Wednesday 9th April 2008: 10:14

Swiss Re enters emissions reduction agreement in China

Swiss-based reinsurance giant Swiss Re has entered into an emissions reduction purchase agreement in northern China with Hebei Construction Investment New Energy.

Under the agreement, Swiss Re subsidiary Swiss Re Global Markets will acquire certified emission reductions [CERs] for its emissions trading desk. Hebei’s project will achieve emission reductions by replacing fossil fuel-based power with wind-power plants connected to the North China power grid. The financial elements of the deal have not been disclosed.

“Purchasing and selling CERs from high-quality renewable energy projects like the Hebei wind-power generation allows us to offer our global clients a broad range of greenhouse gases-related products and services including sales of guaranteed CERs to those who need to comply with cap-and-trade systems such as the European Emission Trading Scheme or the Kyoto Protocol”, said Ben Lashkari, head of emissions at Swiss Re’s environmental and commodity markets division, in a statement.

“We are excited about the continued growth of this emerging market and we are committed to working with our clients in dealing with climate change.” Under the Kyoto protocol, most developed countries, including those in the European Union, Japan, Australia and Canada, have committed to reduce greenhouse gas emissions below specified levels until 2012.

To achieve its reduction goal, the EU has implemented an emissions-trading scheme that puts a stringent emissions cap on energy-intensive sectors such as power, cement and steel production. Companies that do not comply with the cap pay high penalties. Companies and governments can also achieve emission reductions by using CERs from United Nations-regulated international carbon markets. For example, they can purchase CERs from emission reduction projects such as the Hebei wind-power plants to offset part of their emissions.

 A year ago, Swiss Re closed on a fund that acts as an investment vehicle for clean energy projects in the European Union. The European Clean Energy Fund raised €329.2m from investors in Europe, Canada and the United States.

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