Flanders Said to Get Bids From Vitol, Shell in Carbon Tender

The Belgian region of Flanders received offers from 18 companies including Vitol Group SA and Royal Dutch Shell Plc to sell it carbon offsets via a purchase tender, according to two people with knowledge of the matter.

The companies made 19 separate offers, according to the people, who asked not to be identified because the tender process is confidential. Participants in the tender that closed Sept. 13 were asked to offer as many as 20 million Certified Emission Reductions or Emission Reduction Units in four tranches, according to documents published by the Flemish energy and environment department.

Developed nations need to surrender by March 2015 enough carbon permits and offsets issued under the Kyoto Protocol to match their greenhouse-gas emissions from 2008 through 2012. Under Belgium’s plan to meet its target, the regions of Wallonia, Flanders and the capital Brussels have separate emissions-cutting goals.

Alcogroup, Electrabel SA and Electricite de France SA’s trading unit also participated in the tender, according to the people.

Fabian Gmuender, a spokesman for Vitol at Cohn & Wolfe in Geneva, said yesterday by telephone that the company doesn’t comment on daily market activities. Ross Whittam, a spokesman at Shell in London, declined to comment when contacted by telephone today. Olivier Barriot, a deputy head of trading at Alcogroup’s Alco2 unit, said yesterday by telephone that the company participated in the tender.

Tender Terms

Sarah De Bruyn, a spokeswoman for Electrabel in Brussels, and Michele Reid, a spokeswoman for EDF Trading Ltd. in London, didn’t reply to e-mails and phone calls yesterday asking for comment. An official at the Flemish energy and environment department in Brussels said yesterday by telephone that nobody would be available to comment on the tender before tomorrow.

Flanders is seeking 16 million to 20 million tons of CERs or ERUs to be delivered in tranches of 4 million to 5 million tons over a period of 12 months after a seller is selected, according to the tender documents.

The first two tranches of credits must contain CERs or ERUs eligible for the first commitment period of the Kyoto Protocol, which ran from 2008 through 2012. The other two tranches must be valid for the eight years through 2020, according to the papers.

The region won’t accept offsets generated by nuclear plants, land-use change or forestry, from the destruction of hydrofluorocarbon-23 gas or nitrous oxide from adipic acid and nitrous-oxide facilities, from hydro generators with capacity of more than 20 megawatts and from projects to improve coal-plant efficiency, according to the tender documents.

“It is unlikely that those selling into the tender will purchase volume in the open market due to the level of due diligence that is needed to be submitted for the tender,” Richard Chatterton, an analyst at Bloomberg New Energy Finance in London, said by e-mail. “The impact on the market is likely to be minimal.”

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