New Zealand is looking to exclude the use of U.N. offsets from industrial gas projects in its emissions trading scheme from as soon as 2012, as these offsets threaten to distort the market, the government said on Friday.

Climate change minister Nick Smith said he wanted to maintain the integrity of the emissions trading scheme, which is why the government is considering banning offsets from the potent greenhouse gas hydrofluorocarbon-23 (HFC-23) and nitrous oxide credits.

“The high value for destroying these gases creates perverse incentives in developing countries to manufacture more of them bringing into question the environmental gains,” Smith said in a statement.

The New Zealand scheme allows polluters and traders to import U.N. offsets called Certified Emission Reductions from clean energy projects in poorer nations. The CERs can help polluters meet their emissions reduction obligations.

But about two-thirds of the nearly 745 million CERs issued to date have come from projects that destroy HFC-23 and nitrous oxide, leading to criticism that the owners of these projects, mainly in China and India, are enjoying massive windfall profits.