German KfW and Wirajaya in carbon finance deal

KfW Bankengruppe, the German promotional bank, and privately-owned Wirajaya Packindo have entered into an agreement to cooperate for a Clean Development Mechanism Project with the objective to assist the latter to phase out its coal consumption within its manufacturing facility.

Under the agreement, KfW will purchase almost 500,000 CERs to be generated by the project until 2020.

KfW will also contribute by financing the development of the necessary steps under the Clean Development Mechanism, such as validation of the 10 project by independent entities and registration under the UNFCCC, the UN entity that regulates the compulsory carbon market.

Wirajaya is a medium-sized company and a manufacturer of packaging materials exclusively from recycled waste-paper. The project will replace the use of coal for provision of steam needed for paper manufacturer, with steam to be generated using combination of recovered waste heat within its existing operation and supplementary natural gas.

The elimination of coal is expected to reduce operational emission over 70,000tCO2 annually. The revenue from carbon is needed to ensure that the investments necessary for the fuel switch will be financially viable despite the higher gas price. (alex)