Banks Buy Over 200 Million Euro Chinese Carbon Credits
Date: 01-Dec-06
Country: UK
Author: Gerard Wynn
Western banks are piling into the carbon market, eyeing big profits because rich countries are increasingly expected to shoulder tough climate change targets -- fuelling demand for permits to emit greenhouse gases.
Wealthy countries face emissions targets under the international Kyoto Protocol on global warming. They can meet these by funding emissions cuts in developing countries, earning carbon credits in exchange.
In Thursday's deal, investors have funded two projects to destroy the potent greenhouse gas methane in coal mines at Yangquan Coal Industry Company, using the gas to generate power.
"The projects will improve the safety in the mines and will reduce greenhouse gas emissions in the atmosphere," deal arrangers IXIS Environnement & Infrastructures said in a statement.
The banks and specialist investors the European Carbon Fund have bought 18 million tonnes of credits -- roughly equivalent to the annual emissions of Slovenia. The project was developed by carbon specialists Camco.
The idea is to buy credits cheap in bulk from countries like China and then sell them, for example, to European companies which face emissions targets under the EU's carbon market.
The European Union's executive on Wednesday clamped down on the planned emissions of 10 EU states in a move that businesses said would boost the price of credits.
US investment bank Morgan Stanley said last month it was investing $3 billion in carbon markets over the next five years.
Global carbon trade was worth $21.5 billion in the first nine months of 2006 versus $11.1 billion for the whole of last year, according to the World Bank.
China has been a magnet for such trade -- the World Bank announced in summer a deal from two projects that would generate well over 100 million tonnes of carbon credits by the end of 2012.
Methane is one of several greenhouse gases that trap heat in the atmosphere and are expected to contribute to potentially catastrophic climate change -- including droughts, floods and heatwaves -- by 2100, if emissions continue unchecked.
