* EU Commission wants ban on main carbon offset types
* Likely to rile China, other developing nations
(Adds sources on draft proposal)
By Pete Harrison
BRUSSELS, Nov 3 (Reuters) - The European Union's executive
Commission wants to ban from 2013 the most common types of
carbon offsets used by factories and power plants, to boost the
credibility of its emissions trading scheme, two EU sources
said.
Some EU goverments may oppose the plan, which requires
majority approval by member states, environment ministries and
industry sources told Reuters.
"The early draft proposal covers three main gases -- Adipic
acids, nitrous acids and HFC 23," one EU source said on
condition of anonymity. "They are trying to keep it simple so it
would be a strict ban."
The EU Commission will propose the ban in the next two
weeks, and not before Nov. 11, the source added.
Europe's emissions trading scheme caps planet-warming gases
emitted by industry, but allows companies to offset emissions by
paying for carbon cuts in developing countries, as a cheaper
alternative to cutting their own.
The majority of the disputed carbon offsets are generated
in newly industrialised countries such as China and India and
the European Commission aims to reform the scheme to include
more projects from the least developed countries.
The Commission also worries that the current system lures
industrial investment away from the EU towards developing
countries where they can earn the lucrative credits.
Shutting the main supply of offsets could push up carbon
prices, if agreed by a majority of member states at a meeting of
Commission officials and environment ministers later this month.
TRANSITION
The EU Commission questioned in August the environmental
integrity of projects, mostly in China and India, which destroy
a greenhouse gas by-product called HFC-23. []
Such HFC projects accounted for about 60 percent of offsets
imported into the EU emissions trading scheme last year,
according to the Sandbag environmental group.
EU states were unsure whether they supported a ban. For some
Polish companies: "(carbon) price hikes would be problematic,"
said Urszula Allam-Pelka, an official at Poland's Environment
Ministry, who didn't say that Poland would oppose a ban.
The International Emissions Trading association (IETA) says
it wants the Commission to perform a a serious economic analysis
on impacts, long and short-term, not only on market prices but
on market confidence.
IETA also urges the Commission to avoid drafting any
measures which might look unfairly retroactive, thus scaring
investors away.
Germany did not yet have a position, said a German
environment ministry spokesman. The environment ministry had
sympathies with the EU plan but a joint stance must be agreed
for example with the economy ministry, he added.
An official at Spain's environment ministry said "a suitable
transition" was needed.
Similarly, Italian industry sources said a ban couldn't be
put in place by the end of 2012. The Italian government
supported their position, they said. There was no immediate
comment from Italy's Environment Ministry.
Britain supported a reform of the carbon offsetting scheme,
which is regulated under the U.N.'s Kyoto Protocol. A spokesman
for the Czech environment ministry said that they could "in
principle" support a ban.
A ban would likely irritate developing countries, and
especially China, home to many such projects.
U.N. climate talks resume later this month in Cancun,
Mexico, and are deadlocked for example on how far rich countries
should pay for emissions cuts in the developing world. The Kyoto
offset scheme has been the main source of carbon finance so far.
(Writing by Gerard Wynn; reporting by Nina Chestney and
Karolin Schaps in London, Gabriela Baczynska in Warsaw, Martin
Roberts in Madrid, Svetlana Kovalyova in Milan, Michael Kahn in
Prague, Vera Eckert in Frankfurt; editing by William Hardy and
Keiron Henderson)
