Friday, 19 June 2009

Gazprom and Dow Chemical Expand Emissions Alliance

MOSCOW — Gazprom, the energy company, has signed a memorandum of understanding with the Dow Chemical Company to expand trading in carbon dioxide emission credits intended to slow climate change, a business that is a growing sideline for the Russian company.
Best known for its sales of natural gas and crude oil, which produce heat-trapping carbon dioxide, Gazprom is an emerging player in the market for credits that companies can buy or trade to comply with national or international rules on greenhouse gas emissions.
Under the memorandum, Gazprom and Dow agreed to look at opportunities where Dow technologies could be used to reduce carbon emissions, thus generating the emission credits. The companies agreed to look at opportunities worldwide.
Dow could then use some of the credits to offset its own industrial activities while Gazprom’s trading arm in Britain could market any excess.
Gazprom’s customers in Europe — in particular utilities that burn gas to generate electricity — often need to offset their emissions under a European Union pollution trading scheme or the broader Kyoto Protocol on climate change.
Through its marketing and trading subsidiary in London, Gazprom in 2007 began offering utilities a bundled product of fuel along with credits needed to burn it. Gazprom buys the credits on the market or through investments in alternative energy projects elsewhere in the world.
However, the true promise for this business is in carbon credits that come, like the gas, from Russia. Companies in Russia and elsewhere in Eastern Europe are among the world’s big producers of greenhouse gases. But they stand to benefit under the climate treaty by selling their rights to release carbon dioxide into the air, if they invest in greater efficiencies.
The statement said the companies would also explore projects in the small carbon market in the United States.
As a country, Russia possesses the credits in abundance under the Kyoto Protocol, which set a baseline in 1990 for emissions, before a sharp contraction in the Russian economy greatly reduced carbon emissions. Russia can transfer those benefits to its companies to sell.
In 2004, when Russia ratified the protocol, officials estimated Russian companies could earn $6 billion to $9 billion selling credits created from investments in emissions-reducing technologies.

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