Chemrez, Natsource ink pact on carbon emission reduction credits

Publicly-listed Chemrez Technologies Inc. has signed an agreement with Natsource Asset Management Corp. for the sale and purchase of carbon emission reduction credits to be earned from the sale of BioActiv premium coco-biodiesel.

Francis Caluag, ChemrezTech chief finance officer, said that under the agreement, ChemrezTech commits to sell to Natsource with certified emission reduction (CER) credits amounting to 500,000 tons of carbon dioxide equivalent from 2007 to 2013.

Caluag said the foreign currency earnings from the sale of CERs are straight-to-the-bottomline enhancements that are generated without any incremental cost to ChemrezTech.

For his part, Natsource managing director Paul Vickers said ChemrezTech will be the first manufacturing firm in the country to earn carbon emission reduction credits as factories are normally the source of greenhouse gases.

ChemrezTech’s biodiesel plant is already up and running thus funds from this new revenue stream will go straight to the firm’s liquidity pool.

Caluag said the CER will be earned from the one percent reduction in the consumption of fossil fuel by motor vehicles upon implementation of the mandatory blending of one percent coco-biodiesel with petro-diesel.

Vickers said the signing of the forward contract shows that Natsource is confident that ChemrezTech will play a key role in the local coco-biodiesel industry through its BioActiv.

"We have conducted due diligence on ChemrezTech and we have seen that they have the experience and expertise," Vickers said, adding that "they are very good at what they do."

While the Biofuel Law mandates the blending of coco-biodiesel with all diesel fuel including those used by seagoing vessels and power plants, Caluag said ChemrezTech has decided to initially seek credit only reduced emission from the use of BioActiv by motor vehicles.

He explained that seeking credit for reduced emission by use of coco-biodiesel by non-automotive engines may take longer to process as there is currently no methodology yet for the computation of the CER of these diesel engines.

The methodology for the CER computation of a green project typically takes months to formulate and approve. Fortunately, however, biodiesel firms from Thailand have already submitted an application for CER computation for the fuel switch for automobiles with United Nation’s Clean Development Mechanism in Bonn, Germany.

Vickers expressed confidence that the Thai methodology will be approved soon. ChemrezTech intends to use this methodology for the computation of its CER. The methodology is one of the primary requisites for the sale of carbon credits.

Prior to this, Natsource has contracted AHL Carbono to develop the project design document (PPD) for the ChemrezTech biodiesel plant and have these approved by the Department of Environment and Natural Resources and by the CDM Executive Board in Bonn.

The Kyoto Protocol (signed by 163 countries) seeks to reduce the emission of harmful greenhouse gases which contribute to global warming. The DENR is Designated National Authority for the Philippines tasked to qualify projects applying for carbon credits.