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Romania seen as top supplier of greenhouse credit

Date: 23-May-03
Country: USA

Countries in Central and Eastern Europe are seen as key carbon credit suppliers under possible future mandatory emission trading schemes, such as the European Union's and the Kyoto Protocol. Under the EU plan, companies in the oil refining, smelting paper and metals sectors would have to limit emissions or buy credits to pollute more.

"If you are a buyer of these credits where should you be looking? On aggregate you should be looking in Romania," said Paul Bodnar," a spokesman at Vertis Environmental Finance, a carbon finance adviser in Hungary.

Vertis and Point Carbon, a provider of carbon price forecasts, listed the top 13 potential supplies of greenhouse credits under the joint implementation provisions of the Kyoto Protocol, which are all in Central and Eastern Europe. Romania was followed by Slovakia, the Czech Republic, Poland, Bulgaria and Russia.

"Romania has a lot of old, outdated industrial and power generation that needs to be replaced and energy efficiency is terrible there. So with relatively inexpensive measures, you can net a lot of emissions reductions, which is not the case in most countries such as Holland or Canada, where reducing one more ton of emissions will cost you a lot more," said Bodnar.

Although the official EU or international market is still a couple of years a way, a market has emerged, as likely participants position themselves and get used to the mechanisms of carbon trading.

In an example of that, last year U.S. power producer AES Corp. bought $3 million worth of greenhouse credits. AES bought the credits from Hungary, which built renewable biomass power plants that reduce overall carbon production. In today's market, a ton of carbon dioxide emission credit is worth about $4.50.

The emerging European carbon emissions market is set to grow by around 50 percent this year to $1.06 billion and could be worth around $8.4 billion by 2007, according to a recent study by Point Carbon.

The Kyoto agreement needs only Russia's signature to pass. It would require developed nations to reduce emissions by 5 percent below 1990 emissions levels. The first target period for reaching those levels is 2008 through 2012.

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