Installations covered by the EU’s Emissions Trading Scheme (EU ETS) surrendered 254.6 million U.N.-backed offsets for compliance in 2011, some 86% more than were submitted in the previous year, according to analysis of data released by the European Commission, by Thomson Reuters Point Carbon, a leading provider of market intelligence, news, analysis, forecasting and advisory services for the energy and environmental markets.
Of these 254.6 million off-sets, 178.8 million were Certified Emissions Reductions (CERs), generated by the Clean Development Mechanism and 75.8 m were Emission Reduction Units (ERUs) generated by Joint Implemention (JI).
Based on the data, which is in-line with Thomson Reuters Point Carbon estimates, of the 178.8 million CERs, some 84% were from HFC and N2O adipic acid projects (so-called ‘grey CERs’) with the relative share of these credits being higher than in 2010 (78%), 2009 (83%), and 2008 (84%). Of the 572 million HFC and N2O-adipic acid CERs issued by 30 April 2011, a total of 375 million, or 65%, have now been surrendered for compliance within the EU ETS.
According to Marcus Ferdinand, senior market analyst at Thomson Reuters Point Carbon and author of the analysis, “The share of “grey” credits used for compliance is very high and shows that market participants are eager to use as many of them as possible before the eligibility criteria kicks in at the end of phase 2 of the scheme.”
He added, ‘The assumed high 2011 ‘grey’ credit usage confirms our expectations that the upcoming quality restrictions for industrial gas credits were one important factor for the low price of sCERs compared to EUAs that we have observed over the last twelve months.
This confirms our view that the remainder of 2012 will most likely see continued bearish price pressure on the Dec-12 sCER contract as more industrial gas credits will be issued and have to be used before phase 2 comes to an end in April 2013′”.
A total of of 456 million CERs have now been surrendered under the EU ETS, or nearly half of the 919 million that had been issued by the end of April 2012 by the UN. A further 99 million ERUs have been handed in by EU firms since 2008, or 70% of the 141 million credits distributed by the end of April 2012.
Over the past four years of phase 2 nearly 555 million credits have been used for compliance. The volume of surrendered credits was stable in 2008 (82m credits) and 2009 (81m credits), increased to 137 million credits in 2010 and nearly doubled again in 2011 to 255 million credits.