Fund aims for certainty in post-2012 carbon markets 

Five leading public financial institutions behind the 'Post-2012 Carbon Fund' told the Carbon Expo conference yesterday (28 May) that that they received continuous interest from project developers seeking insurance against the uncertainties of the post-2012 carbon market. 

As the outcome of the negotiations on a post-Kyoto deal is still up in the air, projects to reduce emissions in developing countries have been put on hold. The fund aims to reduce the risk of uncertain long-term prices by purchasing and trading Certified Emissions Credits (CERs) under the Clean Development Mechanism (CDM) for the post-2012 period.

The idea is to help additional offset projects take off by guaranteeing bankable revenue regardless of what shape the future CDM will take.  

"We want to set a political signal that we trust the market," Fritz Wilhelm, head of communications at First Climate, told EurActiv. "We guarantee an off-take price no matter whether these credits have a value after the new climate treaty is in force," he added.

The Post-2012 Carbon Fund is the first to target exclusively post-Kyoto credits. The European Investment Bank (EIB) is the principal investor in the €125 million fund, contributing €50 million.

Simon Brooks, vice-president of the European Investment Bank (EIB), identified risk reduction as the key contribution of the fund. "Our key aim in launching this fund was to facilitate project business after 2012 by offering a solution to the main issues facing project developers," he said. He said the fund could make future carbon credit revenues more predictable and help guarantee the availability and reliability of subsequent buyers for the offset credits generated.

The fund is investing in projects using wind energy, waste management and energy-efficiency technologies in Asia, Africa and Latin America. They are supposed to generate four million CERs between 2013 and 2020, when the fund will start to sell to customers like big industrial utilities in the EU, which have to comply with the targets of the bloc's emissions trading scheme.