Climate Campaign
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Introduction
• Sandbag / EIA supports the Commission’s proposal to ban HFC and N2O offset credits from 1st Jan 2013.
• Support based on a number of factors:– Undermining both the Montreal Protocol and the
EU’s international climate objectives– Value for money– Geographical distribution– Limited Sustainable Development benefits
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Montreal Protocol
• The Montreal Protocol established the accelerated phase-out of HCFC-22 (an ozone depleting substance)
• However, the lucrative nature of HFC-23 projects discourages producers of HCFC-22 to reduce their production – rather it causes perverse incentives
• Subsidising HCFC-22 production through the CDM prevents uptake of environmentally friendly alternatives
• Carbon leakage production shift to developing countries• EU is financing the phase-out of HCFC-22 through the
Montreal Protocol, at the same time paying for HFC CERs
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HFC interactions with EU’s international Climate position
EU position for Cancún – as adopted by EU environment ministers on 14th Oct 2010
Point 9 - Increased global abatement efforts from advanced developing countries
Point 14 - Montreal Protocol may be suited to abating HFCsPoint 21 - CDM reform: improved environmental integrity and
regional distributionUNFCCC has failed to address flaws in AM0001• CDM Methodologies Panel Investigation found AM0001 “may inflate
baseline emissions” and recommends a revision. However unlikely to affect first crediting period
Europe must take the lead and set an example for global carbon markets• Cannot afford to allow minority interests to undermine EU leadership
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Value for money
• Technical and Economic Assessment Panel (TEAP) estimates HFC-23 abatement to cost about €0.17/tonne CO2-eq abated
• Europe is paying €12/tonne to abate HFC-23• To date (2008-2009) Europe has spent €1.2bn on HFC credits
for compliance in the EU ETS.• Real cost of HFC-23 destruction in CDM is €16.5 million-70
times higher • These credits originated from 18 CDM projects. There are
2718 registered CDM projects
• Diverting funds away from vulnerable regions
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Geographical distribution
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Project distributionCERs surrendered into the EU ETS to date: 160 million = €1.9bn
HFC CERs – 97 million = €1.2bn
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Timing of ban
• Article 11.a (9) foresees that "from 1 January 2013, measures may be applied to restrict the use of specific credits from project types.“
• A ban as of the 1st Jan 2013 is consistent with the EU ETS Directive
• Market participants were aware of this date and its implications – strategy should have altered accordingly
• Secondary markets ready to accommodate 1st January ban, only small number of investors may be affected
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NO Credit Exchange
• Sandbag / EIA categorically opposes any carryover of credits between phases
• Any carryover would fundamentally undermine this proposal
The ban must be clear and comprehensive – no HFC/N20 credits post 1st Jan 2013
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Thank you for your attention!
Fionnuala Walravens - [email protected]
Rob Elsworth - [email protected]