Energas S.A., the electricity generating joint venture enterprise operated by Sherritt in Cuba, installed a system that uses waste exhaust heat to generate steam and produce electricity (called a combined cycle generating unit) at its Varadero facility in 2003. In 2007, this unit was granted Clean Development Mechanism (CDM) status under the provisions of the Kyoto Protocol by the United Nations Framework Convention on Climate Change (UNFCCC). While the international framework containing the rules governing the CDM expired in 2012, the continuance of the CDM post-2012 has been supported through a commitment by certain regional and domestic emission-trading markets to allow entities to use Certified Emission Reductions to meet their compliance obligations under these systems.
Energas Varadero facility produces lower GHG emissions for each gigawatt hour (GWh) of electricity than other facilities, contributing to the reduction of GHG emissions in Cuba. By the end of 2014, 1,533 kilotonnes of carbon dioxide emission reductions had been documented for the Kyoto credits. Of these, only 343.12 kilotonnes’ worth of credits have been issued, mainly due to delays in verification and approvals. An additional 638.39 kilotonnes have been approved and are ready for issuance, with 184.78 in the approval process for future issuance. At the end of that same year, a further 366.78 kilotonnes covering the reporting periods of 2012 (172.21 kilotonnes), 2013 (127.16 kilotonnes) and 2014 (67.41 kilotonnes) were documented on a preliminary basis.
The first Energas CDM project at Varadero was approved to receive credits over a seven-year monitoring period. To continue receiving CDM credits, Energas must apply to the UNFCCC for renewal for the Varadero facility. We will make a decision on whether to proceed with this renewal on the basis of current economics, revised processes and any benefits or drawbacks associated with the registration of our second facility that would qualify: the recently built Boca de Jaruco combined cycle power generation site.