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EU votes to ban carbon credits

The European Parliament has voted to ban the use of HFC-23 and N20 credits in Phase 3 of the EU’s Emissions Trading Scheme – also known as carbon credits.

The ban, which runs from 2013 to 2020 was approved by the Climate Change Committee, however changes to the original proposal were made at the last minute.

The prohibition will be delayed until May 2013, as opposed to the original date of January 1, after the first deadline was resisted several countries, including Italy and Spain, which were allegedly being lobbied by pro-carbon credit organisations.

Connie Hedegaard, the EU’s climate action commissioner, said that the industrial pollutants offered questionable value for money, geographical distribution and environmental benefit.

“Continuing to use them is also not in the EU’s interest as doing so could discourage host countries from supporting cheaper and more direct action to cut these emissions.”

“Our aim is not to reduce the number of credits available but to ensure the international carbon market is based on a better quality and distribution of credits.”

The decision was welcomed by the Environmental Investigation Agency, who had previously addressed a European Parliament hearing on the subject.

It argued that continued use of HFC-23 credits stifles investment in sustainable projects, is poor value for European consumers and conflicts with the goals of the Montreal Protocol on ozone-depleting substances.

EIA Global Environment Campaign leader Fionnuala Walravens, says: “Despite the delay, which may allow further use of about 50 million carbon credits, this is indeed an historic day,”

“Industry interests have pushed hard for the ban to be delayed beyond May 2013 and today’s outcome is a compromise. It has demonstrated how all interests can unite for the sake of the climate and for the credibility of the EU’s Emissions Trading Scheme.”

Readers' comments (1)


  • It is good news that the European Parliament has voted to ban the use of carbon credits generated from HFC-23 and N20 CDM projects in Phase 3 of the EU’s Emissions Trading Scheme, starting in May 2013.



    The supply of HFC-based carbon credits is a dominating supply-driver to the EU Emissions Trading Scheme; consequently, it has a significant impact of pricing of EU Allowances (the locally traded carbon credit commodity). By removing the supply of these carbon credits we would expect a real and long-term impact of the pricing of carbon emissions in Europe. A strong, long-term pricing signal will enable more investment funding for CDM projects and a drive by project developers to establish greater number of project in the Least Developed Countries (so called, "LDCs").


    We would expect the carbon market to take this news as a positive signal; and also we welcome the certainty that this announcement provides as well. Whilst, not all market players will be happy with this news, we see the opportunity as leading to a second 'golden age' of the carbon markets.


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    Frontier Carbon is an investor in Illumination Headquarters, a solar lamp and carbon credit business, based in Africa (www.illuminationhq.com). We are involved with building carbon trading and clean-tech investment Carbon Trading, We are involved with Carbon Trading , Shameless link. And you may find some of our discussions useful too.

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