Certified Emission Reduction (CERs) Purchase Agreement– 2019
The agreement allows Mumias Sugar Company to sell its Certified Emission Reduction Credits. It allows Japan Carbon Finance Company Limited (JCF) to purchase CERs under the provision of Article 12 of the Kyoto Protocol, the Clean Development Mechanism (CDM), which is designed to help developing countries achieve sustainable development through greenhouse gas-reducing projects. The cogeneration project forms part of the CER agreement, as Mumias Sugar Company will produce clean electricity from the baggasse, a clean fuel. Mumias estimates an annual displacement of 100 0000 tons of carbon from the environment to be factored in the formula.
Carbon Development Mechanism
Global Warming has become a rising concern in the world today. This has led to a sustained effort by all concerned to reduce Carbon emissions which are the lead causes for global warming.
It is with this in mind that a system was designed to help counter carbon emissions. Under the Kyoto protocol countries are permitted to use a trading system to help meet their emissions targets. A country may allocate permits to individual companies for the emission of a certain quantity of greenhouse gases. However Countries are allowed to buy permits from countries that are below their targets, if they go beyond the set limits of their permits. Also companies within a country that are more able to reduce their emissions are allowed to ‘trade’ excess permits to those that have excess emissions.
Certified Emission Reductions (CERS)
These are generated by climate-friendly, sustainable development projects in developing countries. They can be used by developed country Governments and companies to meet their reduction commitments under the Kyoto Protocol.
Mumias Sugar Company has developed CER projects, by diversifying into power production. Currently the company produces 34MW of electricity and exports 26MW to the national grid with the use of Bagasse (a cane residue) which replaces 47% thermal production in the boilers, the current production will increase to 35MW. It is this project, which will earn Carbon credits for the company.
MSC has entered into an agreement with the Japan Carbon Finance LTD, which will see the later reimburse MSC for the clean power production based on the Kyoto protocol meant to control global emission of Greenhouse gasses. This project is set to earn the company revenue not only from the sale of power to the national grid but also from the Carbon credits, meanwhile enabling MSC to give its contribution to the conservation of the environment.