HFC-23 is an unwanted by-product in the manufacture of HCFC-22, a refrigerant and temporary substitute for CFCs. The destruction of HFC-23 in HCFC-22 plants in developing countries can be registered as a CDM project and leads to the issuance of a large amount of credits (CERs). As it is very cheap to install a destruction facility, HFC-23 destruction CDM projects have resulted in huge profits for HCFC-22 plants and a perverse incentive to increase the production of HCFC-22 to earn money from destroying the resulting HFC-23. This is why the crediting rules were suspended in 2010 and made more stringent in 2011. Yet it is still not stringent enough and still threatens to undermine the goals of the Montreal Protocol and the protection of the Ozone layer. The revised rules also do not apply until projects have to renew their crediting period. This means from 2012 until the end of the first crediting periods (seven years after a project started), well over 240 million credits will be issued under the old rules.
This is why the EU has banned HFC-23 credits from use in their European Emissions Trading System (EU-ETS) starting in April 2013. The majority of EU countries have also banned HFC-23 credits for use in non-traded sectors. However, given that HFC-23 credits can still be traded throughout 2012 and given that not all EU Member States have extended the ban to non-traded sectors, the issue has not been fully resolved in the EU.
|HFC: Who’s WhoHCFC-22
|Montreal or Kyoto?The Montreal Protocol covers chemicals that destroy stratospheric ozone
The Kyoto Protocol covers greenhouse gases
N2O – Nitrous Oxide
N2O is a strong greenhouse gas (Global Warming Potential: 310). It is an unwanted by-product in two different industrial processes; the production of:
- Adipic acid, usually turned into nylon
- Nitric acid, usually turned into fertiliser.
In 2010, an independent study commissioned by CDM Watch provided overwhelming evidence that the high profits from CDM N2O destruction projects at adipic acid facilities had led to carbon leakage: These projects had such high profit margins that a shift in production from non-CDM plants to CDM plants occurred. This carbon leakage caused an estimated increase in emissions of 13 million tons of CO2e. The European Union reacted by implementing a ban of carbon credits from this project type from use in the European Emissions Trading Scheme (EU-ETS). The CDM Executive Board has yet to revise AM0021 to make the baseline sufficiently stringent.
Nitric acid CDM projects do not seem to cause carbon leakage, an independent study commissioned by CDM Watch showed. Yet this project type is problematic for other reasons. N2O is normally an unwanted by product of nitric acid production. Evidence suggests the existing methodologies (AM0028 and AM0034) cause a perverse incentive not to adopt an already widely available technology that would minimise N2O formation because it is more lucrative for project developers to maximise N2O production so that it can then be destroyed to earn credits.