yest(BN) Cancun Deal Lures Investors to CO2 Credits, First


Cancun Deal Lures Investors to CO2 Credits, First Climate Says
2010-12-16 10:02:52.657 GMT

By Catherine Airlie
Dec. 16 (Bloomberg) -- 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.

For Related News and Information:
Emission trading stories: TNI ENVMARKET CLIMATE <GO>
Top environment and renewable energy stories: GREEN <GO>
Stories about the climate talks: NSE CLIMATE CANCUN <GO>

--Editors: Mike Anderson, Jonas Bergman.

To contact the reporters on this story:
Catherine Airlie at +44-20-7073-3308 or

To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net