Published on Thursday, 09 February 2012 18:04
A number of European companies which bought carbon credits from Chinese projects under the United Nations Clean Development Mechanism are turning back on previous commitments, according to a report from China Daily
Quoting company sources and project developers, the paper reported that some companies in the European Union, following the plummeting of carbon credit values, are refusing to pay pre-agreed prices, renegotiating agreements, and in some cases terminating contracts for carbon development mechanism projects.
The C.D.M. allows emission reduction projects in developing countries to earn certified emission reduction credits, each equivalent to 1 metric ton of carbon dioxide or its equivalent. These C.E.R.'s can be traded and sold, and used by industrialized countries to meet part of their emission reduction targets under the Kyoto Protocol.
In the European Union, companies use the credits to meet requirements under the bloc's Emissions Trading Scheme. E.U. companies bought most of the credits issuing from China, the world's largest carbon credit supplier.
But the price of carbon credits has fallen down from 25 euros ($33) a few years ago to as low as 4 euros, one of the worst performing commodities in 2011.
"The buyers are looking for loopholes and are trying to terminate or renegotiate agreements," China Daily quoted an executive of a state-owned C.D.M. developer, who declined to be named.
No official figures are available on how many Chinese projects have been renegotiated or terminated, but the companies said there are many. For example, a C.D.M. consulting company that reportedly has about 30 projects in its portfolio has about half of its projects being renegotiated currently. (EcoSeed Staff)