Dow And Gazprom In Carbon Pact

Dow Chemical and an arm of the Russian energy company Gazprom plan to work together on greenhouse gas reduction projects across the globe. They hope to use Dow technologies to cumulatively cut millions of tons of carbon dioxide emissions for third-party customers.

The deal links Dow with Gazprom Marketing & Trading, a London-based subsidiary of the big Russian firm. The companies say they will seek projects in the oil and gas industry that qualify for emissions reduction credits under the United Nations Framework Convention on Climate Change.

Gazprom has already participated in such projects in Asia, South America, and Europe. Carbon reduction projects entitle participants to a credit, called a certified emissions reduction, for each ton of CO₂ that otherwise would have entered the atmosphere. The credits, which are bought and sold by companies to meet emissions reduction requirements, are worth roughly $16 per ton today.

Rich Wells, Dow's vice president for energy and climate change, says the deal will provide a market channel for Dow products and technologies that reduce CO₂ emissions. A spokesman points to amine-based technology for capturing flue gas CO₂ as one way Dow might participate. The company is already involved in amine-based carbon capture projects in the U.S. and Europe (C&EN, April 6, page 5).

Gazprom has been in the carbon market for several years, a company official says. On any given day, he notes, the firm trades between 5 and 40% of Europe's carbon credits. Although Dow is a relative newcomer to the business, the Gazprom official says Dow brings technology and brand recognition, particularly in the U.S.

Elizabeth Zelljadt, a senior analyst in carbon market research at Point Carbon, a consulting firm, agrees that Dow has something Gazprom needs. "Chemical companies produce a lot of materials used in energy-saving devices," she says, pointing to insulating materials used to plug leaky gas pipelines.

Although the carbon reduction opportunity today is mostly in the developing world, Dow and Gazprom say they will cooperate on future projects in the evolving U.S. market. Legislation that could lead to the creation of a U.S. market was set to be voted on last week in the House of Representatives, Zelljadt notes.