The UN's clean development mechanism executive board has suspended so called supercritical coal fired power plants from the mechanism that generates certified emission reductions. The move follows longstanding calls from environmental groups to curb supply from these projects and raises questions over their future in the EU emission trading system.

The CDM board, meeting this week ahead of the UN-led climate change summit in Durban, South Africa, also approved a revised methodology that will issue fewer CERs to projects aiming to cut the greenhouse gas HFC-23.

The decision came after a methodology panel working for the UN framework convention on climate change said coal-fired plants received artificially high amounts of CERs under the CDM because of flawed calculation rules. The UN panel's report estimated that over crediting for coal projects might be as high as 62%. A report by the Stockholm Environment Institute this month put the figure at 71%.

The move has led environmental groups to call on the EU to permanently ban CERs from coal power projects from the EU ETS, rather than tweak the methodology during the suspension, at next week's Durban summit.

Mr Anja Kollmuss from CDM Watch in a statement said that "We welcome the suspension of the methodology. However, it is not feasible to revise the methodology to address the flaws and guarantee real emissions reductions."

The WWF, Greenpeace and Friends of the Earth sent open letters to European environment ministers calling for the ban on Thursday, arguing that the current Eurozone crisis highlighted the need for Europe to spend the money that goes to coal power projects elsewhere to tackle climate change effectively.

A spokeswoman for the European Commission said it was aware of the debate, but that there are no plans for further restrictions at this stage.

But the UN's move to suspend coal CDM projects may help to curb the supply of CERs coming to the market, as the UN's CER issuance has already topped that of 2010. As a result, the market is currently long, which, combined with a bearish macro outlook, has resulted in a price crash for CERs this year.

(Sourced from www.icis.com)