14 May 2008
More carbon credit finance for Bulgarian renewable energy projects
The EBRD, through the Netherlands Emissions Reduction Co-operation Fund, is purchasing more carbon credits from a renewable energy wastewater treatment projects in Bulgaria that will help significantly reduce Greenhouse Gas (GHG) emissions.
This project entails the production of electricity and heat at Sofiyska voda’s Kubratovo wastewater treatment plant, 20 km outside of Sofia using methane that would have otherwise been emitted into the atmosphere. Methane produced at the plant will be captured and used in a combined heat and power plant for electricity and heat production. It is expected that about 1.1 million tonnes of CO2 equivalent will be reduced by 2012, which is the equivalent of the amount released annually by over 180,000 Dutch households.
This is the EBRD’s second carbon credit transaction for the account of the Netherlands signed this week, following the signing of a hydro power project along the river Iskar, which aims to cut 336,462 tonnes of CO2 by 2012.
The carbon credit sale is in accordance with the 1997 Kyoto Protocol, an international treaty to reduce GHGs that came into force on 16 February 2005*. The Kyoto Protocol covers six GHGs, including carbon dioxide and methane, which contribute the most to worldwide GHG emissions. Methane has a global warming potential of 21 times that of carbon dioxide.
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 GHG levels can either use such reductions for compliance or sell the ensuing carbon credits.
Jacquelin Ligot, EBRD Director for Energy Efficiency & Climate Change, said that by purchasing carbon credits from this project, the EBRD-managed Netherlands Emissions Reduction Co-operation Fund is helping the Bulgarian plant maximise generation of electricity from renewable sources, which helps the country diversify its fuel mix. The sale of carbon credits provides an additional incentive that renders such projects viable, Mr Ligot 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. The Netherlands has agreed to cut its 1990 GHG emissions by 6%, which translates into a reduction target of 200 million tonnes by 2012.
To date, the EBRD, on behalf of the Dutch Fund, has signed four carbon credit projects in Bulgaria, which are expected to generate 2 million carbon credits. These projects include the switch to biomass energy at the Paper Factory Stambolijski, an energy efficiency investment programme at Svilocell, a portfolio of energy efficiency and renewable energy projects with bank UBB and Vez Svoghe, a hydro power project signed this week.
As the Dutch Fund is nearly fully invested 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 the largest investor in Bulgaria with more than EUR 1.3 billion committed to projects across the country. Working with its many partners, the Bank has mobilised more than EUR 5.4 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 percent below 1990 levels between 2008 and 2012.