WORLD BANK LAUNCHES CARBON TRADING SYSTEM.
The World Bank yesterday launched the first global market to reduce carbon emissions in an effort to combat climate change and promote the transfer of environmentally friendly technology to developing countries, reports the Financial Times (p.6). The creation of the "Prototype Carbon Fund" (PCF) could give a fillip to countries trying to meet the so-called Kyoto Protocol, agreed in 1997, which committed industrialized nations to reduce greenhouse gas emissions by 5.2 percent from 1990 levels by 2012.
Four governments and nine companies-including six Japanese electric power companies-have agreed to participate in the fund, which will raise money from the public and private sectors to finance projects aimed at reducing greenhouse gas emissions in developing countries. One of the potential benefits of the fund for industrialized countries is that emission reductions achieved from PCF projects could be counted towards meeting their Kyoto targets, although this will depend on rules being developed by the Parties to the UN Framework Convention on Climate Change, which will not be defined until countries meet in The Hague in November.
The fund offers "a tremendous opportunity to boost financial and technology flows to developing countries at a time when government-to-government transfers have fallen to historically low levels," World Bank President James Wolfensohn is quoted as saying. The Bank said it would act as broker by helping to negotiate a price for emissions reductions that is reasonable for both buyers and sellers. Developing countries would benefit by acquiring cleaner technologies and industrialized countries would gain by paying a lower price for emissions reductions.
The Washington Post (p.E3) also reports, noting that Wolfensohn and fund manager Ken Newcombe said the international organization's involvement in helping to create market incentives to reduce emissions is consistent with its goal of alleviating poverty because the world's poor often live in the places that are most vulnerable to damage from global warming-low lying coastal regions and areas where agriculture is marginal and medical treatment unaffordable.
So far, notes Reuters, Finland, The Netherlands, and Sweden have contributed money for the PCF. Reuters also reports that Norway will contribute $10 million over the next 10 years to the World Bank's new fund to help developing countries invest in technologies to curb greenhouse gas emissions, the Norwegian Foreign Ministry said.
Among the companies financing the fund are Japan-based Tohoku Electric Power Co., Chubu Electric Power Co., Shikoku Electric Power Co. Inc., Chugoku Electric Power Co., and Belgian power company Electrabel. Also involved are the Japanese trading houses Mitsubishi and Mitsui.
The Bank said top executives of other energy companies were also considering participation in the fund, which is capped at $150 million and will start operations in April. During the next three years, the World Bank will invest the fund's proceeds in 20 or so projects. Nikkei (Japan) notes that the first project involves construction of a waste disposal facility in Latvia.
Of the capitalization target, $75 million has already been raised, reports the Wall Street Journal (p.A2) and the Wall Street Journal Europe. "People didn't think we could raise this much money," Newcombe said. He stressed there were many opportunities to reduce emissions of greenhouse gases in developing countries at a cost of between $5 and $15 a ton of carbon, Agence France-Presse adds, noting that this cost compares with $50 or more in advanced economies.
Dow Jones, the Asahi Evening News (Japan), the Mainichi Shimbun (Japan), the Dagens Nyheter (Sweden, p.12), and SVT "Aktuellt" (Sweden, TV) also report.
The news comes as Arthur Robinson and Noah Robinson of the Oregon Institute of Science and Medicine write in the WSJE (p.10) that Kyoto treaty supporters cheer new findings that the Earth's surface temperature is probably rising. But this trend isn't recent and isn't man-made; it is closely correlated with solar activity. But the change has allowed environmentalists to spread fears of "global warming"-demonizing, of course, hydrocarbon fuels.