OREANDA-NEWS. On 14 July 2009 was announced, that En+ Group announces that it completed a transaction to sell approximately 1 million emission reduction units (ERUs) that will be created by Joint Implementation (JI) Projects* under Article 6 of the Kyoto Protocol.

The ERUs will be created mainly at the Bratsk Aluminium Smelter. The smelter is owned by UC RUSAL, where En+ Group holds a controlling stake. The ERUs were sold to buyers represented by affiliates of Natsource LLC.

"The emission reductions will be achieved by implementing a new production system at the world's largest aluminium producer, Bratsk Smelter, said Ivan Rebrik, Head of UC Rusal's Health, Safety & Environment Department. The new system will result in a decrease in the anode effect** frequency and duration. "This will reduce emissions of perfluorocarbon (PFC), a greenhouse gas, and also help to lower electric power consumption. This project is one of the first JI projects in Russia", said Rebrik.

The implementation of the new system at the Bratsk smelter was initiated by UC Rusal in 2007 within the framework of the plant's large-scale environmental modernization programme, which is due to be completed in 2015. Once the new system is fully implemented, it is expected to achieve reductions of PFC emissions equivalent to 1.2 million metric tones of carbon dioxide (CO2) over a five-year period.

"We are pleased to have been part of this transaction", said Jack Cogen, CEO of Natsource LLC. "It shows that joint implementation mechanism can help to mobilize capital to fight climate change. Natsource will continue to participate in beneficial transactions in Central and Eastern Europe", said Cogen.

"Investments that protect the environment and increase energy efficiency are set as priorities throughout our business portfolio, including UC RUSAL and EuroSibEnergo", said Jivko Savov, En+ Group Managing Director (Power). The proceeds from this first sale will be used to invest further in environment related projects at UC Rusal and En+ Group portfolio companies. "We will continue to use the Kyoto mechanisms to finance our environmental initiatives and to support our subsidiaries in increasing their energy efficiency and in adhering to higher environmental standards", said Jivko Savov. "We are ready to share our experience and work with companies in Russia to raise funds for environmental and energy saving programs".

Key Terms

* Joint Implementation (JI) was established under Article 6 of the Kyoto Protocol and allows industrialized countries or emitters to invest in projects located within industrialized countries in order to generate emission reduction units (ERUs). In contrast to Clean Development Mechanism (CDM) projects which are undertaken in developing countries, industrialized nations or emitters can invest in project activities that reduce emissions in other industrialized nations, which are subject to an emissions limit under Kyoto, thereby creating ERUs. Countries or investors earning the credits may apply them to meet their emissions reduction requirements from 2008 - 2012. ERUs currently constitute a small, but growing, class of emissions assets in the global market.

** Anode effect - this is the effect produced by polarization of the anode in electrolysis. It is characterized by a sudden increase in voltage and a corresponding decrease in amperage due to the anode becoming virtually separated from the electrolyte by a gas film. The effect results in emissions of perfluorcarbons and an increase in electric power consumption.

Kyoto Protocol, which was agreed in 1997 and entered into force in February of 2005, established the world's first international framework to address global climate change. It requires a group of developed countries to reduce their greenhouse gas emissions by approximately 5% below 1990 levels from 2008-2012. The Kyoto protocol also incorporates several project-based mechanisms that authorize the creation and use of emission reductions (CERs and ERUs) to reduce costs to comply with these emissions limits. The emission reduction targets agreed to under Kyoto have led to the development of the existing global carbon market.