Finnish utility Fortum has signed an agreement to purchase emission reduction units (ERUs) worth EUR70 million and covering around half of its annual carbon dioxide emissions.

Fortum will buy 5 million tonnes of ERUs from Russian Territorial Generating Company No. 1 (TGC-1) under the Kyoto Protocol’s Joint Implementation scheme. The deal is based on a memorandum of understanding signed between the two companies in 2006.

Fortum owns 25 per cent of TGC-1.

As part of the deal, TGC-1 will implement a number of projects to reduce emissions at its facilities, overseen by ECF Project Ltd. The purchase agreement is the largest of its kind ever made in Russia.

The emission reduction projects to be implemented include the reconstruction of hydropower plants, expansion and reconstruction of combined heat and power generation facilities as well as energy efficiency improvements in the district heating network.

“The Kyoto mechanism enables companies to reduce emissions where it is most economical. Last year, 89 per cent of Fortum’s own power generation did not cause CO2 emissions. Reducing emissions in Russia through Joint Implementation is an effective way for us to mitigate climate change,” says Tapio Kuula, Senior Vice President at Fortum.

Fortum is the second-largest shareholder in TGC-1, which was founded in 2006 and which operates over 6200 MWe in north-west Russia. TGC-1 is aiming to increase its installed capacity by 3600 MWe by 2015.

“This agreement clearly demonstrates that Fortum is an industrial investor committed to developing the Russian power and heat sector in a sustainable way. The Joint Implementation mechanism helps us to take climate issues into consideration in our investment program,” said Valery Rodin, General Director of TGC-1.