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UK to ban CDM coal plants projects from September

06 Aug 2013 18:23:26 | edcm

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The UK will soon stop authorising offset projects earning certified emission reductions (CERs) from a controversial methodology for coal-burning power plants because of concerns about its "robustness".

"The Environment Agency and the Secretary of State will no longer issue letters of approval for those project activities applying under methodology ACM0013 which are submitted to the Environment Agency on or after 2 September 2013," a policy statement published by the UK Department of Energy and Climate Change (DECC) and dated this month reads.

The methodology - named "consolidated baseline and monitoring methodology for new grid connected fossil fuel fired power plants using a less [greenhouse gas] intensive technology" - has already been reviewed by the UN's clean development mechanism (CDM) Executive Board in the past after a suspension (see EDCM 14 September 2012).

That came after reports found that coal-fired plants received artificially high amounts of CERs under the CDM because of flawed calculation rules, meaning projects could have received an excess of 62-71% in credits (see EDCM 11 November 2011).

The methodology now allows the UN to award tradeable CERs to projects building cleaner coal-fired plants that, hypothetically, would have been built even if no CDM finance had been available.

But green groups strongly criticised the revision on the grounds that scarce climate finance is still allocated to construct new CO2-intensive coal power plants.

The DECC did not reply to ICIS by press time about why it is introducing the ban. The document states that the policy will be reviewed should the methodology be revised.

Applications submitted to the Environment Agency before 2 September 2013 are exempt from the ban, the document says. In addition, it does not affect project activities that have already been approved under the methodology.

Impact

The decision is not expected to impact market participants in the EU Emissions Trading System (ETS) at present.

"Only the six projects that registered in 2012 can sell CERs in the EU ETS. The others are located in China and India, so even if they do get registered, they cannot sell CERs into the EU ETS, because they are not located in a least-developed country [LDC]," said Anja Kollmuss, climate policy analyst at CDM Watch.

Of those six projects registered before the end of 2012, five are located in India and one in China, said Benjamin Schmitt, analyst at consultancy Tschach Solutions - now part of ICIS. Until now, 606,306 CERs were issued to only one of these projects. One additional monitoring report from another project is in the issuance pipeline and has requested 311,262 CERs, he added.

Of the six projects, only one, brought forward by EcoSecurities, involves the UK. DECC has already issued a letter of approval for this project, according to the UN's CDM website.

Other projects are in the pipeline and still have to get the registration, but they will not generate CERs allowed in the EU ETS because of the LDC restrictions.

"We have tracked so far around 30 projects with this methodology in the validation stage, one of them involves UK participant Climate Bridge," added Schmitt.

According to UK rules, participants can apply for a letter of approval either before or after a project has been registered by the CDM Executive Board, following host government approval. Silvia Molteni

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