Swiss Re Unit To Manage Carbon Fund

Swiss Re announced that its London-based subsidiary, Conning Asset Management (Europe) Limited, has been appointed to manage the EUR125 million ($195.3 million) post-2012 Carbon Credit Fund.

The Zurich-based reinsurers said the fund is currently investing in the carbon credits produced by so-called “post-Kyoto” projects. The Kyoto protocol is set to expire at the end of 2012.

According to the reinsurer, in the absence of any certainty about the nature of the post-Kyoto regime, the market for carbon credits beyond 2012 is undefined. As a result, many projects with long development lead times are unable to secure funding.

Five European public financing institutions, led by the European Investment Bank (EIB), have responded by launching the post-2012 Carbon Credit Fund to purchase the carbon credits that will be produced by these long-term projects.

Swiss Re explained that the operation is the first of its kind and will exclusively buy and sell carbon credits generated by projects worldwide which will come to fruition in the post-Kyoto period, potentially up to 2022.

Projects involved are those already approved, or to be approved, by the United Nations Framework Convention on Climate Changes' Clean Development (CDM) or Joint Implementation (JI) Mechanisms.

The fund will also make these credits available for purchase by qualifying buyers. These credits are a tradable commodity and have a monetary value which depends on supply and demand.

Conning Asset Management was appointed as fund manager by the five investors after forming an alliance with First Climate, a company with a strong track record as a carbon investment advisor.

First Climate is connected to a global network of subsidiaries and partners who develop climate protection projects from which carbon credits are sourced. The company has acted as manager of carbon assets for several firms and has successfully developed climate protection projects under the Kyoto protocol, Swiss Re said.