Canadenis Acquisition Ltd and Tamarisk Acquisition Corporation will purchase approximately 23 million Certified Emissions Reductions (CERs) – the two transactions combined are a billion dollar transaction – the largest to date. The CERs are expected to be delivered from the World Bank’s Umbrella Carbon Facility (UCF). The deal is through Natsource LLC, the world’s largest private sector greenhouse gas (GHG) asset manager.
Each Natsource entity purchased the maximum amount of CERs expected to be sold from the UCF. The purchases represent 24.5% of the CERs made available to the private sector. The remaining CERs are expected to be purchased by the World Bank’s existing carbon funds.
Clean Development Mechanism (CDM) projects authorized by Article 12 of the Kyoto Protocol create CERs. These projects reduce greenhouse gas emissions and create sustainable development benefits for the countries hosting them. Buyers of CERs can use them to comply with requirements to reduce their greenhouse gas emissions.
The World Bank announced the creation of the UCF in December of 2005. The UCF will aggregate multiple sources of funding to purchase large volumes of emission reductions from projects on behalf of its own carbon funds, private firms and governments. In this transaction, the CERs are being created by two chemical facilities that will capture and decompose HFC23 — a byproduct from the production of HCFC22, which is used as a refrigerant and a building block for other chemicals.
This is a path-breaking transaction, said Jack Cogen, President of Natsource. “Deals that mobilize this scale of capital illustrate that markets are the most effective mechanism for companies to meet their reduction requirements cost-effectively and address the problem of global warming.”
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