CAPE TOWN (Business Day) -- Mining companies hoping to earn carbon credits could look at possible projects involving methane capture, energy efficiency, fuel switching and transport projects, auditing firm PricewaterhouseCoopers told the Investing in African Mining conference last week.
The auditors’ manager of sustainable business solutions, Harmke Immink, said companies wanting to take advantage of carbon trading should start by measuring their emissions, quantifying their reduction options and drawing up screening criteria that fitted their business strategy.
They could then develop a plan to monetise the asset, she said.
“If you are a big emitter, you are sitting on a large carbon asset you could realise,” Immink said.
Sterling Waterford director Greg Paterson-Jones told the conference that mining companies with an industrial facility could also look at capturing CO² emissions and converting them into a source for production of biofuels.
Sterling Waterford is a trader in carbon credits. It buys carbon credits on forward contracts, meaning that if it finds the risk and delivery on a company’s qualified project acceptable, that company can generate cash from the project before it has started to create credits.
Paterson-Jones said companies considering such projects could get advice from one of the local consultancies such as PricewaterhouseCoopers or South-South North.
According to Immink, carbon credits were developed after climate change and global warming led to the Kyoto Protocol.
The protocol, which was ratified by 84 countries, set 1990 as a base year for measuring carbon emissions, and European Union (EU) members aim to return their carbon emissions to the 1990 level or below.
Some non-EU countries are also implementing the protocol.
In the EU emission-trading scheme, carbon dioxide, hydrofluorocarbons and methane are the only emissions targeted until next year, but after 2008 there is a commitment to reduce the emissions of other harmful gases.
Trading in carbon credits is one option for these countries. Some had put out tenders for emission reduction projects that would earn carbon credits, while other countries have contributed funds to the World Bank Carbon Fund, which assists emission-reduction projects.
Immink said that although there were no specific mining-related carbon credit projects in South Africa, mining firms could consider a project based on capturing methane gas found underground in mines.
This methane, which is principally used in fuel, could be used to generate power or heat. Another possible option for mines is to undertake energy-saving projects.
She said that the scheme affected mainly energy companies. However, other industries such as pulp and paper, cement, brick and glass could also be affected.
In South Africa, every kilowatt hour of power generated releases 1kg of carbon dioxide into the atmosphere, so energy reduction projects would qualify for carbon credits.
Fuel switching, from fossil fuels to biomass, would also qualify.
A fourth option would be projects related to transport, where changing fuels or processes would reduce emissions, she said.
Business Times reported last month that the first local firm to receive approval for a carbon emissions project was SABMiller [LSE:SAB].
Paterson-Jones said others included paper and pulp company Mondi and the Durban and Cape Town municipalities, which run waste-management projects.
Within the mining and processing sector, BHP Billiton [NYSE:BHP; LSE:BLT] was understood to be looking at a project, and so was steel maker Mittal SA [NYSE:MT].
It was quite possible that Sasol [NYSE:SSL], as one of the country’s largest carbon emitters, would also consider starting energy-reduction projects
