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KfW Moves Staff Away From Carbon Finance Unit as Demand Declines

Nov. 1 (Bloomberg) -- KfW Bankengruppe, the German government-owned development bank, has redeployed staff away from its unit that purchases greenhouse gas credits, after demand dropped.

“No new purchase programs will be set up due to lack of demand from German and European compliance buyers,” Charis Poethig, a spokeswoman for the bank in Frankfurt, said yesterday in an e-mailed response to questions. “Existing programs will be continued, with contractual obligations fulfilled.”

An unspecified number of employees will either take up different functions within the carbon fund department or in other sections of the bank, Poethig said. The carbon unit will concentrate on testing new types of emission market and programs to cut greenhouse gases blamed for climate change, some of which are known as Nationally Appropriate Mitigation Actions, she said. Existing credit buying programs will conclude next year, the bank said.

KfW has contracted to buy about 40 million metric tons of carbon credits from 90 projects, it said. They are worth 446 million euros ($577 million) at 11.15 euros a ton, the average price for December Certified Emission Reduction credits since March 2008, according to data from the ICE Futures Europe exchange in London.

CERs have plunged 84 percent in the past year and were at 1.08 euros a ton at 3:30 p.m. on ICE. UN offsets can be used by factories, power stations and airlines in the EU carbon market, as well as by nations with targets through this year under the 1997 Kyoto Protocol.

EU governments will probably reduce emissions outside the bloc’s carbon market by 8.8 percent more than required under the protocol, according to projections published Oct. 24 on an EU website. Ireland, Portugal and Finland probably won’t need any of the 20.5 million tons of credits they are purchasing, the projections show.

KfW will continue to develop carbon projects and programs in least developed nations, Poethig said. New projects in those poorest nations can supply the EU carbon market through at least 2020, under rules of that system.

“We are cooperating successfully with public funding from both the German Government and the EU Commission,” she said.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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