Rhodia gets U.N. nod for emission rights trading
Mon Nov 28, 2005 07:21 AM ET
PARIS, Nov 28 (Reuters) - Rhodia won United Nations approval to cut greenhouse gas emissions from its Onsan facility in South Korea and trade in the resulting credits, which boosted its volatile share by almost 21 percent.
The French chemical company said on Monday that from 2007 its earnings are set to benefit from trading in carbon emission credits following the clearance by the U.N. Framework Convention on Climate Change secretariat, the official issuer of carbon emission receipts (CERS).
Loss-making Rhodia is in need of revenues as it gradually emerges from a restructuring. A second project for cutting carbon emissions at its Paulinia plant in Brazil is expected to get approval by the end of this year.
"With this decision, the group has now acquired final consent needed to deploy the project, which will become operational by the end of 2006," Rhodia said in a statement.
In return for cutting greenhouse emissions, it can earn greenhouse gas credits and then sell them to other companies failing to meet pollution restrictions under the Kyoto protocol.
Companies are lining up hundreds of projects in Brazil, China, India and other developing countries to earn credits that can be sold on a new pan-European market for carbon dioxide (CO2) allowances. Allowances currently fetch more than 20 euros per tonne of CO2.
Rhodia has been selling assets, renegotiating credit lines and issuing shares to cut debt and return to profit in 2006 after it suffered from a costly expansion, a slowdown in economic growth and high raw material prices.
Rhodia has said it expects to sell between 11 million and 13 million tonnes of CERs annually but declined to give a value. Analysts have estimated the net value of these credits to be at least 200 million euros ($234 million), though estimates varied.
The U.N. approval comes after Rhodia got clearance from South Korea and Brazil. Rhodia's shares were up 14.6 percent at 1.49 euros by 1117 GMT after earlier rising as high as 1.57 euros.
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