Lobby for industrial gas offset ban

A new report by Corporate Europe Observatory details how industry lobbied allies within DG Enterprise, to delay DG Clima's plans to ban dodgy offsets from the EU Emissions Trading System (ETS).

Industrial gas projects currently account for more than 80% of the credits bought by European polluters to offset carbon emissions under the EU ETS. But evidence suggests that many of them do not infact represent extra cuts in emissions.

Laughing all the way to the (carbon offset) bank, documents how BusinessEurope, the International Emissions Trading Association (IETA), chemical lobby group CEFIC and energy companies, including Enel, lobbied DG Enterprise to sabotage DG Clima's proposals 1. They pushed to delay the ban until the end of April 2013 – increasing the number of credits available to meet targets in the second phase of the EU ETS.

As a result, power companies and other heavy polluters will be able to benefit from as many as 100 million extra carbon credits, ensuring the price of offsetting in the second phase of the EU ETS remains low.

In a letter to DG Enterprise, energy company Enel said the delay would mean an extra 20 million credits for the company, “with a signicant value”. Enel has interests in seven accredited industrial gas projects removing the refrigerant by-product HFC-23, so profits from selling credits, as well as relying on the offsets to meet its own emissions targets.

Corporate Europe Observatory's climate researcher Belén Balanyá said:

“Dodgy cheap offsets generated from industrial gas projects have helped Europe's polluting industries meet their carbon targets under the Emissions Trading System while avoiding the kind of structural changes that are needed to ensure domestic reductions. What is very disturbing is that they can rely on the help of their friends in DG Enterprise to sabotage the environmental legislation that does not fit their narrow commercial interests.”

The documents obtained by CEO show that BusinessEurope relied on a former Commission insider to make their case, channelling their demands for a delay through a staff member who had joined BusinessEurope from the Commission. Marten Westrup spent three years working at DG Enterprise before taking on the role of Advisor to the Industrial Affairs Committee at BusinessEurope.

Although the ban will in principle reduce the amount of offsets available, it is part of a plan to expand carbon markets by moving towards “sectoral crediting”. DG Clima has admitted that the banned industrial gas offsets may become eligible in future as part of sectoral credits, which may be agreed bilaterally 2 .

Contact:
Belén Balanyá, Corporate Europe Observatory, belen@corporateeurope.org, tel: +31 633 090 386

• 1. See Laughing all the way to the (carbon offset) bank: collusion between DG Enterprise and business lobbyists, Corporate Europe Observatory, April 2011 http://www.corporateeurope.org/climate-and-energy/content/2011/04/laughi...
• 2. http://www.reuters.com/article/2011/03/04/us-offsets-point-carbon-idUSTR...