World Bank signs carbon rights deal with Ukraine
To buy 10 million metric tons of Kyoto carbon emissions rights
The World Bank signed a pact with Ukraine to buy 10 million metric tons of Kyoto carbon emissions rights, the parties said on Wednesday, in a deal worth up to $140 million, according to Reuters calculations, Reuters reported.
Under the Kyoto Protocol, signatory nations that are comfortably below their greenhouse gas emissions targets can sell excess emissions rights called Assigned Amount Units (AAUs) to nations which are struggling to meet their targets.
The industry of former communist countries collapsed in the 1990s, making their Kyoto targets very easy, and their sales of AAUs now are making it effortless for polluting countries to meet their targets, green groups say.
AAU deals threaten to undermine a market in carbon offsets, which project developers can sell in return for avoiding greenhouse gas emissions through building wind farms or hydropower dams, for example.
As most AAUs are often the result of economic restructuring rather than investment in clean energy, buyers like the World Bank insist that `Green Investment Scheme` clauses to be included in the contracts, to avoid scrutiny.
Green Investment Schemes ensure AAU revenues are invested by the seller in clean energy projects.
"This memorandum of understanding and the expected transaction are a continuation of cooperation between World Bank and Ukraine to design and implement a Green Investment Scheme," the World Bank said in a press release.
The memorandum was signed by both parties on the sidelines of a carbon market conference in Barcelona. On Tuesday, Ukraine`s government said it was looking to sell 150 million AAUs to two private companies. It was not clear whether these deals involved a Green Investment Scheme clause.
Japan`s Nomura bank also said it was in advanced talks to buy 100 million-300 million AAUs from Ukraine, which would include a Green Investment Scheme clause.
Ukraine sold 30 million rights to Japan in March while the World Bank signed a similar agreement in December to buy 10 million rights from Poland. Both these deals were rumored to be worth around 10 euros ($14) per metric ton of carbon dioxide, sources said.