The European Investment Bank (EIB) and The World Bank launched the Carbon Fund for Europe (CFE) today in Brussels. The CFE, a trust fund established by the World Bank, in cooperation with the European Investment Bank (EIB), is designed to help European countries meet their commitments to the Kyoto Protocol and the European Union's Emissions Trading Scheme (EU ETS).

The fund will purchase greenhouse gas emission reductions through the Kyoto Protocol's Clean Development Mechanism (CDM) and Joint Implementation (JI) from climate-friendly investment projects from either bank's portfolio as well as self-standing projects. The CDM and JI are flexible mechanisms of the Protocol, that, under strict conditions, allow industrialized countries to fulfill some of their greenhouse gas emission-reduction commitments through projects in the developing world and in countries with economies in transition.

Four governments and one company make up the Euro 50 million carbon fund. They include: Ireland, Luxembourg, Portugal, Flemish Region and Statkraft Carbon Invest AS (Norway). Welcoming the new Fund, Ireland's Minister for the Environment, Heritage and Local Government, Dick Roche, T.D., said I am very pleased for Ireland to have the opportunity to participate in such an innovative fund which, in addition to assisting with Kyoto Protocol commitments, seeks to ensure an equitable sharing of benefits between participants and recipients, and to expand knowledge and understanding of the Kyoto mechanisms.

Luxembourg's Minister for Environment, Lucien LUX, said: Luxembourg, with an ambitious 28% emission reductions target under the Kyoto Protocol, has decided to work with the World Bank and the European Investment Bank by participating in the CFE. We perceive the CFE as a good instrument for further development of the CDM and JI in the interest of the communities involved and as a tool for the protection of our global climate.

Speaking on behalf of the Government of Portugal, Nuno Lacasta of the Portuguese DNA Secretariat said, Portugal is very pleased to participate in the CFE. Portugal's Kyoto implementation strategy includes ambitious domestic measuressuch as renewablesand also the use of the Kyoto Protocol's market mechanisms. The Portuguese Carbon Fund's investment in the CFE is an important means to meet the national objectives as the World Bank in particular has a proven track record in managing carbon investments.

According to Kris Peeters, Flemish Minister for Public Works, Energy, the Environment and Nature, The Flemish Region decided to participate in the CFE because it is one of the rare opportunities in the market that fulfils some key elements: large experience in this fast growing market, a framework for sustainable investments and balanced risk management. We are confident that with this choice, working together with the World Bank and the European Investment Bank, our investment will lead to successful projects in climate change mitigation.

Statkraft, the single private company participant in the CFE points out that it is one of Europe's largest producers of renewable energy and is committed to environmentally friendly electricity production. Although Statkraft currently has zero emissions from its production plants, we wish to be a pro-active participant on behalf of Norway within European and global initiatives such as the Carbon Fund for Europe, towards abatement of the effects of greenhouse gases on climate change, said Oluf Ulseth, Senior Vice President European Affairs for Statkraft. Not only does this make good environmental sense, but we believe it also makes good long term business sense for Statkraft.

While the World Bank brings its expertise and experience of the carbon market to the CFE, the EIB brings its intimate knowledge of the European economy and a rich project pipeline in developing countries. Through the CFE, the two institutions will complement private sector development in the emerging carbon market and seek ways to support essential private carbon market development.

According to Simon Brooks, EIB Vice-President, "We are at the beginning of a long process to stabilize the climate system, reduce the rate of climate change and manage its adverse effects. We need to make real progress on the path to a low carbon economy, involving the development and financing of new ideas, innovative solutions and associated technologies, to mitigate and adapt to climate change. There is no single "golden bullet" to solving the problems of climate change. Instead, we need a broad range of separate initiatives that bring together the experience and knowledge of public and private interests. The lessons learned from the activities and successes of the Carbon Fund for Europe should inspire new endeavors in the long battle to protect our future."

The CFE will be the 10th carbon fund managed by the World Bank which altogether total more than US$2 billion.

This partnership with the EIB is one more critical element in helping the world to move towards a low carbon economy, said Warren Evans, Director of the Environment at the World Bank. It is essential that we demonstrate the power of the carbon market for greenhouse gas mitigation and continue to involve the developing world which will be hardest hit by the impacts of climate change. The fact that the fund will buy beyond 2012 is sending an important message for the need for a post 2012 stable regulatory regime.

 The fund may purchase carbon credits generated by a project beyond 2012up to a limit of 40%. Projects are prepared, appraised and financed either by the World Bank or the EIB directly or through implementing entities. Implementing entities will include private sector companies which will be selected by public procurement processes. European banks and financial institutions will also be invited to collaborate with the fund. The CFE is interested in projects that already have clear implementation plans and that have a defined operational start date. It will consider all types of emission reduction or removal projects. Anyone can submit projects to the CFE, as long as projects are credible and financially sound. Projects should be able to offer a minimum annual emission reductions volume of 100,000 tons of carbon dioxide equivalent.