Rhodia S.Korea Plant Leads World in Carbon Credits
Date: 24-Sep-07
Country: UK
Author: Michael Szabo
The adipic acid plant in Onsan, South Korea has received
nearly 10 million carbon credits, or certified emissions
reductions (CERs), from the UN under the Kyoto Protocol for
reductions made in the past year. All of these have been resold
by chemical company Rhodia at a hefty markup.
According a United Nations Website (http://cdm.unfccc.int),
the Onsan plant's closest rival project, a hydrofluorocarbon
(HFC) plant in India, has received just 8.7 million CERs to date
for reductions between 2004 and 2007.
CERs, each equal to the reduction of one tonne of carbon
dioxide equivalent (CO2e), are issued by the United Nations
Framework Convention for Climate Change (UNFCCC) and are traded
worldwide.
"I can confirm that we've sold all CERs expected to be
received in the second half of 2007 for an average price of
14.40 euros," Rita Hillig, Head of Media Relations for Rhodia,
said.
She added that the credits received in the first half were
sold for slightly more, at 14.50 euros.
"I can also confirm that we've sold forward five million
2008 CERs at an average price of 15 euros."
Philippe Rosier, President of Rhodia Energy Services, told
Reuters in October 2006 these credits cost just 60 euro cents
each.
With a total cost of around around nine million euros, the
revenues from the sale of the 15 million CERs approaches 220
million euros (US$310 million).
Under the clean development mechanism (CDM), a scheme
introduced by the UNFCCC, companies from rich nations can invest
in emissions-reducing projects in developing countries and
receive CERs which can be used to offset their own emissions
under Kyoto.
According to the Reuters CER Index, credits for delivery in
December 2008 currently trade at around 16.70 euros each.
THREE PLANTS
Rhodia owns two CDM-registered projects, the other in
Brazil, both producing chemicals used in making nylon.
The plants emit nitrous oxide (N2O), a heat-trapping gas
blamed for global warming that is 310 times more potent than
carbon dioxide (CO2).
According to the UNFCCC's website, the South Korean plant
was expected to generate reductions of 9.2 million tonnes of
CO2e annually, though the current rate of CERs issued suggests
the figure will be closer to 10.6 million.
"We expect to sell between 11 million and 13 million CERs
generated annually by both CDM plants (from 2007 to 2012),"
Hillig told Reuters.
Rhodia developed the emissions abatement technology and
first implemented it at a plant in Chalampe in France. There, it
reduced emissions by 20 million tonnes of CO2e annually.
Between 1990 and 2010, Rhodia said it will have reduced its
greenhouse gas emissions by 56 percent, with 57 percent of that
coming from the Chalampe plant, Hillig said.
"We have received no credits or payback from N2O reductions
made at that plant," she added.
Rhodia briefly faced financial difficulties three years ago,
when bondholders demanded debt repayment.
Since then, its fortunes have improved, as its Energy
Services division reported net revenues from the sale of CERs in
the first half of 2007 amounting to 84 million euros, and an
operating profit of 77 million euros, or 31 percent of the
company's overall operating profit for the period.
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