22 June 2006, Dow Jones Newswires

Kyoto Treaty Driving Investment in Renewables-Investor

The Kyoto Protocol treaty is helping to drive investment in technology that will lower greenhouse-gas emissions, particularly in developing markets, an investment fund executive said Thursday. Developing countries like China, India and Brazil are encouraging capital investment in clean-energy technologies to earn additional emission-reduction credits to trade for profit on the carbon-exchange markets, said James Cameron, Vice Chairman of Climate Change Capital, which invests in emission-reduction industries.

Industries in countries that have signed on to the Kyoto treaty are fined if they produce carbon emissions above a certain level. However, they can avoid the fines if they purchase emission credits from industries whose operations ultimately reduce pollutants, such as renewable energy. China, in particular, is determined to be a leader in renewable energy development, and would eventually like to have about half of its energy coming from renewable sources, Cameron said.

Through its $100 million carbon fund, Climate Change Capital has funded the completion of a 1,000-megawatt wind farm in China near the Mongolian border, and it is currently providing capital for a landfill-gas project in the port city of Shenzhen. Because the U.S. has not signed on to the Kyoto treaty, foreign investment for U.S. emission-reduction technology is limited, Cameron said. "The U.S. would be a magnet for investment if it was to join, because the U.S. is inefficient (in producing renewable energy) compared to Europe and Japan," he said.

Climate Change Capital, a specialist merchant banking group with offices in London, Paris and Madrid, invests in projects and companies that generate carbon-emission credits, and provides financial advisory services and policy research.

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