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Omnia and IFC announce landmark Carbon Trading transaction

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Published: Wednesday, 19 March 2008 05:00

Omnia and IFC announce landmark Carbon Trading transaction
"Advancing the global fight against climate change"

IFC, a member of the World Bank Group, and Omnia, the diversified, specialist chemical services provider with business interests balanced across chemical, mining and agricultural markets, today announced an agreement under which IFC will purchase up to one million carbon credits from Omnia over the next five years, supporting the global fight against climate change. The agreement totals an estimated 15m Euros.

IFC will purchase carbon credits, known as Certified Emission Reductions (CERs) from Omnia Fertilizers and sell these on to international buyers. IFC has committed to purchase a minimum 50% of all Omnia’s CERs for the next five years and will guarantee the delivery of the credits to potential buyers. The Clean Development Mechanism of the Kyoto Protocol has established CERs as an asset that can be traded in global markets and aims to decouple economic growth from greenhouse growth.

Omnia Fertilizer, through its Sasolburg plant, will generate approximately 420 000 CERs per annum. The emission reductions will come from a nitrous oxide (N₂O) destruction facility that has been installed by Omnia at its nitric acid plant. This destruction facility will significantly reduce the plant’s N₂O emissions. Greenhouse gas emissions, including Nitrous Oxide, are believed to be the cause of global climate change. Omnia announced the approval of the CDM plant in August last year, and the plant, which uses German Uhde technology, is now fully operative.

The carbon credits Omnia’s plant will produce are expected to add R60m to the Group’s revenue annually, based on the current price of CERs, which is currently approximately €15 per ton. The carbon credits are issued by the Executive Board of the Clean Development Mechanism Protocol.

Omnia Fertilizer MD, Trevor Grant, said the group was proud to be taking the lead in supporting the Kyoto protocol. “The construction of our nitrous oxide destruction facility underlines Omnia’s commitment to sustainable development and reflects the Group’s focus on improving all areas of our environmental management. We believe IFC, with its AAA-rating and experience in the carbon trading market, is an ideal partner to assist us in generating strong revenue from the carbon credits we will generate”.

"IFC places a strong emphasis on environmental and social sustainability and is eager to work with companies who want to undertake climate friendly projects and commercialize carbon assets," said Saleem Karimjee, IFC Manager for Southern Africa. "We hope that Omnia’s move will encourage other companies in Africa to also reduce their greenhouse gas emissions."