ING Bank is the counterparty for the sale of Emission Reduction Units to IFC. ING Bank is a subsidiary of ING Groep N.V. (ING).

ING was founded in 1991 by a merger between insurance company Nationale-Nederlanden and banking company NMB Postbank Group into Internationale Nederlanden Group - soon abbreviated to I-N-G. The company followed suit by changing the statutory name to ING Groep N.V. ING is one of the world''s largest financial services companies, offering banking, insurance and asset management services.

The authorized capital of ING Group is made up of ordinary shares, preference shares and cumulative preference shares. As of year-end 2006, ING had 2.2 billion outstanding depositary receipts for ordinary shares. Based on information provided by custodians, as of 2006, 33% of ING’s shareholders were based in UK followed by 31% in the Benelux region and 12% in USA and Canada. Under the Dutch Act on the Disclosure of Significant Holdings in Listed Companies, two holders of depositary receipts with a stake, or potential stake, of between 5% and 10% in ING Group were known as of 25 April 2006. They were ABN Amro and Fortis Utrecht.

IFC, acting as Trustee of the Government of the Netherlands, will purchase Emission Reduction Units and possibly a limited quantity of Assigned Amount Units from ING Bank N.V. for Euro 10 million.

The ERU’s will be generated by projects in the Ukraine. ING Bank is headquartered in Amsterdam, Netherlands.

By sale of the Emission Reduction Units to the Government of Netherlands with IFC acting as an intermediary, ING Bank will help its client companies commercialize their carbon assets. The commercial benefits of such emission reduction projects will likely have a strong demonstration effect on the nascent market for Joint Implementation projects in Central and Eastern Europe.

IFC’s goal is to encourage emerging market private sector participation in the carbon market by providing value added services to support project’s long-term sustainability. As a global investor and advisor committed to developing sustainable private sector in emerging markets, IFC is well positioned to assist project sponsors to participate in the carbon market.
IFC’s experience and knowledge in evaluating and financing private sector projects in developing countries is leveraged to structure contracts that minimize the risks associated with delivery of ERUs from projects.

This a FI Category project according to IFC’s Environmental and Social Review Procedure. The financial intermediary is ING Bank and emission reduction projects are considered as underlying sub-projects. The environmental appraisal included field visits of IFC’s environmental specialist in August 2007 to a coal mine methane project in the Eastern Ukraine that could provide delivery of ERUs/AAUs via ING Bank.

Through the appraisal, IFC confirmed that the sample project is in basic compliance with Ukrainian environmental laws and regulations. The project mines coal in deep seams located down to 950 meters below the surface. The mine does not provide for coal washing or other enrichment operations, as the coal is delivered “as-mined” to coking facilities located approximately 200 kilometers away. Historically this mine has had a number of environmental and safety issues to deal with. The main safety issue relates to the high methane content in the coal, and this has in the past resulted in several methane gas explosions and fatalities. The current methane extraction project will, besides limiting the direct methane emissions help the company further reduce the risk for methane explosions. IFC has recommended additional safety upgrades, which can help the company reduce the risks involved.

Environmental issues have mainly been related to significant particulate emissions from coal fired boilers at the mine site and water extracted from the mine. The methane extraction project has resulted in the conversion of one boiler on the mine site from coal to gas burning, and a second (new) boiler specifically designed for gas burning is under construction. As a result the burning of coal at the mine site has now stopped and the emission of particulates has ceased. The mine is a relatively dry mine, but the company is still working on long-term solutions for handling the limited amounts of water extracted from the mine. Currently the water is being discharged to a series of settling ponds, after which the cleared water is returned to the mine operations for technical water usage.

The mine is testing option for treating the water to a quality where it can substitute the current water supply from public water utilities and own wells. The mining operation is located away from any residences, is only carried out under open farmland with no buildings present, and due to the significant depth of the mining operation, the narrow seams (height typically below two meters) and a thick buffering sand layer in between the mining operation and the surface, no subsidence problems are evident. As a result no resettlement is necessary and no surface damage to building etc. has occurred.

Evaluation of the above mentioned sample project’s performance against IFC E&S Performance Standards has identified the areas for improvement beyond the minimum compliance requirement for FI projects. All the Performance Standards are applicable and will be used to indicate best practices and IFC will encourage, through ING Bank, all projects to implement the better practices.