"There is some risk involved because there are no returns promised for our efforts" he notes. But each project will be assessed on the reduction of emissions achieved and investing companies will be allocated certificates accordingly. The intention of the fund is to register the reduction credits earned by investors with the United Nations Framework Convention on Climate Change (UNFCCC) agreed to in Kyoto.
"A certificates trading system is expected to begin by 2005," Rentz adds. "The PCF is a contribution to the process of gathering experience that can later feed into emissions certificates trading, one of the most important elements in the ongoing international negotiations on climate protection," says RWE.
The World Bank unveiled its plans to act as the broker for a global emissions credit trading scheme in January with the main aim of encouraging the use of renewable energy technologies in economies-in-transition countries and developing countries. The fund, to be capped at $150 million, will be equally split between the two types of recipient.
To increase the likelihood that the reductions will be recognised by the Parties to the UNFCCC, independent experts will follow validation, verification and certification procedures that respond to UNFCCC rules as they develop. The project is a pilot activity scheduled to terminate in 2012.
Other major utilities already involved include six from Japan, Norway's Norsk Hydro and Statoil, Gaz de France and Electrabel, France. Mitsubishi and Mitsui are the two major industrial corporations, while the financial sector is so far represented by Deutsche Bank. The participating governments are Canada, Finland, Japan, Netherlands, Norway and Sweden.