Environmental Engineering Reference
In-Depth Information
Figure 2. CER Stock available for EU ETS Compliance. Source: Mission Climat of Caisse des Dépôts,
from UNEP Risoe CDM Pipeline
and Leguet (2009)). Besides, the yearly CER
import limit does not seem to be binding before
the 2010 compliance event.
10
The path of CER
delivery displayed in Figure 2 critically depends
on the criteria for CDM project validation.
In terms of expected CER delivery, HFC, PFC,
CH
4
, and N
2
O emission-reduction projects have
a relatively large market share, which is mainly
due to these gases' high global warming potential.
It is also important to look at the distribution of
projects and technologies in terms of expected
GHG emission reductions. Twenty-two projects
involving HFC emissions reductions constitute
17% of expected emissions reductions by 2012.
11
Sixty-five projects involving N
2
O emissions re-
ductions constitute 9% of expected CERs
12
(World
Bank, 2008). By contrast, the 1,098 hydro projects
will deliver just 17% of expected CERs. The dis-
tribution of issued CERs issued by technology is
important to keep in mind, since HFC- projects
(and other gases for which CERs are heavily is-
sued) may not allowed for import in the EU ETS
towards Phase III.
In terms of risk-assessment, it is also interest-
ing to note that the delivery of credits, and thus
the performance of projects, greatly varies: only
10 to 15% of methane reduction credits could
be verified and therefore issued (World Bank,
2008). This ratio is 75% for HFC 23 emissions
reduction projects, while N
2
O projects sometimes
deliver more CERs than expected. Besides, the
high percentage deliveries of HFC and N
2
O may
be also attributable to the low-hanging fruit and
poor quality of verification of additionality (see
Narain and Veld (2008)).
3. Uncertainties concerning Post-Kyoto
agreements
Of course, the list of common risk factors
between the CDM and EU ETS markets would
not be complete without a careful outlook of ne-
gotiations for a post-Kyoto treaty. The European
Commission needs to devise its future strategy
concerning the status of the CDM and the use
of CERs during Phase III of the scheme (2013-
2020). For instance, on technological grounds,
CERs generated through HFC destruction or
large hydro projects may be banned from import
within the EU ETS.
