EIB will invest €50 million, with €25 million each coming from Caisse des Depots and KfW Bankengruppe, €15 million from the Nordic Investment Bank and €10 million from Instituto de Credito Oficial, EIB and its partners said in a statement.

The fund will be managed by a consortium of Conning Asset Management Ltd and First Climate. Launched last year with an initial pledge of €100 million, the fund will purchase and trade carbon credits generated by greenhouse gas emissions reduction projects after the Kyoto protocol’s first commitment period ends in 2012. The fund will support a variety of emissions reduction projects, such as renewable energy, energy efficiency, forestry and methane capture from 2013 to 2022. “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 statement said.

The Kyoto protocol obliges rich nations with a cap on six greenhouse gas emissions to reduce emissions on average by some 5 per cent below the 1990 level in the period 2008-2012. Due to the uncertainty of a future international climate agreement, the fund will purchase post 2012 carbon credits of UN-endorsed emissions reduction projects, namely clean development mechanism (CDM) and joint implementation (JI).

“As 2012 is approaching, the uncertainty in long-term prices for carbon is increasingly affecting project developers,” said Urs Brodmann, executive board member of the fund’s investment adviser, First Climate. “The Post 2012 Carbon Credit Fund will make additional CDM and JI projects viable by offering guaranteed carbon off-take at attractive prices,” he said in the statement. The 27-member EU bloc is the biggest buyer of Kyoto protocol carbon credits. “As the EU’s financing arm, our role is to support these efforts by promoting environmental lending and developing carbon credits,” said Philippe Maystadt, president of EIB.