Brussels, 20/03/2007 (Agence Europe) - The European carbon fund has just been set up to help European countries respect their Kyoto Protocol commitments with clean investments to mainly developing countries, via the Community greenhouse gas emissions trading scheme which allows participating companies to obtain credit on emissions in exchange for climate-friendly investments in third countries.
This financial instrument for fighting climate change is the result of a World Bank and European Investment Bank (EIB) partnership and was formally launched on 20 March in Brussels. The two financial institutions and the European Commission attended the launch.
The trust fund, established by the World Bank in cooperation with the EIB buys carbon credit to reinvest in climate-friendly projects in third countries experiencing economic change (Joint Implementation flexible mechanism for the Kyoto targets), through clean technology transfer projects to developing countries (Clean Development Mechanism). Initial funding is €50 million, funded by four governments (Ireland, Luxembourg, Portugal, Flemish region of Belgium) and a Norwegian company (Statkraft Carbon Invest), which is one of the biggest renewable energy producers in the world. The two institutions will provide expertise and investment project portfolios but may also finance autonomous projects.
During the launch press conference, Simon Brooks, the vice president of the EIB, was delighted that the World Bank and the EIB were both playing “a full part” in the fight against climate change. He stressed that the EIB was deploying new clean technologies in and outside Europe. He explained that this know-how, combined with the vast experience of the World Bank in the carbon market will help their common objective of sustainable development. He said that income generated by emissions trading and then channelled in this way will enhance financial reliability in projects, as well as the distribution of knowledge about new technologies
Joëlle Chassard, the director of the Carbon Finance Unit at the World Bank explained that the European Carbon Fund, is the tenth of this kind managed by the World Bank (with total capital of €2bn, involving 16 governments and 64 industrial groups from Europe and Japan) but is the first “joint venture with another financial institution”. The projects that it will fund will mainly be in developing countries that are selected to help them shift towards sustainable development through development and clean technology transfer. Chassard said that they were pleased with this partnership with the EIB because “sitting in Washington…Europe is certainly leading the way in combating climate change”.
Jos Delbeke, the head of the European Commission Climate Change Unit at Directorate General Environment congratulated their joint initiative that aimed to “push the markets towards good technologies”. He pointed out that a review of the European Union's Emissions Trading Scheme (ETS) was taking place and would be subject to a Commission proposal before the end of the year to “send a long term message to the market”. Delbeke added that “the ETS is not only a European system. It is not dependent on the Kyoto Protocol and is not set to end at the end of 2012 (when the Kyoto Protocol ends: Editor's note). It is there to ensure the success of new targets that the EU set itself (unilateral reduction of at least 20% of its greenhouse gas emissions by 2020). It is open to emissions trading in exchange for investment projects under Joint Implementation and the Clean Development Mechanism and will remain until 2020”. Until then, EU governments have indicated that as part of the framework for their national emissions quota plans (NEQP) they will buy credits that correspond to 500 billion tonnes worth of Co2.