Norway, Spain and Sweden have agreed to support a number of small-scale hydro plants in Vietnam through a World Bank facility, a deal that will initially yield 3 million UN-issued carbon credits for the investor countries.
The deal is a shot in the arm for the ailing UN carbon market, which has seen few new projects develop in the past two years because of an over-supply of credits in the aftermath of the global financial crisis.
The agreement was signed between the Vietnamese government and the World Bank’s Carbon Partnership Facility (CPF), which will buy the carbon credits on behalf of the three governments.
The project will add around 250 megawatts of hydro power to the Vietnamese grid, a World Bank statement said.
Norway, Spain and Sweden will buy the project’s first three million credits, known as Certified Emissions Reductions (CERs), which they will use towards meeting their greenhouse gas targets under the UN Kyoto Protocol.
“About 15 to 25 subprojects, which have total investment cost in the range $5 million to $20 million each, may be financed by the (project),” the World Bank said.
A Bank official declined to comment on how much the buyer governments paid for each CER. In the European carbon market, the world’s biggest, they currently trade at around half a dollar each.
“Signing this agreement with the CPF is very encouraging for Vietnam, which intends to pursue additional opportunities to use carbon credits to support economic development and climate change mitigation goals,” said Le Duong Quang, Vietnam’s vice minister for industry and trade. Reuters