China-EU Relations

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Imminent EU proposals to clamp down on fridge gas scam

24.11.10 @ 17:45

  1. By Andrew Willis

BRUSSELS - European Commission proposals to clamp down on a trading scam linked to the controversial greenhouse gas HFC-23 are only days away, officials have indicated, amid fierce lobbying from businesses to water down the plans.

  • Some firms in China and India have made huge profits producing and then destroying the fridge gases (Photo: Thomas Mues)

The gas, used in refrigeration and estimated to be 11,000 times more damaging than CO2, hit the headlines this summer when it emerged Chinese chemical companies were intentionally producing the pollutant purely to then collect valuable carbon permits under the UN's clean development mechanism once it was destroyed.

"The proposal is in the final stages," commission climate spokeswoman Maria Kokkonen said on Wednesday (24 November), refusing to be drawn on the exact date. "It will be published just before or during the Cancun climate talks [29 Nov - 10 Dec]".

European companies have bought billions of euros' worth of the controversial permits under the EU's emission trading scheme (ETS), a system under which companies must exchange pollution permits for any emissions produced.

EU climate commissioner Connie Hedegaard last month described the process as "perverse", adding that she was not opposed to legitimate off-setting projects unlike some environmental bodies.

MEPs have also slammed the scam. "This use of CERs [off-setting permits] is undermining the EU's credibility in its fight against climate change," centre-right MEPs Richard Seeber, Pilar del Castillo and Theodoros Skylakakis said in a statement on Tuesday.

"It had no substantial environmental benefit and it created a scandalous situation in which European consumers have not received value for their money," they continued.

Several European companies have been lobbying the commission to water down the imminent proposals that are expected to ban or limit the use of the controversial permits under the EU's carbon-trading scheme.

"There are European companies that already have contracts to buy the permits which are worried they will lose money. This is a legitimate concern which we must not allow to happen," Mr Skylakakis told this website.

"But there are other firms who simply want to buy the cheap profits in the future to increase their profits," he added, indicating that foreign banks trading in the credits were among those reaping large windfalls from the scam.

CDM watch, an environmental NGO which closely monitors the process, says German energy firm RWE and Italian energy provider ENEL were among those pressing hard for weaker restrictions.

Separately this week, EU transparency group Corporate Europe Observatory said this drive for profits was one reason why businesses should be kept out of international climate negotiations, after a commission-funded report called for a greater role for firms in UN climate policy-making.

"We are concerned that the commission is funding the work of a corporate lobby group such as the World Business Council for Sustainable Development, [the report's authors], which has a history of lobbying against ambitious international agreements to regulate environmental problems," CEO said in a letter to commissioner Hedegaard on Tuesday.

"More importantly, we are concerned that the commission might support the recommendations of the report," the group added.

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