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EBRD carbon credits project becomes eligible for emission reduction units under UN framework
Bulgarian hydro power plant will cut CO2 emissions
An EBRD-financed renewable energy project in Bulgaria will be able to sell carbon credits to the Netherlands following approval by the United Nations.
The Vez Svoghe project envisages the establishment of nine small-scale hydro power plants along the river Iskar, about 40 km north of Sofia. The investment provides a renewable source of energy with no CO2 emissions, replacing electricity generated from fossil fuels and saving 371 ktonnes of CO2 in the process up to and including 2012. The first hydro power plant has been commissioned and is now fully operational.
The Vez Svoghe project has been recognised to be fully compliant with applicable United Nations Framework Convention on Climate Change (UNFCCC) procedures after having received government approvals from both the Netherlands and Bulgaria.
The EBRD will purchase the carbon credits on behalf of the Netherlands through the Bank-administered Netherlands Emissions Reduction Co-operation Fund. A first batch of credits is expected for delivery at the beginning of next year, which will be used by the Netherlands for compliance with its Kyoto Protocol emission reduction commitment. Under the Kyoto Protocol, the Netherlands has agreed to cut its 1990 greenhouse gas (GHG) emissions by 6%.
The hydro power plants are being built, owned and operated by Vez Svoghe, a company 90 percent owned by a subsidiary of Petrolvilla & Bortolotti, an Italian provider of energy and energy-related services, and 10 percent by the municipality of Svoge. Sergio Bortolotti, President of the Petrolvilla Group, confirmed the importance of this milestone, which puts Vez Svoghe well on track to deliver carbon credits in line with expectations.
Over a decade ago, most countries joined an international treaty - the United Nations Framework Convention on Climate Change (UNFCCC) - to begin to consider what can be done to reduce global warming and to cope with whatever temperature increases are inevitable. Subsequently, a number of nations approved an addition to the treaty: the Kyoto Protocol, which has more powerful (and legally binding) measures.
The 1997 Kyoto Protocol contains so-called flexibility mechanisms that allow parties to the Protocol to implement projects abroad. The Netherlands Carbon Fund is fully oriented towards the Joint Implementation (JI) mechanism that allows for cooperation on mitigation activity among developed countries and transition economies.
Carbon credits are created when a project reduces or avoids the emission of GHGs when compared to what would have been emitted without its implementation. The Kyoto Protocol has created a market in which companies and governments that reduce GHGs can either use such reductions for compliance or sell the ensuing carbon credits.
Terry McCallion, EBRD Director for Energy Efficiency & Climate Change, said that this a major achievement for Bulgaria, the EBRD and the Netherlands as it is the first JI registration for all parties involved. The proceeds from the sale of the carbon credits enhance the performance of the project, assist Bulgaria in diversifying its energy sources and support the Netherlands in meeting its Kyoto targets, Terry McCallion said.
The GHG emission reductions will be verified by an independent entity to ensure that the emission reductions claimed have actually been realised. The Government of Bulgaria will then transfer these credits to the account of the Netherlands via the UNFCCC.
The Netherlands Carbon Fund has signed five carbon credit projects in Bulgaria, which are expected to generate 2.6 m carbon credits. These projects include among others the switch to biomass energy at the Paper Factory Stambolijski, a portfolio of energy efficiency and renewable energy projects in co-operation with Bulgarian bank UBB and a methane abatement and electricity/heat generation project in the Kubratova wastewater treatment plant.
As the Dutch Fund is now fully committed new carbon projects in Bulgaria will be developed under the Multilateral Carbon Credit Fund (“MCCF”), a joint EBRD-EIB initiative which facilitates the purchase of carbon credits from projects across the high energy intensity countries of central and eastern Europe and the Commonwealth of Independent States. Typical projects will include industrial energy efficiency, fuel-switch, renewable energy (for example, biomass, wind and mini-hydro) and landfill gas extraction and utilisation projects.
The EBRD is one of the largest investors in Bulgaria with more than €1.5 billion committed to projects across the country. Working with its many partners, the Bank has mobilised more than €5.9 billion for projects in Bulgaria.
* The Protocol requires 36 industrialised countries and countries undergoing the process of transition to a market economy to reduce GHGs by at least 5.2 percent below 1990 levels between 2008 and 2012.
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