Cavico, a Vietnam-based engineering and construction, infrastructure investment and natural resources company, has said that its majority owned subsidiary Cavico Transportation has signed a carbon emissions reduction (CER) sales agreement related to the operations of the company's Cau Dat wind power plant being built in Lam Dong province.

The agreement, known as a clean development mechanism (CDM) emissions reductions purchase agreement, was made with Swiss-based Carbon Resource Management (CRM). Once the Cau Dat wind power plant is operational, Cavico Transportation and CRM will finalize the financial terms for Cavico’s CERs.

Under the terms of the agreement, CRM agrees to purchase all the CERs generated by Cavico from the Cau Dat project for seven years after the startup of the plant, which Cavico expects to begin operations in 2014. After the expiration of this contract, Cavico has the option to continue the agreement with CRM or to select another purchaser that may give it more favorable financial terms for its CERs.

The selection of the CDM partner was made under a Kyoto Protocol mechanism to assist industrialized countries in reducing their greenhouse gas emissions. It allows Cavico to negotiate the price of electricity with the Vietnamese government and profit from the reduction in carbon emissions. According to the initial studies, Cau Dat plant will reduce on average 37,000 tons of CO2e per year. Currently, the market price of one CER unit is approximately $15.

Cavico received approval from the Lam Dong province to develop the Cau Dat wind power project. Upon completion, the 30MW wind power plant will be connected to the national grid. The wind power plant may eventually be expanded to 100MW-300MW.

Hai Tran, vice president of Cavico, said: “We are pleased to share our progress relating to the Cau Dat wind power project. With the continued support and encouragement from the Lam Dong’s People Committee, the local government and the Vietnamese government’s increased focus on clean energy projects, we believe this will be a win-win for all parties involved.

“Cavico strongly believes that wind power will significantly contribute to alleviating the current electricity shortage problems in Vietnam.”