UK to buy 50 mln stg of UN carbon credits to help poor countries

by Ben Garside | Reuters
Friday, 22 November 2013 15:00 GMT

LONDON, Nov 22 (Reuters) - The British government said it would buy 50 million pounds ($80.7 million) of U.N. carbon credits and cancel them as a way to help fund development and curb greenhouse gas emissions in poor countries.

The government’s Carbon Market Finance initiative will buy and cancel Certified Emission Reductions (CERs), which are issued to projects in emerging markets that generate energy from biogas, solar panels and small hydropower units.

The projects would be registered under the U.N.’s Clean Development Mechanism (CDM), which has channelled more than $315 billion to carbon-cutting projects in developing countries by allowing investors to earn credits that they can sell for use in helping meet emission targets abroad.

Investment under the scheme has dried up as nations wrangle over setting new emission reduction goals under a global U.N. deal. Prices of the credits have crashed to less than 50 cents from over 20 euros five years ago, making many projects unprofitable.

“By channelling this support through the carbon market, the programme will increase the ability of least developed countries to access and benefit from carbon finance in the medium to long term, if and when the market recovers,” a government report said.

The report said 33 million pounds would be spent directly on the credits, with prices negotiated with each developer.

Most of the remaining funding will be spent on programmes to help developers get their projects through the complex auditing process required by the U.N. before credits can be issued.

Britain is one of a handful of European governments that have pledged to throw a lifeline to the CDM by pledging to pay a premium over market rates.

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