EU ETS undermined as Hungary 'recycles' credits

The reputation of the EU’s emissions trading scheme (ETS) – and carbon markets more generally – is under threat after it was revealed that the Hungarian government intends to ‘recycle’ already-used carbon credits by reselling them to a Japanese buyer.

Hungarian officials acknowledge plans to sell nearly 2 million tonnes of Certified Emissions Reductions (CERs) for around 4bn forint ($21m). CERs are generated by projects registered under the UN’s Clean Development Mechanism (CDM), and theoretically represent one tonne of saved carbon.

Hungary has already used the CERs to meet its emissions-reduction obligations under the EU ETS. Though such recycling of credits sounds fraudulent, in fact it is legal, due to the separation of the EU ETS and the emissions-reduction targets taken on by signatories to the Kyoto Protocol.

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