Kyoto gives poor countries 2.7 bn dollar boost

COLOGNE, Germany, May 11: Rich nations' funding of clean energy projects in developing countries reached 2.7 billion dollar in 2005, through deals allowed under the global Kyoto treaty to tackle climate change.

The Kyoto Protocol allows companies and investors in richer countries to invest in and profit from cuts in emissions in poorer nations of heat-trapping greenhouse gases, the World Bank said yesterday.

Developing country investment was part of a global carbon market which grew ten-fold to 11 billion dollar in 2005, the World Bank's third annual report on the global carbon market, released at a carbon markets conference here, showed.

''The biggest cause for celebration is the participation of developing countries,'' the World Bank's Karan Capoor, who is also the co-author of the report, told delegates.

The global carbon market is based on the fact that some companies can cut pollution more cheaply than others, allowing them to sell that pollution reduction in units called carbon credits.

Investors in rich countries can profit by playing differences in these carbon credit prices around the world.

''It's a win-win situation, a win for the (host) country and a win for the financial sponsor who makes money on his investment,'' Malik Khan, Pakistan's environment minister, told the conference.

''It shows that protection of the environment will be key for economic development.'' Kyoto commits some 40 industrialised countries to binding pollution cuts by 2008 to 2012. While trading is already in full swing, buyers will not be able to book Kyoto project credits in their accounts until next year.

A pipeline of more than 750 projects is nearing an environmental milestone of cuts for delivery by 2012 of one billion tonnes of greenhouse gases -- with 940 million tonnes of carbon dioxide cuts so far -- its administrators told the conference.

Europe's carbon market accounts for the biggest slice of the 2005 global pie, at 8.2 billion dollar, and allows the continent's smokestack industry to meet carbon emission targets by buying carbon credits.

Developing countries can sell carbon credits either into this European carbon market or elsewhere. Japan in 2005 was the biggest single buyer, at 38 per cent of the total of projected emission cuts.

Japan is struggling to meet its Kyoto target through pollution cuts at home.

The biggest seller of credits was China, at 66 per cent of the total. China plans an extra 160 GW of power by 2010, and this huge build, alongside planned energy efficiency savings, offers prime territory for clean energy investment.

''The Clean Development Mechanism is a very good mechanism to bring developing and developed countries together to tackle global warming,'' Gao Guangsheng, director at the National Climate Change Office at the National Development and Reform Commission in China, told the conference.

REUTERS