Under the Prototype Carbon Fund (PCF), Finland, Sweden, Norway and the Netherlands will each contribute US$10m (euros 9.6m), while participating companies will pay US$5m. "Active discussions" are underway with further companies to join the scheme, including Statoil and Norsk Hydro of Norway, Gaz de France and SK Power of Denmark.
The contributors hope to benefit from emission reductions the projects bring about by gaining credits that they can use against their commitments to reduce greenhouse gas emissions. Whether they will be able to do this still depends on rules being negotiated by parties to the UN climate change convention, who are due to meet again in November.
The bank will manage the fund and act as broker negotiating prices between contributors and recipients for resulting emissions reductions. It is aiming at a price of about US$15 a tonne of carbon. In advanced economies the price of reductions is about US$50 a tonne, the bank estimates. Some 20 developing countries have expressed their interest in hosting PCF projects.
Over the next three years, the PCF is expected to fund about 20 projects where emissions can be reduced and independently validated at a reasonable cost. The bank says it will withdraw from the market "once private sector confidence has been established and the market is open and functioning".
World Bank Prototype Carbon Fund, tel: +1 202 458 2736.
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