BARCELONA (Reuters) - Ukraine is in advanced talks to sell some $3.5 billion more sovereign carbon emission rights under the Kyoto Protocol to three companies, the government said on its website this week.
Ukraine's Cabinet of Ministers has asked the National Agency for Ecology Investments to sell at least 150 million more rights, called Assigned Amount Units (AAUs), to the UK arm of Japanese bank Nomura, Swiss-based Dighton Carbon SA and New Zealand-based Tawhaki International LP.
The deals represent the biggest such transactions to date.
Laurent Segalen, managing director of commodities and environment at Nomura, said he represented a consortium of Japanese businesses looking to buy at least 100 million AAUs for between 5-10 euros ($7-$14) per metric ton of carbon dioxide, with a view to buying more if the initial deal was successful.
"We're in very, very advanced negotiations ... and expect to sign a mandate with Ukraine soon and a formal agreement by the end of the year," he told Reuters, adding that he was unfamiliar with the other two deals or the private buyers involved.
Ukraine said it also aimed to sell 100 million to Dighton Carbon and 50 million to Tawhaki, but no further details on the deals or the private companies were available. Online records show Dighton set up its carbon trading business within the past 12 months.
Through the most opaque of Kyoto's emissions trading schemes, nations comfortably below their greenhouse gas targets can sell excess rights to other countries that are emitting above their emissions targets.
Critics have called AAUs "hot air," arguing that most were generated through restructuring in eastern Europe in the 1990s, when polluting industries in ex-communist countries were shutting anyway, rather than by new investment in clean energy.
Because of this, many buyers insist that AAU deals should be "greened," meaning their proceeds are transparently earmarked for investment in clean energy or energy efficiency, under so-called Green Investment Schemes (GIS).
"Our deal is extremely green," Nomura's Segalen added.
Ukraine, which has around 1 billion AAUs to sell through 2012, signed a deal in March to send 40 million tons east, for around 10 euros each.
Laurent said Nomura was in talks with other countries but that Ukraine was "by far the most efficient."
This deals represent the largest to date involving private buyers.
On May 5, Slovak Prime Minister Robert Fico said he would fire his environment minister for mishandling a 10 million AAU sale to a private company.
The dismissal of Jan Chrbet came after fierce criticism of the 60 million euro contract with Washington-based Interblue Group, with the opposition Christian Democrat SDKU party saying Slovakia lost some 40 million euros on the deal.
Reporting by Michael Szabo; Editing by Anthony Barker