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Quality Restrictions in the EU ETS: HFC and N 2 0 12th January 2011 Fionnuala Walravens – Environmental Investigation Agency Rob Elsworth – Sandbag Climate.

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Presentation on theme: "Quality Restrictions in the EU ETS: HFC and N 2 0 12th January 2011 Fionnuala Walravens – Environmental Investigation Agency Rob Elsworth – Sandbag Climate."— Presentation transcript:

1 Quality Restrictions in the EU ETS: HFC and N th January 2011 Fionnuala Walravens – Environmental Investigation Agency Rob Elsworth – Sandbag Climate Campaign

2 Introduction Sandbag / EIA supports the Commissions proposal to ban HFC and N 2 O offset credits from 1 st Jan Support based on a number of factors: – Undermining both the Montreal Protocol and the EUs international climate objectives – Value for money – Geographical distribution – Limited Sustainable Development benefits

3 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

4 HFC interactions with EUs international Climate position EU position for Cancún – as adopted by EU environment ministers on 14 th Oct 2010 Point 9 - Increased global abatement efforts from advanced developing countries Point 14 - Montreal Protocol may be suited to abating HFCs Point 21 - CDM reform: improved environmental integrity and regional distribution UNFCCC 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

5 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 ( ) 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

6 Geographical distribution

7 Project distribution CERs surrendered into the EU ETS to date: 160 million = 1.9bn HFC CERs – 97 million = 1.2bn

8 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 1 st 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 1 st January ban, only small number of investors may be affected

9 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/N 2 0 credits post 1 st Jan 2013

10 Thank you for your attention! Fionnuala Walravens - Rob Elsworth -


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