UN issues 20 million credits to controversial offset projects

The executive board in charge of the UN’s Clean Development Mechanism (CDM) carbon offsetting scheme has issued a substantial number of new credits to controversial projects that destroy the greenhouse gas HFC-23, despite acknowledging misgivings that the scheme could have inadvertently led to increased production of the gas.

According to reports from analyst Point Carbon, a meeting of the CDM executive board late last week approved the issuance of about 20 million tonnes of offsets, primarily to industrial gas projects in China and India.

Industrial gas projects have proved extremely divisive in recent months, with critics accusing projects of increasing output of HFC-23 in order to generate credits. Meanwhile, in Europe the prospect of earning HFC-related credits has also been blamed for “carbon leakage”, where manufacturers move their operations outside of the EU Emissions Trading Scheme (EU ETS) to developing countries where they can earn credits.

The EU has already begun a move to ban industrial gas emission, but critics have argued that a blanket ban would simply remove the financial incentive for reducing HFC-23 emissions and lead to increased emissions of the powerful greenhouse gas.

A report by the CDM’s methodology panel found that a significant increase in the manufacture of refrigerant and chemical feedstock HCFC-22, of which HFC-23 is a byproduct, “might indicate” that plants would have reduced production in the absence of the CDM.

“It cannot be ruled out that in the absence of the incentives from the CDM, CDM plants (which tend to be older and of which many are less-efficient swing plants) would have reduced their production and the load factor in newer (non-CDM) plants would be higher because of their higher efficiency,” the panel’s report read.

The report also highlighted concerns that the methodology of awarding credits to industrial gas projects could result in over-issuing of credits, prompting the board to suspend the method that HFC-23 projects currently use while reforms are finalised.

Even so, the board issued Certified Emissions Reduction (CER) credits to 12 of the 17 HFC-related projects it was reviewing, rejecting just one request on an “unrelated matter”.

“Without the CDM there is no incentive to incinerate HFC-23 waste gas, an extremely potent greenhouse gas,” said Clifford Mahlung, chair of the executive board. “With a revision of the methodology we’ll be working to further ensure that the important incentive provided by the CDM leads to real emission reductions.”

You can return to the main Market News page, or press the Back button on your browser.