The project involves the purchase and installation of a precious metal catalyst in the plant in Uzbekistan. The production of nitric acid gives off N2O, an unwanted by-product, which is currently being vented into the atmosphere, contributing to global warming.
The company said that the introduction of a catalyst in the production process will destroy approximately 80% of the N2O that will otherwise be vented into the atmosphere.
The Kyoto Protocol provides an approved methodology pursuant to which the party that is responsible for abating the N2O is eligible to obtain 310 carbon credits for each ton of N2O abated. The project will use technologies designed by authorities on N2O emission monitoring.
Based on the current nitric acid production level of the project, both CRI /Criterion Catalyst Company, a wholly owned subsidiary of Royal Dutch Shell and ClimeCo, have conducted studies at the plant that predict N2O abatement that may result in 800,000 – 1,000,000 tons of Certified Emission Reductions (CER) every year.
The Net Present Gross Value of the project based on 800,000 CER every year and an 8% discount rate is estimated at $58.4m. The funds for the CER are received at the beginning of each year for the N2O removed the year before.
Blue Sphere intends to finance part of the project using other capital sources (such as project financing firms or carbon credit traders) which according to the company will improve the return on equity if successful.
Shlomi Palas, CEO of Blue Sphere, said: ”The technical report we received from CRI /Criterion Catalyst, a wholly owned subsidiary of Royal Dutch Shell, confirms that there is an annual CO2 abatement of more than 1.1 million credits. We have an experienced management team and we look forward to working on this important project.”
Uzbekistan is a CDM (Clean Development Mechanism) country and has other N20 abatement projects registered. All regulatory and operative structures are already in place.
The Clean Development Mechanism (CDM) is an arrangement under the Kyoto Protocol allowing industrialized countries with a greenhouse gas reduction commitment (called Annex 1 countries) to invest in ventures that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries.
A crucial feature of an approved CDM carbon project is that it has established that the planned reductions will not occur without the additional incentive provided by emission reductions credits, a concept known as ‘additionality’.
The CDM allows net global greenhouse gas emissions to be reduced at a much lower global cost by financing emissions reduction projects in developing countries where costs are lower than in industrialized countries.
