The Capex, S.A. electric energy project in Argentina represents the largest infrastructure project accredited by the United States Initiative of Joint Implementation (USIJI) in terms of investment (USD $500 million), megawatts (539 MW) and CO2 offsets produced (30 million metric tons of CO2). There is a high probability of reliable term stream of CO2 offsets being produced, given its very favorable technical, economic and political attributes.

The Capex, S.A. project is a single-cycle to combined-cycle natural gas fueled electric generator facility located in Neuguén, Argentina. The project expects to produce 30 million metric tons of greenhouse emissions credits, over a 30-year period. The current Capex power plant comprises five Westinghouse 261 B11 gas turbines and one Westinghouse 701D gas turbine, one 132kV substation and three high voltage overhead transmission lines through which the generated energy is supplied to the national grid. As a low cost power generator, this plant is one of the first to be dispatched within the grid. The project includes the installation of one HRS in each gas turbine exhaust and the steam system to feed one steam turbine rated at 180 MW. This occurs because the combined-cycle plant will operate at a lower busbar cost of electricity than existing simple-cycle gas fired power plants and will therefore displace the power on the grid. The existing plant rating is 354 MW. After conversion, the plant will be rated at 539 MW. The project’s lifetime is calculated to be of 30 years. Thus, offsets are produced by making the plant more efficient, therefore it is technically an efficiency project. Furthermore, Capex, S.A. has begun a forestation plan at the site of the project. Capex, S.A. has already begun the process of planting grass and trees around the power plant. This has practical results of reducing the ambient temperature around the power plant, which increases the power output. The company intends to continue to reforest property around the plant, such that 100 hectares are reforested per year.

The Capex plant (known as Agua del Cajon Power Plant), in its current simple-cycle configuration, is a base loaded plant. The plant has consistently achieved dispatch levels in excess of 90% since its commercial operation in 1993. Capex is, and will remain, one of the lowest cost generators in the Argentine market. This is due to the leading edge technology utilized by the Capex facility and the fact that Capex owns and supplies its own natural gas. As a result, its entire capacity is, and will be, dispatched over 90% of the time. Therefore, there is a high probability of offsets being created in each and every year of plant operations.

After the conversion to combined cycle, Capex will be able to capture the waste heat generated by its existing gas turbines. Utilizing the waste heat will enable the plant to generate approximately 185 MW of new energy without the use of additional fuel. This will create approximately 1 million metric tons of CO2 equivalent offsets per year over project life, estimated to be 30 years. Governmental approval agencies in both Argentina and the U.S. have recognized and certified this project.

The single most important criteria of the US Initiative on Joint Implementation (USIJI) in project evaluation is whether or not there are real reductions in emissions associated with the implementation of a project-and an evaluation of the estimated reductions. The Capex, S.A. project is USIJI certified.

Capex, S.A. has contracted an Environmental Defense Fund (EDF) affiliate, the Environmental Resources Trust (ERT), to verify the emissions that have been reduced as a result of operations of the project. ERT’s mission is to provide and ensure that the quantity of Emissions Reductions reported as a result of plant operations are accurate. ERT will measure, estimate, calculate or otherwise determine the quantity of Emissions Reductions associated with the Capex, S.A. project. IUEP and ERT supports the use of market-based mechanisms for reducing the emission of air pollutants such as GHG; both seek to demonstrate the environmental and economic benefits of such mechanisms and the components of such mechanisms, while creating environmental benefits.

In December 1997 Capex, S.A. contracted with Black and Veatch International, via an EPC contract, the conversion of its Agua del Cajon Power Plant. As of October 1, 1999 all of the major equipment had been delivered to site, erected and had undergone its initial testing. Initial synchronization of the steam turbine generator was conducted on October 11, 1999. Subsequent to this event the plant underwent isolated systems checks internal to the plant, interconnection testing with the grid required by Cammesa, performance testing and a full reliability run. Commercial operation of the project began on January 1, 2000, consistent with CDM guidelines. Total plant asset value at operation is approximately $500 million USD.

Political Milestones

President Clinton delivered remarks regarding the Capex, S.A. project on October 17, 1997 in The Declaration of Bariloche press release. There have been numerous communications between Capex, S.A. and the Menem administration in the Republic of Argentina, leading to the issued Presidential Decree Number 822/98, establishing the Argentinean Office on Joint Implementation (AOJI) - Law # 24.295 - under the auspices of the Secretariat of Natural Resources and Sustainable Development.