ArcelorMittal and Lafarge lead in UN carbon offsets usage in 2011 #CDM #carbontrading

ArcelorMittal and Lafarge lead in UN carbon offsets usage in 2011
According to data on the European Commission website, ArcelorMittal and Lafarge SA used the most United Nations offsets to cover carbon dioxide emissions in 2011.

The data showed that factories and power stations used 254.6 million offsets in the bloc’s cap and trade program. ArcelorMittal handed in about 29.3 million credits, enough to cover 78% of its emissions in 2011, while Lafarge used 11 million or 64% of its pollution. Offsets may be used to cut compliance costs with Europe’s carbon trading system.

According to Barclays Plc, industrials are using offsets because they are short of money and less concerned over future compliance costs.

Mr Trevor Sikorski, an analyst in London for the investment arm of the bank, said that “We’d expect industrials to hand in a fair amount of offsets. A lot of them will be finding access to credit difficult and current concerns around cash flow would drive them to look for monetization of value.”

UN sponsored offsets known as Certified Emission Reductions and Emission Reduction Units are awarded to projects that cut greenhouse gases that scientists blame for accelerating climate change. UN CERs for December 2011 slumped 4.2% to EUR 3.7 a tonne on London’s ICE Futures Europe exchange.

According to data published and compiled by Bloomberg New Energy, Finance, Germany, France and Spain used the most United Nations emission offsets. Emitters in Germany surrendered 74.4 million tonnes of credits, while those in France used 27.5 million tonnes and Spanish installations submitted 27.4 million tonnes to the European Commission.

Each country sets its own limit on companies’ use of offsets, ranging from zero in Estonia to 20% in Germany. Unused quotas can be used in subsequent years.

The use of offsets in 2011 was higher than the median estimate of five analysts surveyed by Bloomberg News on April 30th 2012. The median prediction was for 244 million credits. The offsets are a cheaper form of compliance to cover the 1.85 billion tonnes of carbon dioxide emitted in 2011. That means offsets were used to cover about 14% of emissions.

Mr Mark Lewis, an analyst in Paris for Deutsche Bank AG, said that the EU has banned the use of credits linked to hydro fluorocarbon 23 from its trading system from next year, saying these credits generate excessive profits. HFC 23 offsets make up about 44% of total supply and so installations should make use of them while they are allowed to in the program. He added that “It’s becoming obvious to emitters they need to use up their quota. We have these qualitative restrictions kicking in from 2013.”

According to prices compiled by Bloomberg, the discount of UN credits to European Union permits for December 2011 narrowed 5.1% to EUR 3.52 a tonne on ICE Futures Europe. The spread, traded as a separate contract, had widened over the previous four sessions.

Source – Bloomberg