Dec. 7 (Bloomberg) -- Investors are rushing to sell some United Nations emission credits before they become almost worthless in 2013, pushing prices to a record low.

With Europe set to stop recognizing credits for projects that destroy industrial gases known as hydrofluorocarbon-23 and nitrous oxide in little more than a year, holders are "racing to beat" the ban, according to Bloomberg New Energy Finance. A UN program that encourages reductions in the industrial gases awarded almost twice as many credits for them this year as in 2010, according to data compiled by Bloomberg. They account for about two-thirds of all so-called Certified Emission Reductions supplied by the UN-managed program.

Enel SpA, Honeywell International Inc. and Solvay SA's Rhodia unit are among investors in projects from Mexico to China and India that will lose their biggest market for emission credits as the European Union, home of the world's largest cap- and-trade system, phases out so-called offsets it has linked to "windfall" profits that undermine the market's integrity. Emissions-trading systems in Australia and New Zealand also will forbid so-called industrial-gas credits, compounding a glut that sent prices for the credits to an all-time low last month.

"It'll be a junk market" for the banned credits, Geoff Sinclair, London-based head of carbon trading at Standard Bank Plc, said in an interview in Singapore. After 2013, nobody will buy industrial-gas credits and countries that have yet to rule them out, such as New Zealand, are preparing to do so, he said.

Record Low

Prices for Certified Emission Reductions, known as CERs, for December delivery settled today at 4.90 euros ($6.57) a metric ton on the ICE Futures Europe exchange, the lowest closing price since they began trading in 2008. The credits have lost 80 percent from their peak of 25 euros in July 2008.

The discount of EU-banned credits for 2012 over those accepted in 2013, traded as a separate contract, widened 12 percent to 48 cents.

HFC-23 and N2O projects have racked up about 500 million CERs valued at more than 2.5 billion euros at today's prices. Developers received 144 million CERs in 2011, including those that will still be accepted in the EU system. That compares with 78 million in 2010 and 82.8 million in 2009, according to UN data. The projects stand to earn at least 150 million credits by the end of 2012, according to Bloomberg estimates.

Supply in 2011 may surpass 300 million tons this year and next under the UN-run emissions credit market, from 132 million last year, said Trevor Sikorski, a London-based analyst at Barclays Capital. It will keep rising in 2012, he said.

"Next year is another difficult one for the carbon market" Sikorski said in an interview in Singapore. "It looks a heavily supplied year."

Last Resort

The UN market, known as the Clean Development Mechanism, was set up by the 1997 Kyoto Protocol as a way of letting richer nations offset their emissions at home by paying for cleaner technology in emerging markets. Investors in these projects get CERs that they can sell to companies and governments with pollution caps. While the EU is the largest market for UN offsets, Australia will allow emitters to use CERs for as much as half of their emissions starting in 2015.

Envoys from 190 nations are meeting this week in Durban, South Africa, to discuss climate rules. A failure to get a second compliance period to follow the Kyoto Protocol would be a "new low" for the UN program, Sikorski said.

Industrial-gas credits may eventually find buyers in Japan, which is planning to set up bilateral emissions trading with other countries. Still, the ban on these credits may be extended to the governments of 38 nations with emissions targets under the Kyoto Protocol, the European Commission said in a Nov. 14 statement. That would remove the only remaining markets for industrial-gas credits after 2013.