European Commission Bans Use of Industrial Gas Credits in the ETS

8 June 2011: The European Commission has formally adopted a ban on the use of industrial gas credits in the EU Emissions Trading System (EU ETS) as of May 2013.

The ban will apply to credits from projects that destroy two industrial gases: trifluoromethane (HFC-23), produced as a by-product of chlorodifluoromethane (HCFC-22), which is also an ozone depleting substance (ODS), principally in air conditioners and refrigerators; and nitrous oxide (N2O) from adipic acid used in the manufacture of nylon. HCFC-22 is covered by the Montreal Protocol. Crediting the abatement of HFC-23 can create a perverse incentive to produce more HCFC-22 than would have happened without the Clean Development Mechanism (CDM), and consequently produce credits that are not additional.

The ban will begin on 1 January 2013, with a phase-out period of four months until 30 April 2013 for credits from existing projects. The European Commission has indicated that it is currently not considering any other specific use restrictions beyond industrial gases. [EU Press Release]