From: Reuters
Published March 3, 2008 11:54 AM

Russia OGK-6 sells $6.8 mln of Kyoto credits

MOSCOW (Reuters) - Russian power producer OGK-6 has sold some 4.5 million Euros ($6.83 million) of emissions reduction credits under the Kyoto Protocol to the U.K.-based Clean Planet Group, its parent firm said on Monday.

The Kyoto Protocol is an international treaty meant to fight global warming by obliging many developed nations to reduce the emission of greenhouse gases in 2008-2012 by 5 percent compared to 1990 levels.

Under the Protocol's joint implementation (JI) mechanism, rich countries can invest in emissions-cutting projects in developing- and former-communist nations and count the cuts as their own.

The deal with OGK-6 is for 550,000 credits, which will represent a 550,000-tonne reduction in carbon dioxide emissions, to be achieved through the installation of a cleaner and more efficient set of turbines at its Kirishskaya power station.

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"OGK-6 views the Kyoto Protocol as a mechanism for co-financing our investment programs...and we are not going to miss this opportunity," said Alexei Selyakov, the deputy head of

OGK-6.

Carbon market intermediaries such as the Clean Planet Group organize or invest in emissions-reducing projects and sell the resulting carbon credits to those who need to reduce their emissions under the Kyoto Protocol.

After two years of delays, the Russian government in January put in place the legal mechanisms for companies to create carbon credits in Russia, which has the potential to become the second biggest source of the credits after China.

Western intermediaries and speculators have already ploughed millions into the Russian market in anticipation of a potential 3 billion euros ($4.4 billion) market.

Twelve firms expressed interest in the auction of OGK-6's carbon credits, the statement said.

Finnish utility Fortum became the first to sign a major deal under the new mechanisms in Russia last month when it bought more than 5 million credits, worth more than $100 million, from another electricity producer, TGC-1.

OGK-6's parent company, the former electricity monopoly Unified Energy System (UES), has said it is keen to work within the framework of Kyoto, as have many of Russia's industrial giants, including gas major Gazprom.

The Russian government, however, has yet to grant formal approval to any of the credit-producing projects, a risk factor that has made Russian credits trade at a discount to those produced in countries where the mechanisms are more mature.

(Reporting by Simon Shuster; Editing by David Cowell)

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