The Multilateral Carbon Credit Fund (MCCF) established by the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) has agreed to purchase carbon credits from JSC Ivano-Frankivsk Cement (IF Cement) plant during the period from 2008-12.
The project with JSC Ivano-Frankivsk Cement plant amounted to US$80m which is jointly financed by the State Export - Import Bank of Ukraine (UkrEximBank) and US$15m by EBRD through an Energy Efficiency Programme (UKEEP). UKEEP is aimed at the reduction of energy consumption and carbon emissions by more 50 per cent through the introduction of new production technologies. This is the first project under the UKEEP framework facility to benefit from a carbon finance transaction. The IF Cement project will represent Best Available Technology (BAT) for the cement industry and is expected to result in greenhouse gases (GHG) emission reductions.
The carbon credits are to be generated via the Joint Implementation (JI) scheme under the Kyoto protocol. JI is a market-based approach for addressing global climate change that uses international partnerships to achieve low-cost reductions in GHGs. A JI project generates carbon credits (Emission Reduction Units) which may then be traded internationally. IF Cement has already received an endorsement letter from the Ukrainian National Environmental Investment Agency, which is an important first step towards qualifying the project as a JI project.
This JI project is also in line with the ‘Energy strategy of Ukraine until 2030’ approved in March 2006 and is intended to reduce emissions of sulphur oxides (SOx), nitric oxides (NO) and other harmful substances. Due to the installation of high-efficiency dust collectors at the IF Cement plant, dust is reduced by two-thirds. Additionally, water will be recycled resulting in an 80 per cent reduction in water consumption.
One of the last Ukrainian -owned cement producers, JSC Ivano-Frankivsk Cement, is a major employer in the region and its viability and competitiveness will be significantly enhanced by the IF Cement project. In addition, Ukrainian cement consumers are expected to benefit from increased capacity and competition between cement producers.
Fully subscribed with €190 million in commitments, the MCCF is one of the few carbon funds dedicated specifically to countries from Central Europe to Central Asia. The MCCF includes six private participants (CEZ, Endesa, Gas Natural, PPC, Union Fenosa and Zeroemissions) and six sovereign participants (Finland, Belgium (Flanders), Ireland, Luxembourg, Spain and Sweden).