Reuters Point Carbon) – Moves to curb offsets issued to emission reduction projects that destroy HFC-23 could result in a steep rise in emissions of the highly potent greenhouse gas as governments are unlikely to force or pay companies to destroy it instead, former Indian climate negotiator Prodipto Ghosh said Tuesday.

Currently 19 plants that produce the refrigerant gas HCFC-22 earn carbon credits under the U.N.’s Clean Development Mechanism by destroying the waste gas HFC-23, a tonne of which has the same heat-trapping impact as 12,000 tonnes of carbon dioxide.

Many countries want the U.N. to either ban companies from earning carbon credits this way or drastically reduce the number they can receive, claiming that it has earned chemical plants obscene profits when viable cleaner production methods exist.

Instead, they want governments to regulate emissions from the CDM projects, which are mostly located in China and India.

But if U.N. curbs do not come into force, an EU May 2013 ban on use of the credits in its Emissions Trading Scheme is likely to render the credits they produce worthless as the 148-billion market is the main demand centre for U.N. offsets.

Prodipto Ghosh, a member of the Prime Minister Manmohan Singh’s Council on Climate Change, told Reuters Point Carbon in an interview that the Indian government is unlikely to compel the industry to cut emissions.

“There is no domestic legislation that would make companies cut emissions of HFC 23 and there are no plans to impose such laws or include these projects in a national carbon plan,” said Ghosh, who for three decades was the most senior civil servant in India’s Environment Ministry.

“These emissions won’t be covered by domestic emissions trading instruments either,” Ghosh added, referring to India’s nascent plans to cap emissions in power generation and energy intensive industries.

Instead, it will most likely to be up to Indian companies to decide whether to pay for destroying HFC-23 themselves once the projects are banned from the EU ETS or should they expire as CDM projects.

India’s three qualifying HFC-23 projects, owned by Gujarat Fluorochemical (GFL), Navin Fluorine and SRF, prevent around 10 million tonnes of year of CO2 equivalent from being pumped into the atmosphere by destroying the gas.

REVENUE

None of the companies, which have made hundreds of millions of dollars and in some cases over 50 percent of their revenues through selling the permits, would reply to questions about their plans.

Fionnuala Walravens of green group EIA said the cost of destroying the gas for each plant is estimated at around $200,000-350,000 a year, but said it was a “tiny price to pay in exchange for the enormous revenue streams brought by the CDM for these companies.”

Conversely in China, where 11 HFC-23 CDM projects are located, observers expect to government to force chemical companies to destroy the gas to help the country cut emissions or allow them to generate credits that the nation will use to meet its goal.

Scientists warn that refrigerants could be responsible for up to 45 percent of greenhouse gas emissions by 2050, if emissions from energy sources decline.

LOBBYING

Green groups claim lobbying by the coolant industry has dissuaded China and India from backing an amendment to the 1987 Montreal Protocol that would take responsibility for cutting HFC-23 away from the Kyoto Protocol and force nations to regulate the emissions instead.

Martin Hession, vice-chair of the CDM Executive Board and former climate negotiator for the UK, said companies and countries would need to decide how to regulate HFC 23 emissions if no future agreement can be found at U.N. level.

“It’s a political issue, and is not the remit of the CDM to say what happens to these projects once the crediting periods end. But one would hope that efforts to cut emissions of HFC-23 would have more momentum after being part of the CDM for so long,” he said.

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