Enel SpA (ENEL.MI), Italy's biggest power company by revenue, said Monday it will buy Certified Emissions Reductions with a market value of around EUR150 million from five energy efficiency projects in China from Wuhan Iron & Steel Co. (600005.SH).
Enel will acquire the CERs from Wuhan Iron & Steel, which is listed in Shanghai, between 2008-2012. The projects aim to cut a total of 11.45 million metric tons of carbon dioxide in the same period.
CERs are carbon credits generated by emissions-cutting projects in developing countries. The U.N. Framework Convention on Climate Change must approve these projects and then issues the project owners with CERs.
These CERs are typically bought by companies or governments in developed countries which can use them to comply with the Kyoto Protocol and the European Union's Emissions Trading Scheme.
Enel said it has also signed a memorandum of understanding with China's Ministry of Science and Technology and Italy's Ministry for the Environment on clean coal technology and the potential to capture greenhouse gases and store them underground.
The focus of research will be on ultra-super critical power plants that burn coal, with Enel leveraging experience gained at its Torrevaldaliga Nord power plant in Italy.
Enel said applying the efficiency standards of the Torrevaldaliga Nord plant, under construction in Civitavecchia, to existing Chinese coal-fired power plants would raise efficiency by about 50% and cut more than one-third of CO2 emissions generated per megawatt hour.
Analysts believe China last year overtook the U.S. as the world's largest emitter of greenhouse gases in volume terms.