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EBRD helps produce cleaner energy in Romania
€15 mln loan to cut pollution, generate carbon credits
The EBRD is lending Colterm, a district heating company owned by the Romanian
city of Timisoara, €15 million to invest in the energy efficient generation of
both heat and electricity in a move that will reduce harmful greenhouse gas
emissions.
By replacing outdated heat only generation units with more
environmentally-friendly gas turbines, Colterm will cut carbon dioxide
emissions by around 120,000 tonnes per year. To cut a similar amount of CO2
using offshore wind-farm technology, an investment of around €120 million
would have been needed. These reductions will help produce up to €4 million
worth of carbon credits, which will be sold to the EBRD for the account of the
Netherlands, following a joint agreement between the two in 2003 to help
reduce emissions in central and eastern Europe.
It is the first project in Romania to directly link the financing of a project
with carbon credits. The sale of these credits is instrumental in making the
project viable.
It is a successful formula which should be considered in other cities,
especially since district heating operators across many former command
economies still require substantial restructuring, said Thomas Maier, EBRD
Director for Municipal and Environmental Infrastructure. It also highlights
the importance the Bank places on cutting greenhouse gas emissions in eastern
Europe and the need to mobilise extra income from the sale of the carbon
credits, he added.
The total project cost is estimated at €23 million. A third of the EBRD loan
will be syndicated to a commercial bank, while Colterm will provide an
additional €8 million towards the project. A portion of Colterm’s investment
will be paid using an advance payment from the sale of carbon credits that
will be generated by the investment.
Established in 2004, Colterm employs around 1300 staff, and produces heat and
electricity for more than 91,000 households across the city.
Gheorghe Ciuhandu, Mayor of Timisoara, said this project will help turn around
an aging heating company into one that is more modern, efficient, and will
also provide local households with a secure and constant supply of heat and
electricity. The idea of generating and using carbon credits to pay towards
the investment is an innovative approach that works greatly in favour of the
company because it makes the project more financially viable, said Mayor
Ciuhandu.
The EBRD is the largest investor Romania, having committed more that €3.2
billion in around 115 projects. In the Municipal and Environmental sector
alone, the Bank has invested nearly €400 million providing financing for over
€1.2 billion in investment in Romania.
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