Option to Acquire Irish Carbon Credit Project

European Green Transition PLC

23 May 2024

 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018. With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

23 May 2024

European Green Transition plc

("European Green Transition", "EGT" or "the Company")

Option Agreement to Acquire Prospective Carbon Credit Project in Ireland

European Green Transition (AIM: EGT), a company developing green economy assets in Europe which aims to capitalise on the opportunity created by the green energy transition, is pleased to announce it has entered into an exclusive option agreement (the "Option") to investigate the potential to develop a peatland carbon sink programme and in turn generate carbon credits (the "Carbon Credit Project") at the Altan farm in Donegal, Ireland ("Altan").

Highlights

·    Altan is a c.1,370 acre site primarily comprising of blanket peatland located in county Donegal in the northwest of Ireland.

·    Option offers EGT full, exclusive access to conduct additional due diligence on the proposed Carbon Credit Project over a 12-month period.

·    Agreement is in line with EGT's strategy to target green economy assets in Europe with revenue potential.

·    EGT will conduct further diligence activities to ascertain the work required to commence the generation of carbon credits at Altan.

·    During the due diligence phase, EGT will engage with all relevant stakeholders to ensure the project aligns with the Company's ESG standards.

·    Should EGT exercise the Option it would expect to monetise the project by generating revenue through carbon credits.

·    EGT does not intend to acquire the land from the landowner, rather EGT intends to generate carbon credits through a revenue sharing model with the landowner, ensuring low capital expenditures in line with the Company's capital light approach. 

·    The Carbon Credit Project provides the potential for EGT to develop a business both generating and trading carbon credits.

·    The Company intends to replicate this revenue sharing model, building a portfolio of peatland carbon credit projects, similar to a number of successfully implemented projects in Scotland.

·    EGT could extend this business to trading third party carbon credits outside of the Company's portfolio of carbon credit generating projects.

·    Should the Company exercise the Option, any further agreement with Altan would be subject to, inter alia, the Company successfully agreeing terms, purchase price and entering into further documentation. There can be no guarantee that the Option will be exercised.

·    The Company will make further announcements as appropriate.

Jack Kelly, Chief Financial Officer of European Green Transition, said:

"The Altan Option agreement offers EGT the opportunity to generate cash flow in a capital light manner by generating carbon credits. The market for voluntary carbon credits is projected to grow by a factor of 15 or more by 2030 as companies progress towards carbon-neutrality goals, and this agreement offers us an entry point into this high-growth market. Other European countries, particularly Scotland, already have a thriving carbon credit industry, generating credits from peatland sinks.

"Peatland covers 1.5 million hectares of land in Ireland, however most of our blanket bog habitats are in poor condition due to human activity and, as a result, are not functioning as they should. Rather than absorbing carbon from the atmosphere, they are leaking carbon back into the environment, which had previously been stored in the peat for thousands of years. The UN has estimated that Ireland's degraded peatlands emit 21.5 million tonnes of CO2 equivalent per year, and Ireland has recently been referred to the Court of Justice of the European Union for failure to protect its peat bogs. We see this Option as not only developing our prospective carbon credit revenue stream, but also potentially contributing positively to Ireland's climate goals.

"The Altan carbon credit generation project has the potential to be one of Ireland's first peatland carbon sink projects, and could also be the first step in a business model of both generating and trading carbon credits that could be scaled up in the years and months ahead."

Structure of Option Agreement

The Company has signed an exclusive 12-month option agreement with the Trustee of the Landowner for Altan (the "Landowner") to obtain the economic rights to develop the Carbon Credit Project at Altan. The Company has paid a fee of €100,000 to the Landowner as consideration for entering into the Option. The Company may exercise the Option to acquire the rights to generate carbon credits at Altan upon successfully completing its due diligence review of the Carbon Credit Project. It is not EGT's intention to acquire the land, rather to generate carbon credits at Altan through a revenue sharing model between EGT and the Landowner. The Company is looking to replicate a number of successfully implemented projects in Scotland. Scotland leads the way in Europe in peatland re-wetting and will be restoring 3,000 hectares of bog a year by 2025.

Building a Carbon Credit Generating Business

As energy demands of businesses grow globally, there is an increased scrutiny on the environmental footprint of each business, particularly its emissions. Policymakers have implemented challenging targets for businesses to progress towards carbon neutral goals in the coming years.  Therefore, large organisations actively buy carbon credits to absorb their emissions or to claim a contribution to societal climate targets. The Taskforce on Scaling Voluntary Carbon Markets, sponsored by the Institute of International Finance with knowledge support from McKinsey, estimates that demand for voluntary carbon credits could increase by a factor of 15 or more by 2030, with a value upwards of $50 billion, and by a factor of up to 100 by 2050.

A carbon credit is generated by either removing from the atmosphere, or avoiding the emission of one tonne of carbon dioxide equivalent. Carbon credits can be sold through a large number of organisations and carbon markets exist as mandatory (compliance) schemes or voluntary programs. Peatlands have immense carbon market potential as restoration can substantially reduce emissions and ultimately sequester carbon. As a result, EGT sees significant opportunity to generate carbon credits from Altan and scale the Carbon Credit Project across other peatland opportunities.

Peatlands - A Nature-Based Solution to Europe's Climate Goals

Peatlands are vital ecosystems in the fight against climate change, covering just 3% of the world's surface yet holding nearly 30% of all natural carbon - almost twice as much as the entirety of Earth's forest biomass. Peatlands are characterised by permanently waterlogged conditions that prevent plant material from fully decomposing, keeping carbon locked in and preventing it from entering the atmosphere as greenhouse gas.

Peatlands continue to be degraded around the world. About 12% of the world's peatlands have been drained for agricultural and forestry use with degraded peatlands accounting for 4% of global annual emissions.  The European Union has experienced the largest losses, with over 50% of former peatland areas no longer accumulating peat. Peatlands cover 1.5 million hectares in Ireland and approximately 30% have been degraded through activities such as draining and agricultural practices.

Drained and degraded peatlands currently emit around twice as much greenhouse gas as the aviation industry. This is a result of the peat soil becoming exposed to air, which accelerates the decomposition of its organic matter, releasing stored carbon as CO2 into the atmosphere. Restoring European peatlands would prevent roughly the same amount of annual emissions as taking 84 million passenger vehicles off the roads. Peatlands also naturally sequester carbon by absorbing it through plants and storing it in the ground (provided the water table is kept persistently high), making them a valuable tool in plans in climate mitigation plans.

Enquiries

European Green Transition plc

Aiden Lavelle, CEO	[phone]
Jack Kelly, CFO

Panmure Gordon - Nominated Adviser and Broker

James Sinclair-Ford / Dougie McLeod / Ivo Macdonald Mark Murphy / Hugh Rich / Rauf Munir

+ 44 (0) 20 7886 2500

Camarco - Financial PR

Billy Clegg, Elfie Kent, Lily Pettifar, Poppy Hawkins

[e-mail] + 44 (0) 20 3757 4980

Notes to Editors

European Green Transition plc (listed on the AIM London Stock Exchange under the ticker "EGT") is a business operating in the green economy transition space in Europe. EGT intends to capitalise on the opportunities created by Europe's transition away from fossil fuels to a green, renewables-focused economy. The Company plans to expand its existing portfolio of green economy assets through M&A, targeting what it believes to be distressed and undervalued projects. EGT sees substantial opportunities to deliver value from its M&A pipeline, which includes critical material, wind, solar, processing and recycling projects.

EGT's highly experienced leadership team have a strong track record of building successful public companies through the acquisition of distressed assets. EGT plans to replicate this approach, creating a sustainable and profitable business while generating shareholder returns.

The Company's current portfolio of green economy assets includes the Olserum Rare Earth Project in Sweden. The Olserum project is one of Sweden's projects of "National Interest" and has the potential to become Europe's first operating REE mine. EGT has taken an exclusive option over a copper tailings recycling project in Cyprus with the potential to generate meaningful amounts of copper, and with the site and surroundings offering an excellent long-term location to establish a potential solar power facility. EGT own additional projects in northern Sweden and Germany which have defined and tangible upside with potential to realise near-term inflection points in a cost effective manner. EGT's objective is to build a profitable business while aiming to monetise some of its assets through sale or partnership with larger industry players or European end users. The team is focused on success while remaining committed to its defined ESG strategy, ensuring excellent development practices across all projects in addition to regular local community engagement.

For more information visit www.europeangreentransition.com or follow us on Twitter and LinkedIn.

 

END