EU says its Kyoto support depends on Russia, Japan

Jos Delbeke, head of the European Commission's climate unit, questioned the value of continuing with the United Nations' Kyoto Protocol in its current form after its present commitment period expires in 2012, and said the 27-country EU was considering all its options.

His comments contrasted with Britain's energy and climate minister Ed Miliband, who said on Wednesday that he supported a continued Kyoto Protocol under a wider deal involving all countries, to break deadlock in U.N. climate talks.

Delbeke's comments reinforced an EU position preferring to replace Kyoto with a new treaty, to engage the United States which never ratified the pact.

Kyoto binds the carbon emissions of 37 industrialized countries including the EU, Japan, Russia, Canada, Australia, Norway and Switzerland, and developing countries want those countries to agree to a tougher, second round of Kyoto carbon cuts after 2012.

"We hear worrying signs Russia and Japan would not join an extension of Kyoto," Delbeke told Reuters in an interview. "Then there are the issues with the U.S."

"We could not accept a situation where the EU, Switzerland and Norway were the only developed countries signed up to an extension of Kyoto," he said. "That's why the EU ministers proposed one, single legal framework," he added, referring to a new treaty which bound the carbon emissions of all developed countries.

A U.N. climate summit in Copenhagen in December failed to agree binding climate action. One of the main sticking points was whether to continue with Kyoto. Countries will now try to agree a climate deal in Mexico in December.

"We are looking at all options," Delbeke said, when asked if the EU was backing away from Kyoto.

LOOPHOLE

One of the EU's main criticisms of Kyoto is the vast amount of spare carbon credits, known as assigned amount units (AAUs), which became available as industry shrank after the collapse of the Soviet Union.

Those credits can be sold to countries that want to avoid the cost of cutting their own domestic emissions.

Russia, for example, is on track to undercut its Kyoto target by about 1.4 billion tons of greenhouse gases annually -- equivalent to the entire emissions of Japan, the world's fifth biggest carbon emitter -- U.N. data show.

"With such huge amounts of AAUs, we may see developed countries' emissions reductions completely nullified by the use of banked AAUs," said Delbeke. "But we have no blueprint yet of how we'll deal with this."

The EU is also looking at whether it will continue accepting offsets from the U.N.'s Clean Development Mechanism (CDM) into its own Emissions Trading Scheme (ETS) in the future.

The CDM mechanism has been criticized for not delivering the carbon emissions reductions it was supposed to.

Delbeke said reform was insufficient on a global level.

"There should over time be some further qualitative restrictions on CDM beyond those already in place on large hydro (projects)."

Those CDM credits, known as CERs, have caused problems for the EU's carbon trading scheme in recent weeks after "used" Hungarian credits found their way back into the EU system.

Hungary used a loophole to sell the used credits, which has now been closed. "We advised Hungary strongly not to do this," said Delbeke. "It turned out to be a little disaster for them, and also for the CDM."

The EU is working on an overhaul of the ETS for its third phase from 2013, and the European Commission is pushing for a common auctioning platform, a move opposed by Britain and Germany.

"It is not manageable or rational to have too many parallel national platforms," said Delbeke.

"European companies do not want to be confronted with different procedures to be followed, different forms to be filled, different languages to be dealt with. They want a fully harmonized approach -- not more red tape."

He said a possible opt-out was likely to be discussed where "if member states want to come forward with their own platforms, they could only do so with strict conditions, similar to the conditions of the common platform, as identical as can be."

(Reporting by Pete Harrison; editing by Gerard Wynn)