Rhodia Gets UN Nod for CO2 Trading Project
Date: 30-Dec-05
Country: FRANCE
The secretariat of the United Nations Framework Convention on Climate Change (UNFCC) approved the project to reduce greenhouse gas emissions at the Paulina facility, and the chemicals group said the investment would become operational during the first half of 2007.
In November, Rhodia obtained approval for a similar project in Onsan, South Korea.
Rhodia shares were up 3.4 percent at 1.83 euros by mid-afternoon.
In return for cutting greenhouse emissions, the company can earn greenhouse gas credits and then sell them to other companies failing to meet pollution restrictions under the Kyoto protocol.
Loss-making Rhodia is in need of revenues as it gradually emerges from a restructuring.
Companies are lining up hundreds of projects in Brazil, China, India and other developing countries to earn credits that can be sold on a new pan-European market for carbon dioxide (CO2) allowances. Allowances currently fetch more than 20 euros per tonne of CO2.
Rhodia has been selling assets, renegotiating credit lines and issuing shares to cut debt and return to profit in 2006 after it suffered from a costly expansion, a slowdown in economic growth and high raw material prices.
Rhodia has said it expects to sell between 11 million and 13 million tonnes of CERs annually but declined to give a value. Analysts have estimated the net value of these credits to be at least 200 million euros ($237 million), though estimates varied.
The UN approval comes after Rhodia received clearance from South Korea and Brazil.
Earlier this month, Rhodia raised 604 million euros in a rights issue in order to cut its debt pile and finance industrial development projects.
