Path breaker: Partnership places firm on forefront of emerging carbon trade market.

The Kyoto Protocol is opening up a new world of opportunities for a Timmins-based biotechnology company with a "proven" process to clean filthy air by reducing greenhouse gas emissions. For more than a decade, Mikro-Tek Inc. has been perfecting a practice of inoculating tree seedlings with an organic supplement to speed up forestry regeneration programs.

Now, with the Kyoto guidelines for emission reductions coming on line next year, there is suddenly a new application for their technology, placing the company on the forefront of the emerging global carbon trade market.

To position themselves for this new market, Mikro-Tek has teamed up with Pelangio Mines Inc., a Timmins mineral exploration company, forming a joint-venture company called C-Trade, which will market greenhouse-gas carbon emission credits based on this seedling inoculation that increases tree growth.

The idea behind it is that faster-growing trees absorb more carbon dioxide (CO2) generated by the burning of fossil fuels.

"It's proven worldwide technology," says Mark Kean, president of Mikro-Tek, who believes they are the only Canadian company doing seedling inoculation.

Pelangio's role will be to raise $6.6 million in private capital over four years for the program.

Kean says the resulting carbon credits, verified through this inoculum process, will revert back to the joint venture and be divided up among the investors interested in collecting carbon credits for their own businesses. Pelangio will operate the joint venture.

The process, known as carbon sequestration technology (meaning the storage of greenhouse gas emissions), is quite basic.

A natural fungal supplement helps trees grow faster, and photosynthesis does the rest.

By digging out naturally occurring micro-organisms commonly found in the roots of most tree species, the mycorrhizal fungi is gathered up and cultured in Mikro-Tek's Timmins lab. There it is prepared as an inoculum that is sprayed on trees in a nursery or wood lot.

"Each species of tree has a corresponding microorganism that's most beneficial," says Kean. "The trick is to match the strain to the plant species."

The faster growing trees remove carbon dioxide from the air more efficiently, produce oxygen, and the carbon is stored as wood. Depending on the species, Mikro-Tek's inoculum increases the growth rate of trees by about 20 to 30 per cent.

They also have a specific strain they sell to Inco Ltd. in Sudbury that is adapted for mine tailings and waste material sites.

The five-employee firm has 20 test plots in Canada with about 10 million seedlings, considered one of the largest number of trees planted.

"What we have is unique... with a collection of micro-organisms from across Canada specifically for reforestation sequestration," says Kean. "We started marketing it from its original research and now have expanded into agricultural crops."

Besides collecting cultures from the commercially valuable tree species like black spruce, white spruce and jack pine, they have expanded into agricultural crops and more tropical species, with trial partnerships in Chile and the University of Guelph.

Kean says the joint venture has piqued the interest of about half a dozen investor companies, but most are adopting a wait-and-see attitude since the international rules for carbon credits are not yet established.

Under the 1997 Kyoto agreement, targets are set for the reduction of greenhouse gases, particularly carbon dioxide, among the world's industrialized nations.

Many companies, especially big oil firms, initially opposed emission cuts, believing it would hurt their growth because C02 is emitted by any activity involving fossil fuel use. But emissions trading has captured the imagination of investment firms and private-sector companies, which sense there is money to be made in the market for carbon dioxide emissions credits.

It is believed companies emitting greenhouse gases will buy the credits from Pelangio and other firms directly, or through trading houses already in operation.

The U.S. is not a signatory to the final agreement, but has pledged to honour their initial commitment by deciding to proceed with it internally.