Sindicatum Carbon Sells 5.5 Million CERs for $84 Million

Sindicatum Carbon Capital Ltd., the developer of clean-energy projects that’s partly owned by Citigroup Inc. and Cargill Inc., sold 5.5 million United Nations emissions permits to European buyers.

The company sold UN Certified Emission Reductions on a forward basis to two energy groups in June and December for delivery in 2011 and 2012, Chief Executive Officer Assaad Razzouk said in an interview in Singapore yesterday. The value of the deal based on current prices is $84 million, he said.

“The conditions for registration and issuance of credits have improved materially over the past six months,” Razzouk said. “We have a strong Asian pipeline of projects around biomass and biogas.”

The buyers have paid about 25 percent of the value and will settle the rest at a variable price when the credits are issued, either at a premium or discount to spot rates, Razzouk said. He declined to identify the companies. Seven of the Sindicatum’s nine committed projects have been registered, he said.

Global supply of new emissions credits will reach 200 million metric tons this year, 52 percent more than the 132 million tons issued last year, when supply rose 8.2 percent, according to Barclays Plc.

UN prices will average 13 euros ($17) a ton in the six months through June, less than a previous forecast of 14.50 euros, Trevor Sikorski, a London-based analyst at Barclays Capital, said on Jan. 10.

CERs Drop

UN Certified Emission Reductions for December fell 0.1 percent to 10.93 euros a ton yesterday on the ICE Futures Europe exchange in London. The permits, which slid as low as 10.90 euros, matching the lowest intraday level since March 2009, have declined 4.1 percent this month. European Union carbon allowances for December fell 6 cents to 14.25 euros a ton.

Sindicatum, which employs 170 people including engineers, technicians and climate-change experts, specializes in helping mining companies use methane from coal extraction and showing factories how to burn industrial gases rather than release them into the atmosphere where they would trap heat.

The company’s emissions permits will come from ventures including six projects in China, and the rest in Thailand and Indonesia where methane is captured from coal mines and landfills, Razzouk said. Sindicatum is developing 28 projects.

In return, the company earns UN certified emission- reduction credits, or CERs, for investing in the projects that eliminate emissions from greenhouse gases such as methane. Power stations and factories in the EU, the world’s largest carbon market, can use UN credits for compliance.

Source: Bloomberg.com