Germany has come out in opposition to European Commission proposals to limit  use of Kyoto offset credits in Phase III of the EU ETS starting in 2013.

A German environment ministry official saying ongoing European recognition of the UN CDM and its CER credits could be a valuable carrot to lure China into new global climate agreement to extend the Kyoto Protocol, negotiations over which are currently making slow progress.

The Commission’s proposal not to allow any extra UN carbon credits to be used in the EU trading scheme unless there is a comprehensive global agreement amounts to punishment for developing countries like China and India by cutting demand for CERs produced from sustainable energy projects in their countries.

But carrots are better than sticks, Franzjosef Schafhausen, deputy director general at the German environment ministry, told Bloomberg.

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