Posts Tagged ‘Russia’

Severstal to cut emissions making energy from waste methane

In addition to direct emissions from steelmaking, emissions from the extraction of raw materials also contribute to steel’s total carbon footprint. However, this also gives vertically integrated steelmakers the opportunity to invest in energy efficiency across the supply chain. One option is to produce power from mining waste gases, insuating the mining operation from volatile energy prices and reducing overall greenhouse gas emissions.

SBB 28 Sept Vorkutaugol, the coking coal mining division of Russian steelmaker Severstal, will start recycling methane gas collected from its Severnaya mine, processing it into heat and electricity at the 800m rouble ($25m) worth gas generating power plant it is preparing to commissioning in the first quarter of 2012, Steel Business Briefing learns from Vorkutaugol.

The 18 megawatt plant will cover 100% and 70% of electricity and heat energy needs at Severnaya. When fully operational, it will enable Vorkutaugol to reduce its emissions by 0.5m t/y in carbon dioxide equivalent, as well as to save up to 300m roubles/year, which may be diverted onto operational needs and other investments, SBB understands.

Based in Russia’s northwestern Komi republic, Vorkutaugol operates four mines: Severnaya, Vorkutinskaya, Zapolyarnaya and Komsomolskaya, and open pit Yunyaginsky. Their combined output is expected to amount to 8.5mt this year, as SBB previously reported.

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Russian steel projects ask for over $377m of carbon credits

After several years of delays, the Russian government finally began the process of issuing carbon credits to Joint Implementation projects this year. Now, Russian steel plants which have reduced their emissions canearn credits, while European steelmakers have access to a new source of offset credits for the emissions trading system.

SBB 3 November 2010 Eight Russian projects which have reduced greenhouse gas emissions in the iron and steel industry are among a total of 58 projects which have taken part in the second round of applications for carbon credits from Russia’s Sberbank, Steel Business Briefing learns.

Sberbank is offering a total of 30m Emissions Reduction Units (ERUs), worth more than $553m (€394m) according to a recent European auction, to projects which have successfully reduced emissions as part of the UN Joint Implementation programme. The state-owned bank should decide on which projects receive ERUs in this round by 22 November, SBB understands.

The largest project on the list is Magnitogorsk Iron & Steel’s (MMK) switch from open-hearth furnaces to electric arc furnaces and installation of continuous slab casters. It is asking for 7m credits to represent the 7m tonnes of CO2 equivalent emissions it has saved since the start of 2008.

In addition to six projects to upgrade or improve the efficiency of iron and steel production and rolling, Air Liquide-Severstal, which provides oxygen to Severstal’s basic oxygen furnaces, also applied. In total the eight projects asked for more than 20m ERUs.

In the first round of applications Evraz was granted the right to 2.12m ERUs, while Metalloinvest was granted 3.2m. They should receive the credits by the end of the year, SBB understands.

ERU futures and options contracts will begin trading on the London-based European Climate Exchange (ECX) on 8 November, SBB notes.

Ukrainian met coal miner starts selling Kyoto credits

For now, Ukraine seems to be running ahead of Russia in the JI metcoal, iron and steel sectors. But plenty of scope for Russia to catch up.

SBB 6 August 2010 Ukrainian coking coal producer, Krasnodonugol, part of the Metinvest group, has sold its first batch of Emission Reduction Units (ERUs) for €598,000 ($788,000). The buyer was Dutch bank, ING, Steel Business Briefing understands.

ERUs are granted under the Kyoto protocol to projects which reduce greenhouse gas emissions. One ERU is granted for a reduction equivalent to one tonne of carbon dioxide.

Krasnodonugol has reduced methane emissions from its Sukhodilska-Skhidna mine, one of seven it operates in the Luhansk region, by using it as a fuel for the boilers which are used to heat the mine and provide hot water. In total the project hopes to reduce emissions by 308,132t CO2-equivalent over 2008-2012.

The first batch of credits was received once emissions reductions for the period 2006-2008 were confirmed. The project still qualifies for further allocations for emissions reductions during 2009-2012.

Krasnodonugol is also undertaking a similar project at its Sukhodolska-Vostochnaya coal mine. It expects this to be operational by Q4 this year. Though this project has yet to be approved for under the Joint Implementation programme, the company hopes to achieve emissions reductions of some 200,000-250,000 tonnes CO2-equivalent from this project.

Ukraine is also host to a number of Joint Implementation projects related to the steel industry. These include three projects at Industrial Union of Donbass’s Alchevsk steel plant which have combined potential emission reductions of over 4.5m t CO2-equivalent, SBB notes.

MMK bids for Russian carbon credits

Russia’s first tender for ERUs – but it is unclear why MMK is involved. There have been significant delays in organising the tender, but it had been expected in recent weeks.

SBB 18 March Russia’s MMK is bidding for carbon credits in the country’s first tender of this type. However it was unwilling to reveal to Steel Business Briefing the details of its emission-reduction project. One source suggests the bid could be associated with mine expansion.

The tender is being organised following Russia’s accession to the Kyoto Protocol several years ago. Moscow-based Sergei Sitnikov of Baker and McKenzie, a law firm explains that, to date, Russia has no clear procedures for the issue of Emission Reduction Units (ERUs). They are linked to JI or Joint Implementation projects under the Protocol.

He adds that Sberbank, a majority state-owned bank is collecting bids and reviewing the projects. “The bank and an expert council to be formed by the bank will make recommendations to the Ministry of Economic Development (MED), which will then approve or reject bids,” Sitnikov tells SBB.

Each tender has a limit of ERUs of 30m tonnes. Bids will be judged on grounds of ecological and energy efficiency, their technical and financial potential and economic and social impact.

MMK spokesperson Evgeny Kovtunov explains that if companies in the scheme reach specific carbon reduction targets in their carbon reduction projects, they can then sell on the ERU’s to other companies outside Russia. “The penalty for excess emissions could be €100/tonne, while current quotes for carbon trades stand at €10/t,” Kovtunov speculates.

It also tells SBB that it expects a decision on whether it has been successful in 30 days.

Russian mills fear carbon-based border controls on steel

Several of the presentations at the recent 15th CIS Metals Summit, organised by Adam Smith Conferences in Moscow focussed on carbon issues. The vice president of the Russian Union of Metal Exporters, Leonid Shevelev, looked at methods of measuring carbon dioxide emissions and detailed proposals for reducing from Russia’s steel mills. He focussed on several companies including Severstal.

Another paper – from Sergei Sitnikov, from Baker & McKenzie, analysed the recent changes in Russian legislation on Joint Implementation of carbon reducing projects. JI is part of the Kyoto Protocol. 

Other speakers looked at sustainability in financing, including the Equator Principles.

Roger Manser