The FINANCIAL — Georgia’s Enguri hydropower plant (HPP) has concluded the first sale of carbon credits. In a landmark transaction the state-owned operator Engurhesi Ltd issued and sold over 400,000 carbon credits to the Norwegian electricity company Statkraft.
The operation was supported by the European Bank for Reconstruction and Development (EBRD) through its Carbon Project and Asset Development Facility (CPADF), which provided technical assistance to help Engurhesi with its sales strategy as well as the verification of emission reductions realised between January 2013 and August 2014, according to EBRD.
The sale caps years of investment, which led to the project’s registration under the Kyoto Protocol’s Clean Development Mechanism (CDM) towards the end of 2012. The financial closure in difficult market circumstances has a strong demonstration effect. It is a major milestone for Engurhesi, which is now well-positioned to generate additional financial revenues from the sale of its emission reductions going forward.
For the first time part of the costs involved in concluding the carbon project development cycle are recovered under the CPADF. Cost recovery is linked to the successful sale of carbon credits, hence the EBRD takes the carbon project development risk. In doing so, it seeks to increase the participation of its clients in the global carbon market.
The Enguri HPP is the largest power plant in Georgia providing around 40 per cent of the electricity consumed in Georgia. The EBRD has been supporting the rehabilitation with financial and technical assistance since 1998. As a result of the refurbishment, the overall output from Enguri HPP has increased by 10 to 15 per cent, leading to significant emission reductions. Part of these emission reductions also compensated for the environmental impact of the Bank’s 2015 Annual Meeting and Business Forum in Tbilisi, which was recently certified as a carbon neutral event
The EBRD is the largest institutional investor in Georgia with over €2.5 billion investments in more than 184 projects. In addition to being a leading investor in many sectors of the Georgian economy, the Bank also provides advisory services and is committed to helping attract additional investment to the country.