The European Commission Friday denied reports that some carbon credits
had been used twice to cover carbon dioxide emissions under the E.U.
emissions trading scheme.
"Any allegation that there would have been double counting
is pertinently incorrect," the Commission said in a statement. "The
Commission has verified and can confirm that the number of allowances
put out of circulation in 2005 and 2006 corresponds to the number of
verified emissions reported by companies in 2005 and 2006."
A report released Thursday by environmental think tank E3
Europe Ltd. said there was evidence of double counting of carbon
credits for 2005 and 2006.
Double counting is when a carbon credit, worth the
equivalent of one metric ton of CO2, has been used more than once to
cover a ton of CO2 emissions under the emissions trading scheme.
According to the report there was evidence of double
counting in Belgium, Cyprus, Denmark, Finland, France, Germany,
Hungary, Ireland, Italy, Latvia, Lithuania, Sweden and U.K.
Under the European Union's Emissions Trading Scheme, E.U.
governments must set national limits on the amount of CO2 industry can
emit in the five years between 2008 and 2012, which must then be
approved by the commission. Companies that stay below these limits can
sell carbon permits to participants that have overshot their quotas,
creating a trading system. In theory the stricter these limits are, the
higher the price of carbon.
The commission decided to impose stricter caps for the
2008-2012 period of the ETS, after it was revealed caps had been set
too generously for 2005-2007. Due to the surplus in credits for
2005-2007 there was a collapse in the carbon price, which meant there
was almost no financial incentive to cut CO2.
If the E3 report were correct it would mean the surplus was
smaller than previously thought and could have lead to a rise in the
CO2 price.
Following the release of the E3 report CO2 prices for
December 2007 delivery rose to 11 eurocents/ton Friday morning,
compared with 8 eurocents/ton on Thursday's close. But prices have now
returned to 8 eurocents/ton.
CO2 traders dismissed the E3 report, and said the fact the
price had returned to the same levels as Thursday was a sign the market
didn't take the E3 report seriously.