The European Investment Bank (EIB) and KfW Bankengruppe (KfW) have launched a joint programme for the purchase of carbon credits from JI and CDM projects. The programme has a volume of EUR 100 million and constitutes the follow up programme and second tranche of the KfW Carbon Fund. The new EIB-KfW Carbon Programme was launched today at the Carbon Expo in Cologne with the signature of a Memorandum of Unterstanding between both institutions.

"This is an excellent opportunity for small and medium-sized European enterprises to participate in the market for emission reduction credits from CDM and JI projects," said Detlef Leinberger, member of the Board of Managing Directors of KfW Bankengruppe.

"This initiative demonstrates how two of the major European financial institutions, by joining forces, can participate to effectively tackling the challenges of climate change," said EIB Director Thomas Barrett.

The purpose of this EIB-KfW Carbon Programme is to finance the purchase of carbon credits by enterprises, particularly SMEs from all of Europe that have no access of their own to these projects yet wish to use the carbon credits as part of their compliance obligations and consistent with to reduce their CO2 emissions in the framework of the European Emissions Trading Scheme (EU ETS) and are interested in directly purchasing carbon credits. The programme also offers these enterprises a guaranteed delivery option This new product will benefit not only European enterprises but also enterprises in developing, transition and industrialising countries that are able to offer appropriate CDM or other JI projects.

KfW will be the Programme Manager, which means that it will be the direct contract partner for the buyers and sellers of carbon credits. The EIB is a co-sponsor and will share the risks equally as well as conduct the initial appraisals for the down payments.

The Programme will enable the EIB and KfW to further expand their activities in the carbon market. Both institutions have so far successfully placed their existing funds and purchase programmes in the market and will now be offering additional advantages to purchasers and sellers of credits under the new programme.

The European Emissions Trading Scheme also allows the use of credits from the flexible joint implementation (JI) and clean development mechanism (CDM) under the Kyoto Protocol. Joint implementation (JI) refers to projects in the industrialised and transition countries and clean development mechanism (CDM) to projects in developing countries.

About EIB: The EIB, the European Union’s long-term financing institution, finances economically viable investment projects that contribute towards the integration, balanced development and eco-nomic and social cohesion of the EU Member States. Outside the Union the EIB implements the financial components of agreements concluded under European development aid and cooperation policies.

Climate change and environmental protection in general form part of the EIB’s lending priori-ties. Over the past five years (2002-2006), EUR 57 billion of its individual loans went to envi-ronmental projects worldwide. In response to the EU climate change policy designed to im-plement the Kyoto Protocol, the EIB has launched a number of climate change initiatives specifically aimed at promoting investment in projects that reduce greenhouse gas emissions and supporting the development of the emerging carbon market.

About KfW: With a balance-sheet total of more than EUR 360 billion as at 31 December 2006, KfW Bankengruppe is one of the ten largest banks in Germany. Its shareholders are the Federal Republic of Germany (80%) and the German federal states (20%). KfW has been assigned the highest rating (AAA/Aaa/AAA) by the rating agencies Moody’s, Standard & Poor’s and Fitch.

As a government-owned promotional bank, KfW Bankengruppe takes a strong stand for climate and environmental protection. With a wide range of financing offers, KfW makes a significant contribution to promoting investments and sustainable development in Germany and abroad. For information on its various purchase programmes for emission allowances please visit www.kfw.de/carbonfund.