The Ministry of Environment, Energy, and Climate has decided to buy emission allowances from other nations in order to meet its commitments to the Kyoto Protocol, an international environmental treaty to reduce greenhouse gas emissions.
It has been clear for some time that Iceland has fallen significantly behind meeting it climate goals, far exceeding its original allotment of carbon credits in the quota system established by the Kyoto Protocol. By the time the figures are settled in the middle of this year, Iceland will need to buy emission credits for the equivalent of 3.4 million tonnes of carbon dioxide, according to the Environment Agency of Iceland.
Read More: Energy Credit Market Means Only 13% of Icelandic Energy is Renewable
Notably, Iceland has up until now refrained from buying emission allowances. In a recent memo by Minister Guðlaugur Þór Þórðarson, however, buying emission credits will become key to Iceland meeting its environmental commitments.
According the results of a working group commissioned in 2020, Iceland could best make use of AAU and CER credits. AAU credits, or Assigned Amount Units, correspond to the original emission allowance given to nations under the Kyoto Protocol. Nations with unused emission credits can sell these on the market to other nations exceeding their allotment. CER credits, or Certified Emission Reduction, are given to nations engaged in climate-friendly development projects in under-developed nations.
Vísir reports that no decision has yet been taken on which credit is to purchased by government.
Current estimates indicate that some 800 million ISK [$5.7 million; €5.3 million] will be needed to purchased the required credits. The decision to buy credits is still under consideration, so the funds are not currently allocated. Such an expenditure would require a budget authorisation to finalise.
Critics Say Emission Allowance Leads to No Change
Some critics have vocally opposed Iceland’s intention to “greenwash” through accounting. One particularly outspoken critics has been Pirate representative Andrés Ingi Jónsson.
In a statement to Vísir, Andrés Ingi said: “Iceland will get away with not having implemented real, systematic changes for environmental issues. It will instead be able to resort to accounting tricks and paying fines, actions which have no actual affect on improving the climate.”
According to Andrés Ingi, flaws in the Kyoto system have led to an oversupply of emission credits, meaning that Iceland is allowed to buy these credits at a significant discount. At current market prices, Iceland will be able to buy off each tonne of carbon dioxide produced with around 235 ISK [1.$67; €1.57].