A UN panel has suspended Romania's right to trade its surplus carbon emissions after it breached rules on emissions reporting, Bucharest's environment ministry said on 28 August.
The UNFCCC compliance committee, which had been meeting in Bonn for a week, found "irregularities" in Romania's 2010 greenhouse gas emissions data, and ruled that its national emissions inventory had been inadequately kept.
"Maybe tough measures will lead to more transparent information," Natalia Yakymenko, an analyst with Point Carbon, told EurActiv from Kiev.
"It's hard to evaluate whether Romania's projects have really generated anything."
At issue is the lightly regulated 'Track 1' procedure for trading Assigned Amount Units (AAUs), a carbon credit, under the Kyoto Protocol's Joint Implementation (JI) Mechanism.
'Track 2' agreements are supervised by the Joint Implementation Supervisory Committee (JISC). But 'Track 1' deals are bilateral agreements regulated only by former Soviet bloc countries, and developed nations that want to offset their carbon emissions in them.
Third-party verification of projects is hard to establish when countries such as Romania "do not publish any information anywhere," Yakymenko said.
Because the UNFCCC ruled that Romania had not met the six eligibility criteria for AAU trading under Track 1, it will now only be able to trade under Track 2.
Asked his opinion of the transparency of Romania's JI procedures, Benoit Leguet, a member of the JISC, told EurActiv: "I would be a liar if I told you that I was fully satisfied."
"But the real problem is that the whole [Track 1] process is not transparent," he added.
In some countries, up to 75% of carbon credits - such as the JI's Emissions Reduction Units (ERUs) - are generated by Track 1 projects.
The JISC proposed merging the two tracks for project approval into a single system at last year's UN climate conference in Cancún, Leguet noted. But consensus could not be agreed.
Last December, Bucharest had hoped to earn €1.5 billion by selling 300 million carbon credits to two Japanese companies, according to Romanian Environment Minister Laszlo Borbely.
But Romania has now been suspended from Kyoto's carbon market – with immediate effect – until it can put in place an adequate system for monitoring emissions.
Prime Minister Emil Boc said he would fire the head of the country's environmental protection agency. He also called for measures to allow carbon trade to be restarted within six months.
"Romania will prepare a revised version of the national inventory and send it to the UNFCCC and based on its evaluation will then ask to reinstall eligibility as soon as possible," the environment ministry said in a statement.
On 25 August, another Eastern European country, Ukraine, also had its carbon credit trading rights suspended after the UNFCCC found that it had under-reported its greenhouse gas emissions.
Kiev had reportedly failed to act on earlier warnings that it was in non-compliance.
Oleksii Khabatuik, the head of Ukraine's emissions inventory, said that the country would appeal the decision.