UN May Allow Carbon Credits Even as Rules Tightened (Update1)

By Mathew Carr, Bloomberg, Mar 22 16:09

March 16 (Bloomberg) -- The United Nations may allow greenhouse-gas cutting projects to get credits for as long as 21 years even if developing countries change their policies on emissions.

Projects that get credits from the UN-managed clean development mechanism “may continue until the end of their current crediting period,” under rules being considered at a meeting later this month in Bonn, according to a March 12 document on the Web site of the UN Framework Convention on Climate Change.

Currently, projects can get credits for up to 21 years, in three 7-year tranches. The document didn’t specify if the new rules would cover more than one seven-year period. Other projects get a single 10-year period for credit award.

The UN is trying to clarify eligibility for so-called certified emission reduction credits in the event that developing nations tighten restrictions on greenhouse gases under a new global climate change regime. The March 12 document proposes that projects continue to receive credits even if a developing nation were, for example, to make combustion of coal- mine methane mandatory.

Entire industries rather than individual projects may receive credits in the future under the UN’s “nationally appropriate mitigation actions,” or NAMA program, according to the March 12 proposal.

‘Gives Hope’

Discussion of the transitional rules for projects “gives us hope that CERs will continue to have value,” Kim Carnahan, Clean Development Mechanism specialist at the International Emissions Trading Association, said today by phone. “It’s an excellent signal for the continuation of the market that we are trying to preserve.”

The Geneva-based IETA said March 3 that members ranging from Barclays Plc and Goldman Sachs Group Inc. to Swiss cement- maker Holcim Ltd. and Swedish utility Vattenfall AB sought more certainty on rules for emissions trading under a new global treaty. Projects have been governed until now by the 1997 Kyoto Protocol. Some 4,200 projects are in various stages of development in the UN-led program.

Under the Kyoto treaty, 37 industrialized countries may get industries to trim output domestically or, if it’s cheaper, offset their emissions by buying credits from carbon-reduction projects in poorer nations. Its first compliance period is the five years through 2012. Negotiators are meeting in Bonn in a bid to extend or replace the Kyoto pact.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

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