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A new fund has been launched to help developing countries reduce their carbon dioxide emissions, and to gain 'carbon credits' for such activities.

The US$100-million Community Development Carbon Fund (CDCF) — which was launched earlier this week at the World Summit on Sustainable Development — aims to help developing countries to tap into the global carbon market, a major part of international attempts to mitigate climate change.

"Until now, countries like mine have been bypassed by the growing market in carbon emission credits," says Lidia Brito, minister of higher education, science and technology in Mozambique.

The fund is a joint initiative between the World Bank and the International Emissions Trading Association, and is the first of its kind to exclusively target small-scale projects and local communities in developing countries. The fund's backers say it may represent the best or only opportunity for such countries to benefit from the Kyoto Protocol (the international treaty to reduce greenhouse gases).

"Small countries and small projects will be heavily discriminated against in the carbon market," says Kenneth Newcombe, manager of the prototype to the CDCF. "The reality is that 80 per cent of developing countries won't see any action through… the Kyoto Protocol."

Under the Protocol, countries can receive 'carbon credits' for reductions in greenhouse gas emissions. These credits can be traded internationally, with the rationale that developed countries are encouraged to finance carbon projects in poorer countries. But this system has been criticised for being biased towards large, capital-intensive projects.

The new fund aims to reduce the significant costs and risks associated with small-scale projects, which are more likely to be by-passed by foreign carbon investors. By linking such projects — in renewable energy, energy efficiency and agro-forestry, for example — with financing partners, the fund hopes to improve the livelihoods of local communities and promote the equitable reduction of greenhouse gases.

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