Green certificate trade combines CDM and EU ETS

15 October 2004 - CO2e.com (a subsidiary of Cantor Fitzgerald, L.P.), the global broker of greenhouse gas (GHG) credits, announced this week that it had facilitated the first publicised legally binding purchase of Clean Development Mechanism (CDM) Certified Emission Reductions (CERs) by a European company.

The CERs have been bought from Brazil for use within the European Union Emission Trading Scheme (EU ETS). CO2e.com worked closely with Brazilian firm Ecoinvest, a world leader in climate change advisory services, to facilitate the transaction. Ecoinvest is developing the documentation necessary to attain the required certification for the project under the UN approval process.

The deal, transacted under the CDM, a market mechanism of the Kyoto Protocol designed to encourage commercial investment in sustainable projects that reduce greenhouse gas emissions in developing countries, involves collaboration between three Sugarcane waste-fired electricity generation facilities in Brazil: Central Energética Rio Pardo LTDA (CERPA), Termoeletrica Santa Adelia LTDA and Usina Barra Grande de Lençóis S.A. A seven-figure volume of CERs from three projects was bundled together for the purpose of negotiating one transaction and was purchased by a leading European company. The CERs will be generated from renewable energy, using sugarcane waste residue as a fuel for electricity cogeneration. This is the first public transaction of CERs by a company in the European Union.

This deal is one of a number that CO2e.com has brokered under the CDM, most recently a transaction in which Agrosuper (a large Chilean pork producer) sold CERs to Canadian and Japanese electricity companies (TransAlta and TEPCO respectively). The CER transactions build on CO2e.com's years of experience in global greenhouse gas emissions offset markets, where it has brokered tens of millions of emissions offsets.

"CO2e.com is dedicated to delivering market-based solutions to help companies manage climate change risk and maximize opportunities," said Corinne Boone, Managing Director, Americas at CO2e.com. "This transaction clearly demonstrates the opportunities that can be achieved via the CDM by bundling together smaller projects to offer a larger volume of CERs to buyers. This in turn enables smaller CDM projects to make significant contributions to reducing GHG emissions and at the same time receive economic benefits. This transaction continues to show the essential part that emissions trading has to play in the world's ability to reduce emissions and benefit both business and the environment."

"CO2e.com is delighted to have brokered another ground-breaking transaction," said Steve Drummond, Managing Director of CO2e.com. "CERs will be an important compliance tool in the European Emissions Trading Scheme, and pioneering deals like this pave the way for the larger volumes that will be needed to enable European companies to manage their compliance risk and grow the global market."

"This trade demonstrates how large multi-national corporations and first class local companies in countries such as Brazil stand to profit from emissions trading," said Carlos de Mathias Martins Jr., Director of Ecoinvest, advisor to the sugar mills in Brazil. "It also illustrates the potential for financing biomass to energy projects in rural areas of developing nations".



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