OREANDA-NEWS. May 31, 2010. The Multilateral Carbon Credit Fund (MCCF), set up by the EBRD and the European Investment Bank (EIB), has agreed to buy from Air Liquide Severstal carbon credits resulting from an energy efficiency project involving a modern Air Separation Unit in Russia’s Vologda region, reported the press-centre of EBRD.

This will be the MCCF’s second transaction in Russia.

Air Liquide Severstal is a joint venture between Air Liquide (75 percent) and Severstal of Russia (25 percent) created to build and operate a modern Air Separation Unit at Severstal's main steel plant in Cherepovets to supply oxygen, nitrogen and argon for Severstal's steelmaking facilities.

The EBRD financed the original project through a 72 million Euro A/B loan -- with 36 million Euros for the account of the EBRD and 36 million Euros syndicated to three B-Lenders, BNP Paribas Fortis, Credit Agricole CIB and Natixis, each of whom contributed 12 million Euros.

Russian government approval has to be obtained and various other conditions fulfilled before the purchase of the carbon credits can be completed.

The Air Separation Unit built and operated by ALS is a state-of-the-art operation applying internal compression via a pumping cycle.

As a result, the facility directly produces high pressure oxygen and high pressure nitrogen. The facility includes two main air compressors and an air compressor booster. It also receives a portion of its compressed air from Severstal.

The carbon credits being bought through the MCCF are to be generated via the Joint Implementation (JI) mechanism under the Kyoto Protocol.

The MCCF, whose participants include the governments of Finland, Belgium (Flanders), Ireland, Luxembourg, Spain and Sweden, as well as five private sector participants, is one of the few such funds dedicated specifically to countries from central Europe to central Asia.

JI is a market-based approach for addressing global climate change aiming to achieve cost-efficient reductions in greenhouse gas emissions through targeted investments in transition economies. A JI project generates carbon credits (known as Emission Reduction Units). These can be traded internationally or used to meet a buyer’s compliance obligations.

This transaction was negotiated by GreenStream Network Plc., which acts as a carbon manager for the MCCF.