Azernews.Az

By Bloomberg

Emission-cutting projects will probably reduce supply of credits into markets overseen by the United Nations as developing nations set up alternative programs, according to GDF Suez SA.

China’s preliminary plan for a national greenhouse-gas market published last week means projects will now be more inclined to avoid the UN market for credits, said Philipp Hauser, vice president, carbon markets at GDF Suez Energy Latin America, a unit of the world’s biggest utility. China’s move may be followed by others and credits changing hands this week for 50 euro cents ($0.61) a metric ton may rise to a “few euros” by 2020, he said yesterday from Rio de Janeiro.

An increased tendency to hold rather than sell carbon credits is underpinned by developing nations joining richer countries in accepting emission limits from 2020, under the UN process of tabling climate contributions through July next year. Measures announced by Mexico, South Africa and South Korea will already add to demand, GDF Suez said. 2015 CERs have plunged 97 percent since 2011 as demand in Europe dried up, settling yesterday at 52 cents a ton on ICE Futures Europe in London.

Projects “will think twice before selling at 50 cents” in the UN market because they will bet they can get a higher price in their own country, Hauser said.

An important element of China’s rules is that they place similar values on emission allowances to be allocated by the nation’s provinces from about 2016 and the project-based credits, or China CERs, he said. That may encourage companies to create CCERs instead of UN CERs, depending on details of the rules, he said.

The rules will spur investments in China, the biggest supplier of UN CERs, because projects can be fairly sure of obtaining a credit that can be sold to the factories covered by the market, Hauser said.

Issuance of UN CERs dropped 62 percent to 101 million tons this year, compared with 265 million tons last year, according to UN data compiled by Bloomberg. CERs are created under the Clean Development Mechanism of the 1997 Kyoto Protocol.