Carbon Credits

Rurelec currently has two projects benefitting from the production of carbon credits under the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC). The agreement put a cap on the level of emissions that the industrial countries which ratified the protocol (Annex 1 countries) could emit. The protocol came into force in 2005 with the first compliance period lasting for four years from January 1st, 2008.

Under the Clean Development Mechanism ("CDM") of the Protocol, Annex I countries can meet their emission reduction targets by offsetting their emissions with credits known as Certified Emission Reductions ("CERs"). A CER is created when a project developer such as Rurelec invests in emission reducing projects in non-Annex I countries that have ratified the Kyoto protocol (e.g. Argentina and Bolivia).

A reduction of one tonne of Carbon Dioxide generates one CER. Other polluting greenhouse gases are also included and assigned a carbon equivalent value which allows them to generate CERs. The CERs can then be sold to those parties in Annex I countries with a requirement to reduce emissions. Rurelec can thus ensure an increased revenue stream through the adoption of cleaner technology.

The revenue from the sale of CERs generated by Rurelec's combined cycle gas turbine (CCGT) projects allow the company to invest in the most up-to-date and environmentally friendly power generation technologies available.