Statkraft signs CDM deal in South Africa

21.04.2005 08:00 | pressrelease

On 21st April 2005 Statkraft and Corobrik signed a long-term agreement whereby Statkraft will acquire all CERs (Certified Emission Reductions) that will be generated from a fuel switch project at Corobrik’s Lawley brick factory in the province of Gauteng, South Africa. The fuel switch from coal to gas is expected to lead to a reduction of 400,000 tons of greenhouse gas emissions over a period of 10 year. Parties anticipate that this CDM (Clean Development Mechanism) project will be registered before the end of this year.

The Clean Development Mechanism (CDM) is a measure under the Kyoto Protocol to mitigate greenhouse gas emissions. An emission reduction initiative, registered as a CDM-project, will then have their emission reductions certified. Upon certification, the CERs become tradable commodities in the carbon market and may be used – in line with EU Allowances - to comply with emission obligations. To qualify for CDM status, a project must meet stringent environmental and social requirements and be located in a developing country that has ratified the Kyoto Protocol.

Statkraft takes an active role in carbon emission trading - through its Amsterdam office - although it does not have any CO2 compliance obligations itself. CERs from CDM projects are an obvious extension of its carbon portfolio. These activities are important for Statkraft as they allow us to capture early entrant opportunities, while at the same time developing our insights into how the carbon market will affect electricity prices on the Continent and in the Nordic region. CDM projects are normally conducted through participation in funds established by entities such as the World Bank, or handled directly by Governments. The Corobrik transaction is the first project-based CDM deal done by Statkraft and probably one of very few done directly by a single Scandinavian company.