Carbon Trading

Use of cover gas in the magnesium industry is essential. It protects molten magnesium from severe oxidation and allows the metal to be handled safely. Sulphur hexafluoride (SF6) has been the gas of choice to date, providing a non-toxic, safe and odourless gas protection system. Magnesium typically requires approx. 0.5kg SF6 per tonne molten magnesium to be protected. However SF6 has a global warming potential of 23,900 tonnes equivalent CO2 per tonne SF6, and in today’s environment, Governments around the world are moving to phase out the use of SF6 by 2008. AM-cover™ offers similar benefits to SF6, but with the added advantage of lower operating costs, significantly improved melt losses, and a reduction of up to 99.6% in greenhouse gas emissions i.e for each tonne of molten magnesium protected, AM-cover™ could avoid 22,000 X 0.0005 X 0.996 = 11.0 tonnes CO2e in greenhouse gas emissions. Molten magnesium needs protecting when it is produced as primary metal, and also when ingots are remelted for diecasting.

Market mechanisms have been established with a view to assist companies and governments achieve compliance with greenhouse gas emissions reduction obligations established by the Kyoto Protocol on climate change. The market mechanisms consist of Joint Implementation (JI) and Clean Development Mechanism (CDM) project mechanisms, and provisions for International Emissions Trading.

AM-cover may qualify under the Kyoto Protocol project-based mechanisms as a Clean Development Mechanism (CDM) project; provided it can be established that:

• There is an evident and quantifiable significant reduction in greenhouse gas emissions.
• The technology being employed is world best-practice.
• The greenhouse gas emissions intensity represents an improvement upon the business-as-usual scenario.

Projects that reduce greenhouse gas emissions from a baseline scenario can generate carbon credits (CERs) which can then be sold. The spot market value of these CERs is yet to be established, but could have a value between US$5-10 per CER. (CERs have been traded on a forward basis at between US$5-15 historically).

According to the World Bank report, issued earlier in May this year, ‘State and Trends of the Carbon Market 2006’, the overall value of the global aggregated, carbon markets was over US$10 billion in 2005. In the first quarter of 2006, overall transactions worth US$7.5 billion had led some to predict that this new financial market would be valued at between US$25-30 billion in 2006."