Finland purchases greenhouse gas emission reductions

Ministry of the Environment and NEFCO inform

The Finnish Ministry of the Environment has contributed EUR 2.5 million to the Baltic Sea Region Testing Ground Facility (TGF), in addition to the EUR 1.75 million already invested. TGF is a regional carbon fund which works as an instrument for purchasing greenhouse gas emission reductions under the joint implementation mechanism (JI). The investors receive emission reductions in accordance with the proportional share of their investments in the fund.

"In Montreal we were able to reinforce the very foundation of the market mechanisms related to the Kyoto protocol. Therefore I see this a particularly fitting time to boost the use of joint implementation. The carbon fund makes it easy for the companies to gain CO2 emission reductions without actually having to manage JI projects themselves. Our contribution also gives a strong signal to the private investors", comments Minister of the Environment Jan-Erik Enestam.

Enestam points out, that TGF is very active in Russia. "The fund will provide indirect means of benefiting from joint implementation projects this immense market area can provide."

The founding investors of the TGF, the Governments of Denmark, Finland, Germany, Iceland, Norway and Sweden already in 2003-2004 contributed a total of EUR 15 million to the fund. The current capital raising exercise is targeting an additional EUR 15 million from existing investors and new private sector sources. Three European energy companies have expressed their interest in the fund and negotiations are ongoing with other interested parties.

During the period 2008-2012 the Finnish Government plans to buy 10 million tons of CO2 emission reductions using the so called Kyoto mechanisms, one of which is joint implementation.

Ash Sharma, Manager of the TGF at the Nordic Environment Finance Corporation (NEFCO) , stated "The Finnish Government has been an early mover in the carbon market with the CDM/JI Program, starting in 1999, and has been a strong supporter of the Facility. Hence, we welcome this first contribution to the second subscription, which allows the TGF to support more projects and further diversify our portfolio".

For further information:

Ash Sharma, Facility Manager at [email protected] or +358 40 08 11 32

Kristiina Isokallio at Finnish Ministry of the Environment +358 50 5819 618

Information for Editors:

The TGF: The Baltic Sea Region Testing Ground Facility (TGF) is a regional carbon fund (in the form of a trust fund administered by the Nordic Environment Finance Corporation, NEFCO) set up as an instrument for purchasing greenhouse gas emission reductions under the joint implementation (JI) mechanism in the Baltic Sea Region, under the auspices of the multilateral energy cooperation BASREC (www.basrec.org). The TGF invests in energy related projects, by providing carbon finance to renewable energy, energy efficiency, fuels switching and other related projects. The target markets are Poland, the Baltic States and the Russian Federation.

Joint implementation: part of the greenhouse gas emissions reduction commitments of a country under the Kyoto Protocol can be met by implementing projects jointly in another country. For example industrialized countries may implement JI projects cost -efficiently in countries with economies in transition.

Montreal meeting: The first meeting of the Parties to the Kyoto Protocol took place in Montreal in conjunction with the eleventh session of the Conference of the Parties to the Climate Change Convention ( 28 November to 10 December 2005).

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