First Climate AG, a manager of emission reduction projects producing tradable credits, said this month’s climate summit in Cancun, Mexico, may spur interest in a new carbon fund.
Envoys at United Nations climate talks in Cancun agreed on Dec. 11 to a package aimed at limiting global warming by protecting forests, advising nations on coping with climate change and opening a $100 billion fund to assist poorer nation.
“Market participants didn’t really expect much, and what we saw was a clear political commitment,” Martin Schulte, a director at First Climate, said by phone from Luxembourg. ”We’ve got out of the complete standstill.”
First Climate invests in climate projects in exchange for Certified Emission Reduction credits under the UN’s Clean Development Mechanism. Cancun was “helpful” as the firm plans to announce the first investor next year in a new fund aiming to raise 100 million euros ($133 million) and produce credits for use after 2012.
“Two European utilities are interested in becoming the anchor investor,” committing to put in at least 10 million euros, Stefan Kleeberg, managing director, said in an interview in Bad Vilbel. This would allow First Climate to invest in emissions cutting projects to create UN offset credits that will be usable by European factories and power stations after 2012.
The European Union proposed to restrict some UN credits in its emissions trading system from 2013, as the system enters its third phase. The ban would target UN credits from projects that curb hydrofluorocarbons and nitrous oxides, industrial waste gases that make up about 80 percent of issued offsets so far. These gases are cheaper to cut than other projects and the EU is concerned they create excess profits.
Uncertainty over which credits would be allowed may have deterred investors, First Climate said.
The EU ban is “positive” and means we can now “focus on good quality CERs,” Kleeberg said. “We’ve never touched industrial gas CERs. It’s obvious that prices for these will go up with the ban,” he said.
