08 November 2010

Europe to Ban Carbon Offsets?

It is not clear how much support there is for such a proposal, but the EU Commission is to bring forward a proposal to ban most forms of carbon offsets:
European Union member states may oppose new rules on how far their factories and power plants can offset their carbon emissions, to be proposed by the European Commission, environment ministries told Reuters.
The EU executive is expected to propose in the next two weeks curbs or an outright ban from 2013 on the most common types of offsets.

Europe's emissions trading scheme caps planet-warming gases emitted by industry, but allows companies to offset emissions by paying for carbon cuts in developing countries, as a cheaper alternative to cutting their own.

Shutting the main supply of offsets could push up carbon prices, if agreed by a majority of member states at a meeting of Commission officials and environment ministers later this month.
Any such ban would represent a step towards a more transparent form of carbon pricing, along the lines of a straight up tax.  Offsets are of course one reason why there is no such thing as a "cap" in cap and trade.