Used carbon credits sold in the EU
ONE of "the biggest trading houses" in the EU bought used UN credits coming from Hungary before it re-entered the bloc's emissions market, intermediary Hungarian Energy Power said yesterday.
"We sold the permits to a London-based trading house, which then sold them to one of the biggest trading houses in the EU," said Jozsef Spenger, director at the Budapest-based wholesale energy-trading company, in a phone interview.
Hungary said last week it had sold almost two million United Nations Certified Emission Reduction (CERs) units that had already been turned in for compliance in the EU.
That triggered concern that investors may be stuck with offsets that are no longer valid in Europe's cap-and-trade programme.
Exchanges in both London and Paris halted spot trading in CERs on Wednesday, after reporting that some second-hand credits had returned to the European market.
There may have been "fraudulent conduct" by a dealer if the credits ended up on EU trading floors, the Hungarian environment ministry said in a statement earlier this week.
The International Emissions Trading Association has said sales of 'recycled' carbon credits could damage the reputation of the EU's emissions trading market, the world's largest cap-and-trade programme.
The European Commission, the regulatory arm of the 27- nation EU, said on Wednesday it was "surprised and concerned" to learn that some of the UN credits have re-entered the carbon market.
It announced that it would investigate "further interim measures" that could be taken to stave off concerns that investors may get stuck with CERs that won't be valid again in Europe.
The UN, which manages the programme that creates CERs, said the EU was responsible for protecting buyers. (Bloomberg)