Swiss Re and Arreon Carbon have jointly established a facility to acquire China-based greenhouse gas (GHG) certified emission reduction credits.

Certified Emission Reductions (CERs) can be purchased by countries or companies to meet Kyoto protocols if they are unable to meet them through improving environmental efficiencies.

The CER purchases are being made under a Kyoto Protocol scheme called the Clean Development Mechanism (CDM). Each CER corresponds to one ton of carbon dioxide not emitted into the atmosphere.

A Swiss Re spokesperson explained that, under the Kyoto Protocol, a country will agree to reduce emissions by a certain percentage. To meet the benchmarks, the country must improve efficiencies. If a country has improved efficiencies but still has not met its benchmark, it may purchase CERs. Companies may also purchase the CERs to meet designated standards.

The CERs, the spokesperson said, are created by projects such as wind farms which reduce emissions.

Through the facility created by Swiss Re and Arreon Carbon, which is a firm specializing in the development of emission reduction products, purchasers will be able to acquire CERs from a broad range of high-quality CDM projects. The facility may invest up to EUR300 million ($382 million) CERs by the end of 2012.

"Quality and diversified credit origination allow us to offer our clients greenhouse gas related products and services including sales of guaranteed CERs to clients who need to comply with carbon emissions cap and trade systems," said Ben Lashkari, head of emissions at Swiss Re's Environmental and Commodity Markets division. "Through this new facility, Swiss Re and Arreon Carbon can fund the development of Chinese CDM projects."

Special Reports /

Swiss Re, Arreon Carbon To Purchase China-Based CERs

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