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Dresdner Bank, Gazprombank to set up carbon trading venture - extended

OAO Gazprom's banking unit plans to set up a carbon emissions trading venture with Dresdner Bank AG to take advantage of the growing market for securities linked to greenhouse-gas quotas under the Kyoto Protocol.a

The venture, Carbon Trade & Finance SICAR SA, will invest in projects that earn carbon emissions credits by reducing pollution and will trade securities tied to those credits, Moscow-based ZAO Gazprombank said in an e-mailed statement today. Emissions trading can lead to greater investment in energy-efficient technology and equipment to curb greenhouse gases. Gazprom, the world's biggest natural-gas producer, supplies about a quarter of Europe's gas and is expanding its electricity and oil output. Gas produces about half the emissions that coal does for each unit of generated power. The venture is likely to become one of the world's five biggest traders of emission credits from projects, said Ingo Ramming, managing director of emissions trading at the German bank's investment arm, Dresdner Kleinwort. The venture will bring Dresdner, which already trades European Union carbon dioxide allowances, „more into the project-based credit market,” Ramming, based in London, said today by phone. Ramming is director of the venture, which will focus on emission-reduction units from the Kyoto Protocol's joint implementation mechanism, which promotes projects in regions including Russia and eastern Europe.

The protocol is a 1997 agreement between nations to curb carbon dioxide emissions. Global emissions-permit trading was worth about $21.5 billion in the first nine months of 2006, almost double the $11 billion in all of last year, the World Bank said in October. EU factories and power stations can comply with carbon dioxide limits by using allowances granted by their national governments, or by buying credits from projects including those planned by the venture. Ramming declined to say how much the banks plan to invest or trade, except that it will be a „substantial” amount. The banks are already in talks about potential projects, which may include housing, mining and metals, as well as projects related to the Gazprom group of oil, gas and power companies, Ramming said. Gazprombank will use its ties to Gazprom, the world's largest natural-gas producer, and its nationwide client base to develop projects, Deputy CEO Alexei Obozintsev said in the statement. The banks, which each own half of the venture, will soon file an application to register the venture in Luxembourg, Ramming said. The European Union gave its approval December 19, the statement said. The venture may be opened to financial or strategic investors in the future, Ramming said. (Bloomberg)