February 17, 2010 / 1:44 PM / 8 years ago

Russia's Sberbank takes bids for 30 mln CO2 credits

* Kyoto credits worth over 350 million euros

* Russian majors expected to partake

* Tender limited to specific types of clean energy projects

by Dmitry Sergeyev and Michael Szabo

MOSCOW/LONDON, Feb 17 (Reuters) - Sberbank SBER03.MM, Russia’s biggest lender, started soliciting bids from clean energy project developers this week for 30 million Kyoto Protocol carbon credits, the bank said on its website.

The state-controlled bank was last November appointed as the operator for a scheme to trade carbon emission rights under Kyoto, and the tender proposes over 350 million euros ($480 million) worth of offset credits, based on current market rates.

Under Joint Implementation (JI), clean energy projects in nations that have signed up to Kyoto can receive offsets called Emissions Reduction Units (ERUs). Those offsets can be sold to other governments trying to meet their Kyoto targets or to firms participating in the European Union Emissions Trading Scheme.

Sberbank wants to hear proposals until March 12 from project developers seeking to cut carbon dioxide emissions in return for ERUs. It said it will then decide on proposals within 45 days.

Russian majors, including gas monopoly Gazprom (GAZP.MM), the country’s largest oil producer Rosneft (ROSN.MM) and the world’s largest aluminium producer Rusal (0486.HK), may take a part in the tender, Kommersant business daily reported earlier.


Russia, the world’s number three greenhouse gas emitter behind China and the United States, saw its carbon emissions plummet after the fall of communism in the early 1990s.

Unlike other eastern European nations like Ukraine and Czech Republic, Russia has been slow to try to monetise its CO2 cuts.

As one positive outcome of its industry’s collapse, Russia has upwards of 5 billion sovereign emissions rights, or Assigned Amount Units (AAUs), to sell before Kyoto’s 2012 expiry, according to investment bank Barclays Capital.

Other AAU-rich countries have been swift to hock their government-level emissions rights to rich nations unable to meet their own Kyoto targets through domestic abatement.

Countries like Japan and Spain, once scouring the market for AAUs, have now bought most of what they will need by 2013.

    As a result, Russia may now look to convert its unwanted glut of AAUs into ERUs, as demand for Kyoto’s project-based offsets in the EU’s Emissions Trading Scheme is expected be around 1.4 billion tonnes by 2020.

    AAUs can be converted into ERUs, but the United Nations requires governments to ensure emissions reducing projects are behind the conversion.

    Russia has been suspended from trading Kyoto credits over 3 years’ worth of unpaid UN fees, amounting to some 175,000 euros.

    Once these fees are paid, Russia then needs to address the 110 track 2 JI projects awaiting approval, capable of cutting carbon emissions by around 235 million tonnes by 2012.

    JI projects can only receive ERUs once they receive a letter of approval from the host government. After that, under JI’s track 1 those governments can unilaterally approve projects and issue credits, while under track 2 projects must go to the UN’s JI Supervisory Committee. “It’s not clear if Russia’s telling the track 2 projects to apply to Sberbank or if this is a tender for new track 1 projects,” BarCap’s director of carbon research Trevor Sikorski told Reuters.

    “30 million credits is not that much against 235 million, but I’m not sure exactly what they’re trying to do with this as developers have just over 20 days to submit an application.”

    More than half of Russia’s forecast ERUs come from projects that patch up leaky gas pipelines and trap industrial gases or coal mine methane emissions, UN data showed.

    Sberbank said it will consider energy efficiency, forestry, solvent usage, waste, and industrial projects for its credit tender, and investors will receive ERUs once the project is registered and the emissions reductions have been verified.

    The current JI project pipeline is expected to yield around 375 million ERUs from 14 countries by the end of 2012. (Reporting by Dmitry Sergeyev in Moscow and Michael Szabo in London; editing by James Jukwey)

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