Washington D.C./ Belo Horizonte, February
3, 2003—The International Finance Corporation (IFC), the private sector
financing arm of the World Bank Group, announced today the largest transaction
to date under the Kyoto Protocol, Clean Development Mechanism. The IFC-Netherlands
Carbon Facility (INCaF) will provide a conditional commitment to the Brazilian
steel producer V&M do Brasil (V&M) to purchase five million tonnes
of greenhouse gas (GHG) emission reductions.
The total contract value is expected to be €15 million. In addition,
Toyota Tsusho Corporation will sign a contract with V&M to purchase
an additional volume of emission reductions that the project will generate.
EcoSecurities Group Ltd., an international GHG advisory firm, advised V&M
on both transactions.
During a visit to Brazil, Peter Woicke, head of IFC, will sign the Corporation’s
intention to purchase these emission reductions over a ten year period
on behalf of the Dutch government. “IFC is proud to be part of this landmark
project. We believe that this significant transaction will demonstrate
our commitment to developing and supporting market-based instruments to
promote environmentally sustainable projects in emerging markets.” said
Woicke. Senior executives from Toyota Tsusho Corporation, V&M do Brasil,
the Brazilian Minister of Environment and other government officials will
join the reception ceremony that will be hosted by the Governor of Minas
Gerais on February 4 in Belo Horizonte.
The V&M project will supply sustainably-produced charcoal to avoid
the use of coal for the industrial scale production of steel and will lead
to the reduction of over 21 million tonnes of carbon dioxide equivalent
emission reductions over the next 21 years, with over five million committed
to IFC and Toyota.
“This project is one more step in our continuous commitment to environmental
improvement. It gives us great satisfaction to have our efforts recognized,”
said Dr Marco Antonio Castello Branco, CEO of V&M do Brasil. “V&M
is the only producer of ‘carbon neutral’ industrial steel tubes in the
world, branded as ‘Green Tubes’.”
Many Brazilian steel producers have converted from charcoal to coal-derived
coke due to cost savings. However, V&M realized it could continue to
use environmentally friendly charcoal by offsetting the additional cost
with the revenue from emission reductions. The company will make investments
of approximately $50 million in its forestry and kiln operations. INCaF
is the anchor buyer of half the expected emissions reductions.
INCaF is an arrangement under which the IFC will purchase greenhouse gas
(GHG) emission reductions worth € 44 million for the benefit of
the Government of the Netherlands under the “Clean Development Mechanism”
(CDM) of the Kyoto Protocol. The Netherlands will use these emission reductions
to help meet its commitments under the Kyoto Protocol. The funds will provide
additional revenues to eligible projects in developing countries.
IFC is actively promoting the new and evolving market for greenhouse gas
emission reductions. For developing countries, the purchases of carbon
credits will encourage the transfer of cleaner technologies to reduce emissions
at an effectively reduced cost, and for developed countries the purchases
increase the range of options for complying with the Kyoto Protocol emission
The Kyoto Protocol of the U.N. Framework Convention on Climate Change calls
for industrialized countries to reduce their GHG emissions to levels below
those generated in 1990 by the period 2008 – 2012. Emission reductions
result from activities that avoid or reduce the production of carbon dioxide,
methane or other greenhouse gases as compared to a ‘business as usual’
situation, or from ‘sequestering’ carbon emissions in biomass such as
forests and soils. The market for GHG emission reductions is becoming established
and is expected to grow significantly over the next few years.
IFC’s mission (www.ifc.org)
is to promote sustainable private sector investment in developing countries,
helping to reduce poverty and improve people's lives. IFC finances private
sector investments in the developing world, mobilizes capital in the international
financial markets, and provides technical assistance and advice to governments
and businesses. Since its founding in 1956 through FY02, IFC has committed
more than $34 billion of its own funds and arranged $21 billion in syndications
for 2,825 companies in 140 developing countries. IFC's worldwide committed
portfolio as of FY02 was $15.1 billion for its own account and $6.5 billion
held for participants in loan syndications. For more information on INCaF,
please visit http://www.ifc.org/carbonfinance.
V&M do Brasil is a subsidiary of Vallourec & Mannesmann Tubes (V&M
Tubes), a joint venture between the German company Mannesmannröhren-Werke
(45%) and the French company Vallourec (55%). Created in October 1999,
the joint venture incorporated Mannesmann do Brasil, a Brazilian subsidiary
of Mannesmann, a manufacturer of seamless steel tubes. The company has
demonstrated great dedication in the pursuit of social and environmental
excellence, and has secured a series of quality certificates as a recognition
of that, such as Forest Stewardhip Council certification for its forests
since 1999, ISO 14,000 and ISO 9000.
Toyota Tsusho Corporation is a member of Toyota Motor Group and is engaged
in a wide range of businesses from trading, manufacturing and processing
to retail and services throughout the world. Toyota Tsusho Corporation
aims to be an eco-friendly company, participating in CDM emissions reduction
projects in the developing world.
EcoSecurities is recognized as the leading greenhouse gas advisory firm
by the readers of "Environmental Finance" magazine. With
three dozen full time professionals and offices in the UK, US, Brazil,
Netherlands, and Australia, EcoSecurities is the largest dedicated GHG
advisory firm in the world, having developed CO2 emission reduction projects
in over 70 countries, advised over 15 governments on their climate change
policies, and structured and advised on many of the world's early carbon
emission reduction transactions.