Today the European Commission voted to ban industrial gas offset credits from HFC and N20 destruction projects from the next phase of the EU Emissions Trading Scheme, beginning in 2013.
That's a big deal for two reasons:
Willingness to fix the problem
Firstly it shows that politicians are prepared to act to reform the ETS – reforms which are desperately needed to safeguard the EU's flagship climate policy and ensure it drives real carbon reductions.
It was Sandbag's research that revealed the extent to which international offsetting in the ETS was dominated by credits from industrial gas projects, which made up over 84% of CERs surrendered. This amounted to a flood of funding for Indian and Chinese chemical industries for destroying highly damaging waste gases, at such high profits that there was evidence that a perverse incentive for the production of these gases was being created. (see previous post for details of the evidence against industrial gas offsets). So this action to turn off the tap is a victory for common sense and the climate.
Our international offset map, a significant major step forward in bringing transparency to the carbon market, shows just how significant the flow of these credits has been.
The politicians listened. They chose to put the goal of the policy – tackling climate change – ahead of the financial interests of a small group of powerful industries who opposed the ban on the basis of reduced profits.
It's a big deal, secondly, because it shows what we can achieve through campaigning for ETS reform. Sandbag and our NGO colleagues have brought enough pressure to bear to counteract the lobbying of powerful industry groups.
The difference to the climate is huge. Industrial gas projects supplied 68 million tonnes and 66 million tonnes of offsets, surrendered into the ETS in 2008 and 2009 respectively. Imagine that level continuing until 2020. Now the flow has been stopped, billions of Euros of investment is freed up to fund projects far more likely to spur a clean future: wind turbines, energy efficiency, etc.
So it is encouraging to see that there is the political will to make changes, and that campaigning for these changes can bring results.
We’ll need much more of the same: Sandbag estimates there is a potential 1.4 billion surplus of permits, meaning emissions in Europe could increase by a third in the next five years. There is still a lot more work to do before the ETS begins to realise its potential to drive green, low-carbon growth in Europe.
But today is a good sign of what’s possible.