Netherlands to explore domestic emissions crediting


03 Jan 2012 18:45GMT
London, 3 January (Argus) — The Netherlands is the latest EU member state to consider domestic emissions crediting after the Dutch parliament last week decided to examine the possibility of issuing credits to home-grown reduction projects that fall outside of the EU emissions trading scheme (ETS).
Under the EU ETS directive's domestic offsets provision contained in article 24a, allowances can be allocated to domestic, non-ETS projects, for example in the energy-efficiency building or waste-reduction industries.
This “silent” provision was adopted in 2008 as part of the original directive, but until recently its existence has not been widely known and it has seldom been used, said Jos Cozijnsen, a consultant connected to Dutch emissions trading information website Emissie Rechten.
But last week the Dutch parliament “decided to make use of it and to study how it can be done”, Cozijnsen said.
The Dutch government, various agencies and market participants will examine the emissions reduction potential of domestic projects, likely monitoring and verification costs, ways to bundle schemes, the preferable scale of projects and sectors to be included under such a scheme.
The study will also ascertain which baselines or benchmarks should be used and if an overall emissions cap will be needed.
The Netherlands is the latest EU member state to show interest in the use of domestic crediting, alongside Germany, France, Denmark, Finland, Belgium and Portugal.
Germany and France already issue emission reduction units (ERUs) to domestic projects, while Denmark is currently piloting a domestic offset scheme and Portugal has set up a climate fund in pursuit of similar schemes.
EU member states' new interest in domestic crediting is partly driven by an emerging preference among European companies to buy credits generated in Europe rather than in China or India, Cozijnsen said.
The move is further motivated by a desire to use the carbon market to help stimulate member states' slowing economies, while at the same time tackling emissions generated by non-EU ETS sectors, he added.
So far the European Commission has been waiting to see what action member states would take, Cozijnsen said. But hopefully the current Danish presidency of the EU will put a proposal for a new mechanism to cover the non-ETS sector on the agenda, so that the commission can start preparing the necessary enabling legislation, he said.
As new EU rules takes at least two years to enact, 2015 is the earliest that domestic projects could generate credits, Cozijnsen said. But he stressed that there is no reason why schemes initiated before then could not be granted credits retroactively.
Any unnecessary delay in investment would be “perverse”, he said.
Elaine Mills
Emissions reporter
Argus Media
+44 (0)20 7780 4238

Jos Cozijnsen, MMA
Consulting Attorney emissions trading
Emissierechten.nl