Int’l - Chile's Agrosuper Sells Credits From Pig Waste to Utilities
Published:September 21, 2004
Source :Bloomberg.com
Agrosuper, the world's eighth- largest pork producer, is using a global anti-pollution agreement to turn pig-manure fumes into cash.
The Rancagua, Chile-based company earns credits for collecting methane gas from the waste of its 110,000 pigs. Agrosuper last month agreed to sell credits worth as much as $2.2 million a year to Tokyo Electric Power Co., Japan's biggest utility, and TransAlta Corp., Canada's biggest publicly owned power generator, to help them meet their emissions quotas.
The pork producer is among a growing number of companies to benefit from the 1997 Kyoto Protocol, a United Nations plan to cut so-called greenhouse gases that scientists blame for global warming. Emissions trading may soar next year when the European Union requires a total 12,000 factories and power plants to meet reductions, said Oslo-based trading consultant Point Carbon, which predicts a $10 billion market by 2007, from about $300 million in the first half.
"There will be more and more requirements to reduce emissions and our program will help us,'' said Agrosuper's General Manager Ramon Arrau De La Cerda. The privately held group, which also farms fruit and poultry, is the largest meat and fresh products producer in Chile, with more than $700 million in annual sales.
The Kyoto Protocol set emission-reduction targets for 124 countries including Japan, Canada and the European Union, which in turn are setting limits on companies and utilities.
Clean Development
The Agrosuper contract is the third-largest to date under the Kyoto Protocol's Clean Development Mechanism, which allows polluters in developed countries to buy credits from projects in developing nations that reduce the potential level of emissions.
The mechanism is controlled by a United Nations secretariat with independent auditors assessing and monitoring each project. National governments in the developed nations set and enforce the limits for their companies.
Tokyo Electric was responsible for 8.1 percent of all carbon dioxide emitted in Japan in 2002. The utility has until 2010 to cut the percentage of carbon dioxide produced per kilowatt-hour by 20 percent from 1990 levels. Last business year, its emissions were 21 percent higher per kilowatt-hour than the 1990 level, said spokeswoman Yuko Eda.
"We've already invested substantial amounts in cutting emissions from our power plants in Japan and further improvements are difficult,'' Eda said. "We expect to see positive benefits on profits from investing in CDM projects.'' She wouldn't say how much the Agrosuper contract may save the company.
Japan's government has yet to fix penalties for exceeding emissions targets.
Biodigestors
To trap the gas, Agrosuper built biodigestors -- 10-meter- deep lagoons of pig waste covered with a polyurethane sheet. The methane is burned off, reducing emissions by the equivalent of 400,000 metric tons a year of carbon dioxide.
"Wanna know what it's like to stand on 40,000 tons of pig manure?'' Carlos Andres Vives, the company's environmental manager, asked while walking on the plastic cover of a biodigestor that looks like a giant waterbed. Agrosuper is expanding gas-trapping facilities at the farm in Rancagua, about 200 kilometers south of Santiago, to cut pig-waste emissions by a third next year, he said.
Methane, one of the gases covered by the protocol, is about 20 times more potent per ton as a greenhouse gas than carbon dioxide.
Chile's head start in emissions credit projects may soon come up against competition from bigger developing nations, said Sergio Vives, a partner at Urquidi, Riesco & Compania, a legal adviser in the Agrosuper transaction.
China's Efforts
Countries such as China, with a population of 1.3 billion compared with Chile's 15 million, will have more opportunities to get credited for emission reductions, said Vives, who led Chile's delegation during the Kyoto Protocol negotiations from 1995 to 1997.
China, the world's largest greenhouse gas producer after the U.S., will start a nationwide emissions-trading program next year as part of its effort to clean up cities such as Beijing, which will host the 2008 Olympics, the State Environmental Protection Administration said in March.
Some 75 million tons of carbon-dioxide credits were traded in the first six months of this year, compared with 72 million tons for full-year 2003, according to data from Cantor Fitzgerald LP's unit CO2e, which brokered the Agrosuper-Tokyo Electric- Transalta transaction.
In Europe, carbon allowances for 2005 traded at an average of 9.42 euros ($11.52) a ton this year to date, according to figures from London based energy broker Spectron Group Plc.
The planned European Union emission-trading rules are driving the emergence of carbon trading and consultancy firms such as Oslo, Norway-based Point Carbon, and EcoSecurities Ltd.
Generating Revenue
"Some companies are recognizing the business opportunity here,'' CO2e Managing Director Corinne Boone said in an interview. "It's easier to talk to your chief financial officer about environmental projects when you can show him that you can generate some revenue.''
Agrosuper spent a total of $30 million on its eight biodigestors, each about 100 meters by 100 meters in area. It has two $3-million sludge activators, which turn excrement into compost and water, and another five will be switched on over the next year.
The recycling of the waste has an added payback for the company. With the pig-waste transformed from a toxic pollutant into useful water and manure, the land surrounding its livestock pens is now part of the 1,500 hectares the company planted with chardonnay, cabernet sauvignon, syrah and other grapes that produce its Ventisquero brand wines.
