Carbon credits option for Austria

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While wind development in Austria is grinding to a halt due to policy dithering on renewables legislation, the government is progressing with a targeted strategy to reap CO2 emissions credits abroad through investment in wind farms. Under its Kyoto Protocol obligation, Austria must reduce carbon dioxide (CO2) emissions by 13% by 2010 compared to 1990 levels.

Three wind developments with a combined capacity of 108.45 MW have so far been accepted under the government's CO2 certificate purchasing program. Two are Joint Implementation (JI) projects: 49.5 MW in Hungary and 14 MW in Estonia. The third is a 49.3 MW clean development mechanism (CDM) project in the Chinese province of Jilin.

The projects will provide Austria with 1.22 million tonnes of CO2 emission reduction credits over the 2008-2012 period. Moreover, thanks partly to Austria's triple A credit rating, the forward purchase price for the certificates is considerably lower than the current spot market price of EUR 7-10/tonne, according to Kommunalkredit Public Consulting, appointed to manage the program.

To meet its Kyoto target Austria must reduce annual emissions over the period by 22.6 million tonnes. It intends to acquire seven mega tonnes a year of CO2 emission credits using the Kyoto protocol's project-related JI and CDM flexible mechanisms. It has issued three calls for such projects since December 2003, the most recent in August 2005. Under these calls, some 120 projects are at now at varying stages of processing, with 14 having been formally accepted (including the three wind projects).

A fourth call for proposals is due by the end of this month, with further calls to follow until the required volume of credits for the 2008-2012 period has been accumulated and/or the budget exhausted. This budget has been set at EUR 288 million, of which about one-third has already been used for the purchase of credits created by the 14 selected projects. Wind projects account for around 10% of the proposals pitched to Austria so far, and include a 300 MW project in the autonomous republic of Crimea.

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