Today Margot Wallström, European Commissioner for the Environment, and Philippe Maystadt, President of the European Investment Bank, EIB, presented the Bank's planned initiatives to help to bring about a reduction in greenhouse gas emissions in support of EU's Emissions Trading Scheme. The new initiatives will be mainly implemented through project financing activities, both inside and outside the EU. Welcoming the initiative by the EIB Wallström said: I am happy that the Bank has proposed to provide targeted financial support for the EU Climate Change Policies and for the EU-based companies as well as governments that fall within its remit.
The EIB proposal was presented during the 9th Conference of the Parties, COP9, in Milan and contains the following key initiatives:
- A Dedicated Financing Facility of EUR 500 million, for commitment over 2-3 years, to provide appropriately structured loan finance for projects sponsored by promoters. Specifically those promoters participating in the EU Emissions Trading Scheme (ETS) and seeking to reduce their greenhouse gas emissions.
- A proposal still under discussion for a Technical Assistance Facility (TAF) to provide conditional grant finance to help identify, prepare and market Joint Implementation (JI) and the Clean Development Mechanism (CDM) project-related carbon credits, in transition and developing countries respectively, that most likely would be linked to the EU ETS allowance market.
- The EIB is also exploring the potential for EIB participation in a carbon equity-type facility.
President Maystadt announced that the Bank will look for partners to develop the various proposals: To address the challenges of Climate Change we need a broad coalition, we need to be creative and practical. The EU has invited countries and many other relevant players to contribute. The EIB together with partners in the business and financial community will continue to explore and implement new solutions for a sustainable development. "
The carbon market is now a reality, with the EU Emission Trading Directive having entered into force in October 2003. The emissions trading scheme starts in 2005 and covers five major sectors of EU industry: power generation, oil refineries, steel, building materials and pulp and paper. These account for almost half of the EU's total carbon dioxide emissions. It is expected to reduce the costs of EU meeting its Kyoto commitments by about one-third.
The emissions trading scheme is fully compatible with international emissions trading under the Kyoto Protocol. It may be expanded into other sectors and also cover other greenhouse gases from 2008.
The European Commission's proposal to link the EU emissions trading scheme to the Kyoto Protocol's project mechanisms, JI, Joint Implementation, and the CDM, Clean Development Mechanism, will significantly increase the demand for JI and CDM credits and speed up the implementation of the Kyoto Protocol also outside the EU.
120 Countries, representing more than 70% of the world's population have ratified the Kyoto Protocol, which is expected to enter into force in the near future.
The Commission remains confident that Russia will ratify the Kyoto Protocol and that the EU emissions trading scheme provides a strong incentives for Russia and other CIS countries to ratify the Kyoto Protocol. The Commission recently presented the Emissions Trading Directive to Russian business and governmental representatives in Moscow and received a very positive response.