EU May Allow Carbon Credits From Forestry to Fill Gap, BNP Trader Says

The European Union may allow use of emission credits from forest protection to help fill any gap from a ban of some industrial-gas credits, a banker at BNP Paribas SA said.

The EU carbon market may have room in its third phase, which runs from 2013 to 2020, for credits under a program known as Reduced Emissions from Deforestation and Forest Degradation, or REDD, should the bloc restrict industrial-gas credits and adopt a tighter emission-reduction target for 2020, said Christian Del Valle, director of environmental markets and forestry at the Paris-based bank. The region’s target is currently to cut emissions by 20 percent from 1990 levels.

“Policy makers might seek to offer another source of credits for cost control,” Del Valle said yesterday in an interview at the Climate Finance 2010 conference in London. “Some member states may be open to allowing REDD in certain circumstances.”

Almost 200 nations are meeting later this month in Cancun, Mexico, to discuss replacing or extending the Kyoto Protocol, which runs through 2012, slowing emissions and shifting the world to low-carbon energy sources. Inclusion of forestry projects would increase the number of credits available to polluters to cover greenhouse-gas emissions after 2012.

Some EU officials are saying the bloc reserves the right to allow additional UN credits into its program, the world’s biggest carbon market, De Valle said. “Doing so would send a strong signal internationally that Europe is serious about addressing deforestation in tropical countries.”

“There is still some resistance from the east and south” of Europe to the adoption of a tighter emission target for 2020, possibly a 25 percent or 30 percent reduction on 1990 levels, he told the conference earlier.

To contact the reporters on this story: Mathew Carr in London at m.carr@bloomberg.net

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