EU CO2 offset limits from 2013 harm investment-Deutsche

* EU should scrap plans to limit carbon offsets-Deutsche

* Plans will dent clean energy investment, raise costs

LONDON, June 22 (Reuters) - European Commission plans to restrict certain U.N.-backed carbon offsets from 2013 could slow the pace and scale of new investments and increase costs under the EU's Emissions Trading Scheme (EU ETS), Deutsche Bank said.

In May, the European Commission said moving from a 20 percent to a 30 percent emissions reduction target by 2020 from 1990 levels would be cheaper to achieve than previously thought. [ID:nLDE64O264]

It also said it could consider restricting the use of certain types of offsets called certified emissions reductions (CERs) from Jan 1., 2013 in the EU ETS.

Under the U.N.'s Clean Development Mechanism, CERs are traded to fund clean energy projects in developing countries.

In a note on Tuesday, Deutsche Bank urged the Commission to scrap plans to limit offsets such as from industrial gas or energy-intensive projects.

"It would undermine the case for new investments in sectoral mechanisms and make them less likely to achieve scale in a reasonable timeframe," said analyst Mark C. Lewis.

"It would also push up the absolute and relative cost of compliance and make linking with other countries' carbon markets more difficult."

The limits would lead to 18 million tonnes per year of carbon abatement under a 20 percent cut and 85 million tonnes under the higher target.

In a worst case scenario, the restrictions would lead to 50 million tonnes per year of carbon abatment under a 20 percent cut and 147 million tonnes under a 30 percent cut.

Lewis said in May that an EU move to a 30 percent reduction target could push up the price of carbon permits to as high as 50 euros ($67.09) a tonne and that 80 million tonnes a year of abatement would be needed. [ID:nLDE64Q0SV]

The Commission said last month EU firms would have a surplus of 2.4 billion carbon permits under the EU ETS (EUAs) from 2008 to 2020 if it raised its reduction target.

Deutsche Bank said EU firms will emit 183 million tonnes of carbon dioxide more per year than the Commission has predicted. (Reporting by Nina Chestney; editing by James Jukwey)