World Bank Prototype Carbon Fund Syndicate Agreement Extended Through 2023

The World Bank’s Prototype Carbon Fund extended an agreement until as late as 2023 to help govern the syndicate including six governments and 16 companies.

“Diverging interests among PCF participants surrounding the extension of the PCF instrument beyond 2014 were overcome to reach a mutually beneficial solution,” said Martin Lawless, chairman of the fund and London-based global head of environmental financial products at Deutsche Bank AG. (DBK)

The fund’s accord was extended in December 2010 to the end of the last signed emission-reduction purchase agreement, or 2023 at the latest, Lawless said in the 2010 annual report of the Washington bank’s Carbon Finance Unit, published May 25.

Governments including Canada and Norway and companies ranging from BP Plc (BP/), Deutsche Bank and RWE AG (RWE) to Tokyo Electric Power Co. can expect credits for the equivalent of 28.2 million metric tons of carbon dioxide valued at $172.1 million from the fund, which started in 2000 and now invests in 24 projects, according to the report.

In 2008, the fund accepted an additional $39 million, “securing the possibility of purchasing late-vintage emission reductions from projects already in its portfolio,” according to the Carbon Finance Unit’s 2009 report. The fund was designed to help demonstrate the ability of carbon markets to help protect the climate and sustainable development.

Groups of Demand

The 2010 report didn’t elaborate on the diverging interests, and Lawless declined to comment by phone yesterday. Credits can be used by companies meeting limits in the European carbon market, as well as industrialized nations with targets in the 1997 Kyoto Protocol through 2012. Japan has appointed some of its companies to buy on its behalf. Nations have so far failed to agree on whether to extend or replace the Kyoto deal.

“The extension of the PCF Instrument does not suggest a material change in the direction,” the World Bank said yesterday in an e-mailed statement. The extension will “formalize decisions taken by PCF participants some time ago to enter into some long-term contracts to purchase emissions reductions.”

The fund was designed to “prototype carbon transactions in different sectors and different countries,” it said. “As business and policy contexts evolve in different countries and different companies, it’s quite normal in any organization for diverse views to emerge among the 22 participants, but it’s also quite normal that those views are resolved and decisions taken.”

EU Ban

The European Commission on June 8 adopted a ban starting in May 2013 on the use of industrial-gas credits in Europe’s emissions trading market, the world’s largest. The ban includes Certified Emission Reduction credits from plants cutting hydrofluorocarbon-23 gas.

A Chinese HFC-23-cutting plant accounts for 24 percent of the Prototype Carbon Fund’s credits, the biggest share of any type, according to the report.

“The controversy surrounding HFC-23 projects also posed a challenge for the fund this year, causing issuance delays that have since been resolved,” Lawless said.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net