EBRD Facilitates Large Carbon Credit Deal in Georgia

Enguri Hydro Power Plant concludes sale of carbon credits to Norwegian utility

Engurhesi Ltd, the state-owned operator of Enguri hydropower plant (HPP), recently concluded the first sale of carbon credits. This deal crowns 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 of this transaction in difficult market circumstances has a strong demonstration effect. This 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.

The deal 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 decide on a sales strategy as well as the verification of emission reductions realised between January 2013 and August 2014. Over 400,000 carbon credits were subsequently issued and sold by Engurhesi to Norwegian utility Statkraft.　

The important feature of this deal is that this is the first time that 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 EBRDtakes the carbon project development risk. In doing so, it seeks to increase the participation of its clients in the global carbon market.

The　EBRD　has financed the rehabilitation of　Enguri HPP, which now produces over 40 per cent of the electricity consumed in Georgia. 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.