IFC and AgCert: Partnering to Reduce Greenhouse Gas Emissions
IFC responds to the challenge of climate change by investing in sustainable energy and projects that reduce greenhouse gas (GHG) emissions, supporting the carbon finance market, and driving innovation in clean energy. Agriculture is responsible for about 20% of global GHG emissions per year; yet few projects to date have addressed this challenge head-on. IFC's investment in AgCert, a market leader and innovator in this area, is also its first in a business that relies solely on the generation and sale of carbon credits as its primary source of revenue.
AgCert
Dublin-based AgCert International PLC, founded in 2002 and listed about a year ago on the London Stock Exchange, is a leader in the production and sale of agriculturally derived greenhouse gas emission reductions.
AgCert works with pig and dairy farms and other animal waste producers, installing biodigesters, covered waste management systems that capture and dispose of methane from animal waste. Traditionally, animal waste management systemsare open-air lagoons that emit large volumes of methane, which has a global warming potential equivalent to 21 times that of carbon dioxide. With AgCert's technology, the captured methane is either converted into electricity for the use of the farmer, or flared, producing much less potent carbon dioxide. The process also produces organic fertilizer. AgCert covers all the costs, including construction and maintenance of the biodigesters and ancillary equipment.
Since AgCert's technology has received UN approval under the terms ofthe Kyoto Protocol, it can then sell the resulting certified emission reductions, or so-called carbon credits, to the public or private sector indeveloped countries to help them meet their emission reduction obligations. The company shares a portion of its revenue from the sale of carbon credits with the farmers.
To date, AgCert has operations in Mexico—the first to obtain UN approval in that country—Brazil, Argentina, Chile, and Canada, and its customers include industrial giants such as Nuon, AES, BHP Billiton, Electricite de France, and Canada's Epcor Power. AgCert and AES will partner in rolling out its technology in Asia, Europe, and North Africa.
Partnership with IFC
When AgCert approached IFC in mid-2004, attracted by our global operations and in-house carbon finance expertise, it had gas capture operations at only five sites in Brazil. The company’s expansion project involved an additional 1,600 sites in Brazil, Mexico, and other countries in Latin America over a two- to three-year period, at an estimated cost of $150 million. In early 2005, IFC provided $10 million equivalent in equity financing to the company, which also served as a signal of confidence in the company's initial public offering on the London Stock Exchange later that year.
Development Impact
The company has installed its technology at over 460 sites as of June 2006, which should result in 1.9 million tons of CO2-equivalent reductions per year; upon project completion, expected reductions are about 15 million tons per year.
Potential for additional income and cost savings for farmers: share in sale of carbon credits, sale or use of biodigester output as organic fertilizer; if they choose, the use of methane as source of renewable energy.
Sustainable employment: several hundred jobs maintaining and monitoring the digesters.
Improved water and air quality at sites where the technology is implemented.