Russia to set 10 euro carbon floor price: Sberbank

LONDON (Reuters) - Russia has set a minimum price of 10 euros per tonne ($12.84) for Kyoto Protocol-backed carbon offsets generated in the country, according to a letter from Sberbank seen by Point Carbon News.

According to the letter, sent to firms that had successfully submitted clean energy project proposals to the bank under a tender for 30 million carbon offsets, any credit sales from the approved projects will only be permitted if above this limit.

Under Kyoto's Joint Implementation, companies can invest in carbon-cutting projects in Kyoto signatory countries, and in return receive offsets called Emissions Reduction Units (ERUs), which can be used toward emissions targets or sold for profit.

"To be guided by the fair conditions of price determination for Russian ERUs ... shall be supplemented with ... minimum prices equal to at least 10 euros per carbon unit," the translated document said.

Late last month, Sberbank, which administers Russia's JI programme on behalf of the government, gave the green light to 15 projects submitted to the tender it launched earlier in the year.

"Setting up a price floor for offsets is an effective way to protect project developers from volatile market prices ... (but) ERU pricing remains relatively unstable, and the risks associated may be higher than developers wish for," said market analysts IDEAcarbon.

ERUs, traded mainly on the over-the-counter broker market, were valued this week at around 13 euros per tonne of carbon dioxide.

Sberbank said project owners must now have contracts approved before they can receive the ERUs.

"Non-approval of the contracts will make it impossible for the operator of carbon units (Sberbank) to transfer the project emission units to a third person (contracting party)," the letter said.

The bank also said approval would be given on condition that firms sell the ERUs on a forward basis and not in the spot market.

China, another major supplier of Kyoto carbon offsets, has set a floor price of 8 euros for its domestically generated tonnes.

Russia, potentially the largest seller of ERUs, has changed the rules for approving projects at least twice, frustrating project developers.

Investors have been waiting for Russia to make progress on its JI scheme, which could eventually unlock around 2.7 billion euros in carbon finance, based on market rates, for over 100 Russian projects held up to date by bureaucratic red tape.

(Reporting by Michael Szabo; Editing by Jane Baird)