A report in PointCarbon this week suggests that the World Bank is considering a new issue of "carbon bonds", after a two-year pause in issuance.
The story quotes World Bank head of derivatives and structured finance, Ivan Zelenko, as saying “We are in talks with a number of countries and banks about issuing new carbon bonds” .
An earlier version of the carbon bond was called a 'CO2L' or 'Cool Bond', marketed to Japanese retail investors in 2008 with a total offering was $31.5 million. The bonds pay a fixed rate coupon for an initial period and then a coupon linked to future Certified Emission Reduction (CER) market prices and the actual volume of CERs issued by a hydropower plant located in the Guizhou Province in China and a bio-energy project in Malaysia. Investors make money if the price of the CER goes up.
Zelenko explained that, beyond 2012, UN-backed carbon credits will be accepted in the EU emissions trading scheme and the market price should remain correlated with the EUA price.
