Carbon Emissions Trading Picks up

Even as nations gather in Montreal to consider new curbs on global warming gases (page 10), chemical companies that emit such gases are maneuvering to do their share and also make a buck.

Rhodia says the UN Framework Convention on Climate Change Secretariat has registered a greenhouse gas reduction project at its Onsan, South Korea, facility that makes the nylon intermediate adipic acid. Each ton of nitrous oxide produced as a by-product of the manufacturing process has a global warming potential equal to 310 tons of CO₂.

The carbon emissions receipts (CERs) earned in South Korea, along with credits Rhodia expects to obtain from a similar project at an adipic acid facility in Paulina, Brazil, will allow the firm to offer between 11 million and 13 million metric tons of CERs per year beginning in 2007 in countries that have signed the Kyoto protocol. The likely buyers are companies that cannot reduce emissions as easily as Rhodia can.

The market to trade CERs is only now beginning to develop, so it is too early to say how and where Rhodia might trade the credits. Early trades in CERs have fetched between $11.80 and $23.60 per ton, according to the company. At those prices, Rhodia's CERs could garner between $150 million and $300 million annually, giving the financially beleaguered company a much-needed income stream.

Separately, Ineos Fluor says it has agreed to sell 1 million CERs to Natsource Europe, a firm that trades in emissions credits. Ineos obtained the credits from a project with Ulsan Chemical in South Korea to reduce hydrofluorocarbon-23 generated as a by-product of making the refrigerant HFC-22. Ineos acted as a partner on the project and expects to obtain additional credits for sale from a similar project with India's Gujarat Fluorochemicals.