Another Carbon Credit Fund created

South Korea to Start State-Led Carbon Fund in July (Update1)
By Meeyoung Song

May 28 (Bloomberg) -- South Korea, which imports 97 percent of its energy and mineral needs, plans to set up the nation's first government-led carbon fund in July.

The fund may be as large as 200 billion won ($215 million), the Ministry of Commerce, Industry and Energy said in an e-mailed statement today. It will invest in carbon-reducing businesses approved by the United Nations and profit from selling carbon credits these businesses produce, the ministry said.

South Korea wants to reduce reliance on oil and diversify energy sources after crude oil prices more than doubled since 2001. The country joins Japan and China in trying to expand the use of cleaner fuels to address concerns that power generation is harming the environment. Energy and industrial activity account for more than 90 percent of the country's greenhouse gas emissions, the ministry said.

The Clean Development Mechanism under the 1997 Kyoto Protocol allows companies in industrialized nations including Japan and most of Europe to buy carbon credits from developing countries to comply with requirements to cut emissions. The credits are derived from projects such as wind farms that are approved by the UN.

The fund will be managed by Korea Investment Trust Management Co., while Korea Energy Management Corporation will invest an initial 20 billion won and act as an adviser, the ministry said.

Kookmin Bank
Kookmin Bank, South Korea's largest lender, will establish a 330 billion won fund that will invest in companies dealing with renewable energy such as solar power, the ministry said on May 20.

Kookmin Bank's fund will be in operation for 15 years, with a yield of more than 7 percent annually after exemptions, the ministry said at the time.

There are more than 30 carbon funds worldwide, valued at at least 2.5 billion euros ($3.4 billion), the ministry said today.

South Korea is among 21 Asia-Pacific Economic Cooperation member nations meeting in Darwin this week to discuss energy- supply security and climate change. The group is responsible for 60 percent of world energy use.

Global energy demand is set to increase by 50 percent by 2030, resulting in an increase in carbon dioxide emissions of between 35 percent and 55 percent, according to International Energy Agency forecasts.