From: Reuters
Published December 8, 2007 08:13 AM

U.N. talks will not decide on new HFC incentives

By Gerard Wynn

NUSA DUA, Indonesia (Reuters) - The biggest winners from a U.N. scheme to reward companies which cut emissions of potent greenhouse gases will have to wait until next year to see if the multi-billion-dollar rewards are extended.

A 190-nation climate conference in Bali, Indonesia, failed to agree terms to allow companies to profit from destroying gases called hydrofluorocarbons (HFCs) that are a waste product from making refrigerants.

"Parties were unable to come to a conclusion ... on whether the rules that govern eligibility to earn credits ... should be changed to allow more production facilities to qualify," a statement seen by Reuters read on Saturday.

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The HFC debate would be deferred until the next U.N.-run climate meeting in spring 2008, a source familiar with the matter said.

Under the U.N.-led Kyoto Protocol rich countries can meet greenhouse gas emissions targets by funding emissions cuts in developing nations, earning carbon offsets in return.

SUCCESSOR PACT

Countries are meeting in Bali to refine such rules under Kyoto and launch negotiations on a successor pact from 2013.

Chemical plants in China and India have so far earned about 300 million euros ($378.5 million) from destroying HFCs and stand to earn some 2.5 billion euros by 2012, when the present Kyoto Protocol scheme expires.

Project developers based in London and New York arranging such deals will earn much more.

China wants the rules extended so that chemical plants can continue to destroy HFCs, including from new plants or additional capacity at existing plants.

The projects have drawn criticism because the plants can now make more money destroying the greenhouse gas than from selling their end product, used in air conditioners, removing any incentive not to produce the waste HFC gases.

At present, factories are not allowed to claim offsets for destroying the production of HFCs above a 2000-2004 baseline.

China wants to be able to sell offsets from subsequent, additional capacity. But the European Union is concerned that will encourage companies simply to manufacture the greenhouse gas in order to earn offsets, making these meaningless.

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