IETA’S CONCERNS OVER RECYCLED CERs

The International Emissions Trading Association today warned of the dangers for investors and the carbon market from the recycling of CDM credits (CERs), following on from the news that the Hungarian Government has plans to sell ‘recycled’ Certified Emission Reductions (CERs) to an undisclosed intermediary. The CERs exchanged in this transaction had been previously surrendered by Hungarian firms to comply with their emission constraints under the EU ETS. The government subsequently swapped surrendered CERs with Assigned Amount Units (AAUs), allowing the CERs to be resold on the international market.President of IETA Henry Derwent said: “If Member States ‘recycle’ credits, they will place companies and other organisations at risk of purchasing CERs or ERUs on the international carbon market that have been already submitted to compliance authorities. This apparent double-counting could damage the reputation of the EU-ETS" (Source: Press release IETA: see here).
Comment: it is not the mere fact that 'individual CER certificates are used double, after a comnpany surrenders them, that impacts that market, but the fact that a Party can sell CERs again and uses it's surplus AAUs (Kyoto Budget) to meet its targets. Because via this 'smart move' a party can implicitely marketize surplus AAUs )often called hot air), and add carbon supply: that could indeed decrease the price over time (JC)