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EBRD and Netherlands launch carbon credit fund
€32 million will speed reduction of greenhouse gas emissions in eastern Europe
The European Bank for Reconstruction and Development and the Government of the Netherlands are setting up a Carbon Fund to promote the reduction of greenhouse gas emissions in central and eastern Europe.
The Bank will use €32 million of Dutch funds to acquire carbon credits, for the account of the Netherlands. The funds will be used to buy carbon credits from projects such as modernised district-heating systems, that cut emissions in central and eastern Europe. This will help the Netherlands to meet its emission-reduction targets under the Kyoto Protocol and, in the process, will contribute to the establishment of a market in these credits.
This agreement marks the Bank’s first foray into the new but promising field of carbon credits and will assist our efforts to finance more energy-efficiency and green energy projects in our countries of operations, EBRD President Jean Lemierre said in The Hague at the signing of the agreement.
The Dutch Minister of Economic Affairs, Laurens Brinkhorst, added: this is an important step in the Dutch approach of fighting global warming in a cost-effective way.
The EBRD will acquire the carbon credits for the account of the Netherlands, under the Joint Implementation mechanism of the Kyoto Protocol to the UN Framework Convention on Climate Change, adopted in 1997. The Protocol created market-based mechanisms to combat global warming and achieve emissions reductions at the lowest economic cost. Among the Bank’s countries of operations, it is expected that the funds will be used to purchase carbon credits from projects in those countries joining the EU next year, as well as from projects in Bulgaria, Croatia, Romania, Russia and Ukraine.
The scheme will help the Netherlands lower the costs of meeting its Kyoto target because emission-cutting projects typically cost less in central and eastern Europe than in the more advanced industrialised countries. Emission reductions from nuclear projects, land use change and forestry projects are not eligible.
The Fund also fits well with the EBRD’s environmental mandate: a carbon credits market should attract additional investors to climate-friendly projects, enabling the Bank to finance more such work.
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