Climate Change Capital Raises US$830m To Create World's Largest Private Sector Carbon Fund
(LONDON, 11 September 2006) UK investment banking group, Climate Change Capital (CCC,) which is dedicated to investment in clean energy and a low carbon economy, announced this morning that it has created the world's largest private sector carbon fund, with US$830m already raised. CCC took only three months to raise the money and expects the total to top US$1bn by the second close.
Investors include ABP and PGGM, two of the world's top five pension funds, plus the UK-based international energy group Centrica and a global emerging markets banking group. The money raised will be invested in projects principally in developing countries that will lead to dramatic reductions in the amount of greenhouse gases (GHG,) and specifically carbon being emitted into the atmosphere.
James Cameron, vice-chairman of Climate Change Capital, said: "This is further proof that the so-called 'green economy' has arrived, as the world realises that combating global warming is an economic opportunity as well as a necessity. The profile of the investors backing this new asset class, created due to the Kyoto Protocol, confirms this, reflecting very real progress in the development of the carbon market."
The fund's objective is to generate attractive levels of returns by acquiring a diversified portfolio of different types of carbon assets and derivatives. The fund also has the power to invest in projects and companies which develop and generate GHG reductions.
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Notes to Editors:
ABP is the pension fund for employers and employees in service of the Dutch government and the educational sector. All of it´s 2.4 million customers have the assurance of income security against the following events: disability, death and pension. All of it based on solidarity and non-profit. ABP´s main office is in Heerlen (South part of the Netherlands). In addition, it has office branches in Amsterdam and New York.
Frank Asselbergs, Fund Manager Commodities at ABP stated, "ABP is interested in this new asset as it still has a first mover advantage, and we believe the world is, and must be, serious about its intention to reduce greenhouse gases and therefore expect an investment in emission rights to offer attractive returns over a longer period."
UK based Centrica plc is a FTSE 100 international energy company with businesses in the UK, Europe, North America and West Africa. It is better known through its British Gas brand, which is the largest household energy supplier in the UK. Through its other businesses, Centrica is also an energy supplier in the Belgian, Dutch and Spanish markets and recently commenced trading in Germany. Upstream, Centrica operates gas production, gas storage, power generation and renewable energy facilities and is an established trader in the wholesale energy markets.
Sue Wheeler, Head of New Energy for Centrica said, "Centrica has made this investment as part of its low carbon strategy and investment in renewable energy. We believe investment in CDM projects through this fund will be a vital step towards global engagement in reducing carbon emissions."
Dutch sector pension fund PGGM manages the pension portfolio of some 1.9 million (former) employees in the health care and welfare sectors in the Netherlands. The capital under management currently amounts to more than Euro 74 billion, and comprises pension fund premiums and investment revenues.
Leo Lueb, CIO of PGGM said, "We feel that the involvement of financial institutions in this market is essential if we want to achieve the long-term political measures set out to tackle climate change. PGGM believes that the fund is ideally placed to capitalize on the market opportunity created through the Kyoto protocol.
How carbon trading reduces emissions.
The Kyoto Protocol, set up to combat global climate change by reducing greenhouse gas emissions, includes the Clean Development Mechanism (CDM.) This mechanism enables companies or groups in industrial nations, such as Britain, to identify a source of greenhouse gas (GHG) emissions in a developing country, such as China, and to finance a project to reduce those emissions.
Each industrial nation who ratified the Kyoto Protocol agreed to an annual quota of tons of carbon dioxide equivalent emissions that they would emit. The CDM allows these nations to meet their emission targets by accessing cost-effective opportunities to reduce emissions or remove carbon from the atmosphere in other countries. The certified emission reductions (CERs) created under the CDM can be used to offset the emissions of these nations or they can be sold.
The global, policy driven market for Carbon Assets was created to give an incentive to countries to reduce GHG emissions, create demand for Carbon Assets and encourage the financing of GHG emissions reduction projects. This market is referred to as the "carbon market".
Critics say that the system may encourage some businesses to attempt to buy their way out of trouble but as James Cameron, the vice-chairman of Climate Change Capital says: "It doesn't matter where in the world a ton of pollutant is taken out of the atmosphere, whether it be Beijing or Burton-on-Trent. A ton of carbon is still a ton of carbon and it matters to us all."