August 17, 2011 / 4:45 PM / 8 years ago

Sberbank sees weak demand at carbon tender

* The tender amount is 70 mln carbon credits

* Sberbank may have one more tender by end-2012

* Bank says could eliminate price floor on ERUs

* CERs prices rise over 5 pct to nearly 9 eur/t

By Oksana Kobzeva

MOSCOW, Aug 17 (Reuters) - Russia’s Sberbank may face weak demand for its third carbon credit tender but it is ready to proceed with another by the end of next year if there is sufficient market demand, the bank’s carbon unit head said.

State-owned Sberbank, which helps administer the country’s Joint Implementation (JI) offset scheme and sets minimum prices for the sale of carbon credits, is taking bids for the third tender, worth 70 million credits, until mid-September.

Speaking to journalists on Wednesday, Vsevolod Gavrilov also said Sberbank could refrain from setting a price floor for sovereign carbon credits in the future unless it believes “clear manipulation” is occuring in the market due to lower prices.

“We won’t issue (price) recommendations in the future unless we see facts that indicate clear manipulation,” Gavrilov said. “Up to now we don’t see any.”

Last year, Russia set a minimum price of 10 euros per tonne for Kyoto backed carbon offsets generated in the country, known as emissions reduction units (ERUs).

Under JI, companies can invest in carbon-cutting projects in Kyoto signatory countries, and in return receive carbon credits called ERUs, which can be used toward emissions targets or sold for profit.

“We expect that there will be fewer bids (than the tender ammount)... But all reasonable and effective bids will be approved,” Gavrilov said, without providing any details on why he expects weak demand for the offering.

Sberbank and government ministries will allocate 30 million credits to projects in general industries such as steel, cement, chemicals and oil production, as well as 30 million to the power generation sector and 10 million to schemes that make use of landfill or waste gases.

The bank held one tender in 2010, followed by a second one earlier this year, through which Russia approved 33 joint implementation projects worth a potential 60 million credits.

ERU and CER prices correlate with each other but the CER market is more liquid.

Prices for front-year certified emissions reduction (CERs) stood at 13.59 euros ($19.14) CEREZc1 on ICE Futures Europe at the end of September last year when the second tender began.

However, prices had fallen to a 2.5 year low of 7.58 euros by Aug. 5 this year, mainly due to concerns about the global economy and over-supply.

The contract had recovered to nearly 9 euros on Wednesday.

“We are closely watching the market... We are likely to see a little positive correction,” Gavrilov said.

Gavrilov added that a fourth tender could take place by end-2012.

“If we feel any signs at the market... We may support it with new offers,” he said.

(Additional reporting by Marton Kruppa in London, writing by Katya Golubkova, Editing by Nina Chestney and Alfred Kueppers)

$1=.7099 Euro

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