Correction: Russia suspended from UN carbon trading scheme

The immaturity of one of the UN's flagship carbon trading scheme was underlined yesterday after Russia was suspended from registering carbon credits on the international transaction log (ITL) as a result of unpaid fees.

A spokesman for the UN confirmed that Russia had been suspended from using the log over its failure to pay outstanding fees related to its participation in the scheme. The ITL is used for recording trading of official UN carbon credits between buyers and sellers.

He added that Russia had not, as previously reported here, been suspended from participating in the UN's Joint Implementation (JI) carbon offset mechanism, which generates carbon credits from emission reduction projects in developed and emerging economies.

"In fact, Russia accounts for more than half of the 170 projects in the JI pipeline, under the so-called track-two JI process, and can continue to pursue its interests in the mechanism," he said.

Experts said the move to suspend Russia from the ITL is unlikely to have a significant impact on the price of carbon credits as Russia has failed to establish itself as a major player in the global carbon market.

"In terms of maturity and scale, JI is almost at zero compared to the [much larger] CDM [clean development mechanism]," said Alessandro Vitelli at analyst firm IDEACarbon, adding that companies interested in investing in emission reduction projects capable of delivering short- to medium-term returns would be advised to focus on CDM projects in the developing world.

"People just don't seem to like the idea of investing in [offset projects] in developed economies," he explained.

However, while the suspension of Russia from the ITL is unlikely to have any short-term impact on the market for carbon credits, it will stoke fears that the country could weaken its support for carbon trading initiatives at ongoing UN c limate change talks.

Russian officials have already signalled that they will not sign up to an international emissions reduction deal that they regard as against the country's best interests, and the potential embarrassment of being suspended from officially registering carbon credit transactions could harden their position.