Ukrainian government in biggest ever permit sell-off

Ukraine is in advanced talks to sell the right to emit some $3.5bn (£2.1bn) worth of carbon to three companies, the government said on its website this week.

In the largest deal to date of its type, the government will sell well over 150 million Assigned Amount Units (AAUs) - a measurement of carbon established under the Kyoto Protocol - to the UK arm of Japanese bank Nomura, Swiss-based Dighton Carbon and New Zealand-based Tawhaki International.

Laurent Segalen, managing director of commodities and environment at Nomura, told Reuters he represented a consortium of businesses looking to buy at least 100 million AAUs for between 5 and 10 euros ($7-$14) per metric ton of CO2.

"We're in very, very advanced negotiations... and expect to sign a mandate with Ukraine soon and a formal agreement by the end of the year," he said.

The Ukrainian government issued a cabinet resolution saying it also aimed to sell 100 million to Dighton Carbon and 50 million to Tawhaki, but provided no further details.

The permits to emit carbon are no longer needed by the country as the global economic crisis hits industrial production – last month Ukraine's gross domestic product (GDP) decline outlook was downgraded by the World Bank from minus four per cent to minus nine per cent for 2009.