US Broker Creates World's First Private Emission Credit Fund
NEW YORK US emissions broker Natsource LLC has established the world's first private fund for public and private sectors to achieve the greenhouse gas emission targets set by the Kyoto Protocol by pooling money to buy emission reduction credits, company officials said Friday.
The participants in the fund named the Greenhouse Gas Credit Aggregation Pool include companies from Japan, Europe and Canada.
Launched by Natsource's wholly owned subsidiary, Natsource Asset Management Corp., the fund is initially estimated at about $95 million.
The World Bank has established a similar mechanism to purchase emission reduction credits, but the one established by Natsource is the first of its kind led by the private sector.
The Japanese participants in the Natsource mechanism include Chugoku Electric Power Co., Hokkaido Electric Power Co., Tokyo Gas Co. and Osaka Gas Co.
Natsource said the fund works in such a way that it will procure emission reduction credits through market trading or projects in developing nations using the money pooled under the system and will sign contracts on behalf of the contributors.
By collectively purchasing the emission reduction credits, the fund hopes to increase its influence in the market and keep the credit prices low, the officials said.
Natsource said it hopes to attract additional contributors and the fund is likely to grow to about $130 million if everything goes well.
The Clean Development Mechanism under the Kyoto Protocol requires industrialized countries to reduce carbon dioxide and other greenhouse gas emissions from 1990 levels by an average of 5.2 percent between 2008 and 2012.
The 1997 protocol, which took effect Feb. 16, adopts a flexible market-based approach that allows the buying and selling of emission reduction credits.
Companies earn credits for emissions removed or not released into the atmosphere, while companies that emit greenhouse gases can purchase these credits to reduce the emissions' impact on the atmosphere.
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