LONDON, June 7 (Reuters Point Carbon) – The number of new projects seeking permission to produce U.N. carbon credits by cutting emissions in poorer nations hit a seven year low in May, according to data from a United Nations research agency, further evidence that carbon finance is drying up.
Just six projects applied for United Nations validation under the Clean Development Mechanism (CDM) in May, the lowest level since January 2006, when banks, energy companies and governments poured money into the market in the hope of getting carbon credits they could sell on for a profit.
Since January, just 72 schemes have been registered, down 94 percent from more than 1,100 in the first five months of 2012, UNEP Risoe said.
Analysts say investment has been hit by the introduction of EU curbs on European companies using credits from newly-registered projects to meet targets under the EU Emissions Trading Scheme as well as rock-bottom prices.
Under the CDM, projects that cut emissions in poorer nations, such as wind farms in China, can earn carbon credits that European companies and industrialised nations can use to meet legal emission goals.
However, prices of credits have crashed from a high of over 20 euros each in 2008 to just 30 cents, largely as a result of nations failing in 2009 to sign a legally-binding global deal that would force them to cut emissions from 2013.
The U.N. has said the CDM has helped transfer more than $215 billion in carbon finance to help poor nations cut emissions of greenhouse gases that are blamed for warming the planet.
At U.N. climate talks last year industry and some governments urged all nations to find ways to support the carbon price under the scheme, warning only “night watchmen” were still working in the market and that private-sector investors would abandon the scheme altogether unless action was taken.
Earlier this year the United Nations commissioned a study into launching a fund that would tap sovereign wealth funds for cash to invest in new projects until a new global climate deal comes into effect in 2020.
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