The 'Post-2012 Carbon Credit Fund', which is the first of its kind, will exclusively purchase and trade 'carbon credits' generated after the Kyoto Protocol expires in 2012. The aim is to support the market value of environmentally worthwhile projects amid uncertainty over the actual form that the carbon credit trading regime will take after 2012.
Indeed, the scramble by governments to agree on a follow-up climate pact by the end of 2009 is holding back investment in such longer-term projects.
"By assuming the inherent regulatory risk, the Fund will give a clear signal to the market of the EIB and its partners' confidence in the development of a post-Kyoto regime while directly supporting environmental projects," the group said in a statement on 28 April.
The Fund will contract credits from projects, for delivery as far away as 2022, under the Kyoto Protocol's Clean Development Mechanism (CDM) and Joint Implementation (JI) schemes, which allow industrialised nations to offset carbon emissions at home by funding "clean" projects in the developing world.
"As 2012 is approaching, the uncertainty over long-term prices for carbon is increasingly affecting project developers. The Post-2012 Carbon Credit Fund will make additional CDM and JI projects viable by offering guaranteed carbon off-take at attractive prices," said Urs Brodmann, an executive board member at the fund's investment adviser First Climate.
EIB President Philippe Maystadt said the fund would help the EU to remain "at the forefront of international efforts to combat climate change".
"As the EU's financing arm, our role is to support these efforts by promoting environmental lending and developing carbon markets. This fund, combined with other EIB carbon and climate change initiatives, positions the Bank as a significant contributor to global climate change efforts," he added.