Mercuria strikes deal to buy 1.6 mln African CO2 credits

Swiss-based trading house Mercuria has signed a deal to buy 1.6 million post-2012 carbon credits from a 40-MW biomass plant in the Ivory Coast for an undisclosed price, according to a statement by brokers ecosur Afrique.

The developers hope to register the Clean Development Mechanism (CDM) project before the end of the year and credits will start to be generated in 2015, the statement said.

Mercuria will take the credits for a period of 10 years.

“Our assumption is that we will get this project registered in time to be eligible for the EU Emissions Trading Scheme,” said Jean-Francois Steels, head of emissions markets at Mercuria.

EU rules state that credits from CDM projects registered after 2012 will not be eligible for use in the bloc’s carbon market unless they are located in a country classified by the U.N. as least developed, which the Ivory Coast is not.

The project will cut emissions of greenhouse gases by generating electricity from palm oil residue at a power plant owned by Biokala, an affiliate of West African agro-industrial group SIFCA.

The electricity will be transmitted to the national grid and the developers say the project will displace carbon dioxide emissions from fossil fuel plants.

Ecosur Afrique claim the deal is the largest brokered in West Africa and comes as carbon prices are struggling to recover from record lows.

U.N. carbon credits in the secondary market hit a record low of 3.27 euros earlier this month due to oversupply and a lack of demand.

Low prices have forced many developers to shift away from fixed price deals and sign indexed, or floating price, contracts instead.

Steels refused to comment on the price paid or the terms of the deal.

Mercuria is a large player in the CDM, having in 2010 purchased a portfolio of carbon credits from MGM from Morgan Stanley at an undisclosed price.

(Source: Thompson Reuters)