EU to crack-down on "gaming" of carbon offsets

EU officials have confirmed they will move to address controversial carbon credits that "game" the Clean Development Mechanism (CDM) and undermine the effectiveness of the EU emissions trading scheme (ETS) before the end of the month.

Currently, companies covered by the ETS can use UN-approved carbon offset credits known as Certified Emission Reductions (CERs) to help them cut their emissions.

But a series of investigations have alleged that companies based in China and India and South and Central America are "gaming" the CDM scheme by increasing the production of HCFC-22 and HFC-23, two powerful greenhouse gases, so that they can then earn extra CER credits by destoying the gas.

The resulting CERs have then allegedly been sold into the EU Emissions Trading Scheme, despite the fact that they have not delivered any real net reduction in greenhouse gas emissions.

Jos Delbeke, the director general of European Commission's climate team, told Reuters in an interview late last week that the EU was preparing to act to tackle the practice.

"We see there's a gaming of the system, where people are tuning up or down the production of these industrial gases to maximize their credits," he said. " The proposal on reforming these credits will be on the table before the Cancun meeting, and discussions among EU member states are going to start before Cancun."

Delbeke did not mention specific CDM projects, but his comments will further fuel specualtion that the EU is preparing to ban offsets issued by HFC-23, adipic acid and nitrous acid emission reduction projects from 2013.