The mystery of what happened to the Hungarian CERs remains unresolved. But perhaps the lesson of this story is to remember that CERs, EUAs CDMs etc are all government created entities, and as such they can in theory come and go as they please, or as the governments please. The carbon market is a state-initiated market, and not a natural market, such as iron ore or steel.
SBB 16 April Martin Lonergan, CEO of London-based steel and carbon credit trader Total Global Steel has “no knowledge” of his company having bought used Certified Emission Reductions (CERs) from the Hungarian government, he tells Steel Business Briefing.
CERs are produced under the UN’s Clean Development Mechanism and have a value of one tonne of CO2 each. Under the European Emissions Trading System (ETS) CERs can be used to account for a percentage of a company’s CO2 emissions. However, they become invalid once they have been used.
The Hungarian government sold approximately 800,000 used CERs, but then accused an unidentified company of breaking an agreement not to resell the CERs in Europe. At the same time, it asked Total Global Steel to provide trading information to help track down the invalid credits.
However, the Hungarian government stopped short of directly accusing Total Global Steel and one market analyst suggested to SBB that Hungary may simply be trying to deflect some of the bad press it has received. Lonergan previously said that he had “no idea why we’ve been identified as a trader of these credits”.