Flex-mex on trial in the Baltic region

Energy and environment ministers from the five Nordic countries- Norway, Denmark, Sweden, Iceland and Finland – in tandem with Germany, Poland, Estonia, Latvia, Lithuania and Russia, are set to decide on plans for exchanging investments for emissions credits by the end of next year.

The recently-finalised Kyoto Protocol embraces flexible mechanisms for reducing emissions, including the trading of carbon credits. The Baltic scheme will see the Nordic countries and Germany setting up and contributing to an investment facility. The fund will be used to set up projects aimed at reducing emissions of greenhouse gases in Russia, Poland, Estonia, Latvia and Lithuania.

In return, the funding countries will be assigned credits for any reductions in carbon dioxide and other greenhouse gas emissions that come about as a result of the investments, thereby reducing the requirements for emission limits in their own countries.

The World Bank already has a similar investment facility called the Prototype Carbon Fund (PCF). Several projects have been finalised and the first credits are due to be assigned to the countries and companies that have provided the funding. Commercial entities are also becoming involved in carbon credit systems – Senter, in The Netherlands, is offering a tender to countries interested in buying carbon credits through the joint implementation process, involving trade-offs with Eastern European countries.

“In the Baltic Sea region it will primarily be the funding countries themselves that invest in the facility,” said Cecilia Kellberg, at Sweden’s Ministry of Industry, Employment and Communications. “In the long term, companies could also invest in ‘joint implementation’ in order to meet future emission limitations.”