INTERVIEW-World Bank launches new carbon guarantee product

By Lesley Wroughton

WASHINGTON, March 17 (Reuters) - The World Bank on Monday launched a new carbon credit trading guarantee that will allow private-sector firms in developing countries to tap the growing 40 billion euro ($63.11 billion) global carbon market, a senior official said.

The International Finance Corp, the World Bank's private-sector lender, said it signed its first carbon delivery guarantee agreements with fertilizer producers Omnia of South Africa IMNJ.J and Rain CII Carbon in India.

In South Africa, IFC's agreement covers up to 900,000 credits from Omnia. For Rain, one of the world's largest producers of calcined coke, the deal covers 850,000 carbon credits.

Under the guarantee, IFC will help facilitate the delivery of carbon credits from companies in developing countries to buyers in developed markets, such as Europe and Japan, said Lance Crist, head of IFC's oil, gas and chemicals division.

He said other companies in China, India, Mexico, Brazil, Egypt and Tanzania had expressed interest in the product.

Under the Clean Development Mechanism (CDM) of the Kyoto Protocol, currently being re-negotiated before it expires in 2012, companies in developing countries can qualify to sell carbon credits, known as Certified Emission Reductions, in global commodity markets when they reduce their output of environmentally harmful substances.

However, so-called compliance buyers, the large utility companies in Europe or Japan, which are obliged to reduce their emissions under Kyoto, have been averse to paying full price for credits from developing nations because of the risk associated with doing business in these countries.

Crist told Reuters the IFC product guaranteed companies' ability to deliver the carbon credit.