After facing lukewarm responses from investors earlier this year, a London investment firm has raised $280 million to fund carbon emissions-reduction projects worldwide.
Sindicatum Carbon Capital persuaded Istithmar World Ventures from Dubai and undisclosed endowment and pension funds from the United States to invest in its fund.
Sindicatum Carbon plans to use the money to finance renewable energy and other cleantech projects, such as solar- and wind-power plants, that could be eligible to sell carbon-emissions credits.
The credits, created by the United Nations to carry out the Kyoto Protocol requirements and by the European Union to meet its goals to reduce greenhouse-gas emissions, can be used to offset emissions from companies and countries that invest in the projects. The EU program also allows companies that emit more than permitted to buy credits from lesser polluters.
In addition to carbon-emissions mandates set by the Kyoto treaty and the EU, voluntary carbon cap-and-trade programs have been set up by public and private agencies. Overall, the carbon market was worth about $64 billion in 2007 and about $31 billion in 2006, according to the World Bank (see this World Bank report released in May).
With more countries mulling over plans to create mandatory programs to cap and trade emissions allowances, the carbon market is poised for fast growth.
Norway-based Det Norske Veritas, one of the world's largest companies that evaluate and certify emissions-reduction projects, is setting up an office in San Francisco to take advantage of the emerging carbon market in California (see U.S. and Canada to Create Carbon Cap-and-Trade System and California Offers Plan to Clear the Air).
But raising money was tough for Sindicatum Carbon, which set a $600 million goal when it began fund raising last December. The company had expected to bring in about half of that amount in the first quarter of this year, Reuters reported. The company blamed a softening economy marred by rising oil prices and the credit crunch.
The slow pace with which the United Nations approves emissions-reduction projects for one of its two programs likely didn't help either. The process is filled with requirements that make carrying out a project expensive and time-consuming, according to a World Bank report submitted last month.
Nearly 4,000 projects have applied for emissions credits under the U.N. carbon-credit program, but only 385 projects have qualified to sell the credits, according to a U.N. Wesite.
Sindicatum Carbon plans to use its new fund to invest in more than 40 projects. About 80 percent of the money is slated for projects in China and southeast Asia, with the rest of the fund aimed for projects in the United States and India.
Sindicatum Carbon's shareholders include Citigroup, AIG and Black River Asset Management, a subsidiary of Cargill.