In exchange for a substantial controlling interest in the project, the company has agreed to fund, directly or indirectly, the project’s budgeted operating and capital requirements. Implementation of the project is subject to obtaining financing on acceptable terms.

Blue Sphere has been moving forward with the development of this project and has a letter of approval from the government of Uzbekistan and a Project Design Document (which contains a comprehensive description of the project and is required for the project to be validated and registered in accordance with the rules of the Kyoto Protocol) for both the landfill gas and the compost components of the project. The next step is to submit the project for validation and then to the United Nations for registration. A validator has been selected (SGS).

The landfill gas extraction component consists of installing a flare to capture and destroy methane gas contained in the Samarkand landfill. It is expected that the landfill will continue to generate methane until 2024. There is also an option of power generation subject to economic factors.

The compost component consists of installing at the Samarkand landfill composting equipment to process newly-delivered waste and convert it into fertilizer to be sold to local farmers.

The annual estimated carbon credits for the project (known as Certified Emission Reductions (“CERs”)) is in excess of 100,000.

The sale price of the project’s CERs have been locked in through 2012 pursuant to an industry standard agreement with a third party buyer and there is written indication of interest from potential buyers regarding the sale price for the project’s post-2012 CERs as well. As currently drafted, the European Union Emissions Trading System (which is the EU legislation that implements the Kyoto Protocol in EU member states and creates EU-specific emissions reduction targets and procedures) provides a market for this project’s CERs through the end of 2020, which will yield a minimum of 9 full years of CERs. When emission reduction targets for developed countries for post-2020 are finalized, such targets will extend the Kyoto market beyond 2020. The proposed US scheme, as currently drafted, will accept up to 1 billion CERs, which is more than the total number of CERs issued to-date.

“We have made a lot of progress determining the feasibility of this project and we are pleased to finalize the details,” said Shlomi Palas, CEO of Blue Sphere.