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CantorCO2e Limited (a subsidiary of Cantor Fitzgerald, L.P.), a leading global provider of financial services to the world’s environmental and energy markets, announced today their facilitation of a groundbreaking transaction involving the first ever Biomass Clean Development Mechanism (“CDM”) Project in Chile.
The multi-million dollar transaction involving contracts between Arauco, the largest forestry company in Latin America, and Tokyo Electric Power Company (TEPCO), one of the world’s leading electricity generation companies in Japan, will see Arauco sell emissions reductions created from the Biomass project to TEPCO.
The transaction will result in the creation of energy through the burning of Sustainable Biomass (wood waste) which will then be dispatched to the Chilean electricity grid, thereby reducing CO2 and methane emissions in the order of 500,000 tonnes of carbon dioxide equivalent whilst using the latest and cleanest technology available. Much of the biomass will come from Arauco’s own pine plantations and none of it is taken from native forest, of which Arauco owns 400,000 hectares.
CantorCO2e brings much experience to the project and as broker has been instrumental in developing the right methodology, validation, registration and verification for the project. The project is one of many brokered by CantorCO2e to help mitigate the effects of climate change using market mechanisms.
The project is one of the largest Clean Development Mechanism (CDM) projects involving biomass to have been agreed under the provisions of the Kyoto Protocol, a treaty signed in 1997 to address and manage global climate change issues. The CDM is a market-based mechanism under the Kyoto Protocol to encourage commercial investment in sustainable development projects in emerging economies that reduce greenhouse gas emissions.
The deal comes at an important time for Chilean industry as Chile looks to decrease its dependence on natural gas imported from Argentina, which has, until now, been the only economically viable alternative to dirty fuels such as coal and diesel. Although this project is substantial in size, biomass accounts for only 1.5% of power transmitted on the Chilean Power Grid and so the growth potential is significant.
Steve Drummond, Managing Director at CantorCO2e said, “We are delighted to have helped Arauco and Tepco by creating the carbon asset and securing value for it. As the CDM moves beyond the low-hanging fruit, it is renewable energy projects like this that will pave the way towards a sustainable future. We are proud to be at the forefront of that change.”
