June 17, 2004—The emerging carbon market received a boost last week with the launch of an emissions trade fair in Cologne, Germany. The Carbon Expo, co-sponsored by the International Emissions Trading Association and the World Bank, gave buyers and sellers of greenhouse gas emissions the first opportunity to meet in person. In Perspective | The Kyoto Protocol
commits most industrialized countries to reduce their carbon emissions by 5 percent below 1990 levels in the period 2008-2012. The agreement allows countries and companies to purchase their reductions from emission reduction projects. in developing countries. |
More than 700 participants from 20 countries, representing both government and private-sector concerns, exchanged information on existing products and policies and discussed future emission-reduction projects. "What is most important for the People's Republic of China is that we came here; we are showing that we are interested in putting forth our positive attitude to doing greenhouse gas emission reduction projects," said Lu Xuedu of China's Ministry of Science and Technology (MOST). "Until now, we haven't spoken out enough to show potential investors how keen we are to get involved in carbon finance. We understand that climate change will affect the nation and its economic development." A Market Whose Time Has Come
"Carbon Expo demonstrated that the global carbon market is coming of ages," said Ken Newcombe, Senior Manager of the World Bank's Carbon Finance Business (CFB). "This was the right time and place. Europe is now the hub of the global carbon market." A global greenhouse gas market helps developing countries take advantage of their lower costs of achieving greenhouse emissions to attract the capital and know-how to upgrade their energy systems and infrastructure and improve land management. This in turn helps achieve sustainable economic development. | The carbon market’s potential over the next several years could reach US$10 billion, according to Point Carbon, a specialized firm in the carbon emissions industry. |
For example, Bolivia has a number of reforestation and river hydro projects that are potential carbon sequestration projects. "The Clean Development Mechanism (CDM) and carbon markets are very important for the sustainable development of Bolivia. Being here at Carbon Expo has put us in touch with the people actually doing deals," said Alejandra Peres of the National CDM Office of Bolivia. “It's hard to imagine that just about everyone involved in carbon finance is in one spot here . . . It's a real market." Uganda, another of the 15 developing countries represented at the Expo, is already on the carbon finance map with the Prototype West Nile Hydropower Project. "This expo has given us an opportunity to showcase Uganda and Africa to potential buyers and investors in CDM projects," said Bwango Apuuli, the Uganda National Focal Point for the United Nations Framework Convention on Climate Change (UNFCCC). "We're showing that even countries like Uganda have something to sell for the good of the global climate and for sustainable development." Banking on the Market
The Bank signaled its commitment to this new industry in 2000 with the creation of the Prototype Carbon Fund (PCF). The public/private partnership of six governments and 17 companies buys carbon emission reductions from projects that use mainly renewable energy technologies such as wind, small hydro and biomass energy technology. Today the World Bank's Carbon Finance Business includes a whole range of funds including the Netherlands CDM Facility, the Community Development Carbon Fund, the BioCarbon Fund, and the newly minted Italian Carbon Fund. The Bank’s prototype fund concluded two Emission Reductions Purchase Agreements (ERPA) during this year’s expo. The "Durban Landfill Gas to Energy Project" in South Africa may be a first of its kind for Africa. "I think the example we are setting in Durban, working with the World Bank to deal with landfill, is a huge innovation. We are turning dirt and garbage into a raw material that we could grow wealth from. If you wanted to say to yourself, 'we want to be the cleanest city in the world' waste, in my view, is the best place to start," said Obed Mlaba, Mayor of Durban. More to Come Carbon Expo will be held annually in Cologne until 2008, with the next one scheduled for May 11-13 2005. You can obtain more Carbon Expo information at www.carbonexpo.com. Additional information on the World Bank's carbon finance business is available online at http://www.carbonfinance.org, or at http://www.prototypecarbonfund.org. You will find further information on IETA at www.ieta.org.
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