Sep. 22--Thailand's Carbon Fund is expected to be operational by the first quarter of 2010, structured as a high net worth trust as recommended by the Securities and Exchange Commission.

The SEC is in the process of imposing regulations to facilitate establishing the Carbon Fund.

MFC Asset Management is ready to play a key role in setting up, said Sopida Luveeraphan, the company's first executive vice-president for private equity and financial advisory business.

"The SEC expects to complete the work by the first quarter of 2010 but with the clear mandate from the government, the process could be completed by the end of this year," she said yesterday at a conference hosted by the Thailand Greenhouse Gas Management Organisation (TGO).

MFC, majority-owned by the Finance Ministry, conducted a study of the Carbon Fund for the TGO.

The plan is subjected to a final endorsement by the National Climate Change Committee chaired by Prime Minister Abhisit Vejjajiva.

Similar to a mutual fund, the high net worth trust will mainly raise funds from institutional or high-profile investors interested in the carbon business.

The SEC earlier this year announced that active or passive trusts may be established to facilitate investment in real estate, manage exchange-traded funds or issue Sukuk securities.

The Carbon Fund will be able to invest in the equity of Clean Development Mechanism (CDM) projects, buy carbon credits in the form of certified emission reduction (CER), or acquire the projects under the Build-Operate-Transfer (BOT) concept, Mrs Sopida said.

The CDM allows developed countries that have obligations under the Kyoto Protocol to make emission reductions overseas in non-Kyoto nations and count those reductions against their own legal commitments.

"The private sector, including those with obligations to cut emissions, and companies which want to buy credits to support their corporate social responsibility policies, will be major investors in the Carbon Fund. The government will also have a minor role in fund raising," Mrs Sopida said.

The size of the fund will vary from 500 million baht to one billion baht with fewer limitations in terms of the ownerships in each project, she said.

To date, several foreign investors from Japan, including the Japan Bank for International Cooperation, and Europe have expressed keen interest in taking part in Thailand's Carbon Fund.

"Local investors have limited understanding in the carbon trading business with the Export-Import Bank of Thailand the only active player to date," she said.

The TGO is hopeful the Carbon Fund could be set up this year so that Thailand can cash in on the expected greater CDM opportunities after December's climate change talks in Copenhagen, in Denmark, said deputy executive director Prasertsuk Charmornmarn.

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