May 28, 2009 / 4:01 PM / 10 years ago

INTERVIEW-Ex-Goldmans carbon head sees light with new fund

* Ex-Goldman Sachs carbon head to launch $500 mln CO2 fund

* Looks to replace 13 million Indian inefficient lightbulbs

* Planning other green projects in Australia, United States

* Confident U.S. projects eligible in domestic CO2 market

By Michael Szabo

BARCELONA, May 28 (Reuters) - Ken Newcombe had an idea, and the proverbial lightbulb that appeared over his head was an energy efficient one, not a traditional electric one.

The former head of carbon emissions trading at investment bank Goldman Sachs (GS.N) started his own carbon finance business last year, C-Quest Capital. He hopes to raise $500 million for a fund that invests in clean energy projects including replacing household lightbulbs in India.

“In India, we’re leading in the development of alternatives for lighting for households, replacing incandescent lightbulbs with CFLs (compact fluorescent lamps),” he told Reuters.

“Indian Railways, one of the biggest institutions in the world, owns 640,000 houses and we’re distributing four CFLs per household over the next 12 months.”

Under the Kyoto Protocol climate change pact, companies can invest in projects in developing countries and in return receive U.N.-approved offset credits, each equivalent to one tonne of avoided carbon dioxide, which can be sold for profit.

The projects can be single installations like wind farms, or a programme of activities like replacing millions of lightbulbs.

The International Energy Agency has calculated that lighting using conventional bulbs uses 19 percent of global electricity.

In 2007, environmental group Greenpeace asked India to follow Australia and ban the incandescent lightbulb.

India announced in February it would replace 400 million bulbs with CFLs by 2012, which would save about 55 million tonnes of carbon dioxide per year, Greenpeace calculated.

Newcombe expects his Indian Railways project to reduce emissions by some 1 million tonnes.

“Our business is expanding. We’re looking to distribute 13 million CFLs to around 4.5 million households under our current contracts,” Newcombe said, adding that C-Quest is developing similar projects in two other regions of India, as well as other green ventures in the U.S. and Australia.

The Indian projects must be validated and registered by the United Nations before they are able to receive credits, a process which can take upwards of 1-2 years.

“The project validation is under way, but we may lose offsets because we are unable to get registration before a significant number of CFLs are distributed,” he said.

“We haven’t started raising money yet, we’re just using our founding capital to do all these projects.”

U.S. EMISSIONS

C-Quest aims to set up 85-90 percent of its projects in Asia and the United States, with the remainder in Australia, Newcombe told Reuters on the sidelines of a carbon conference in Barcelona.

“We’re looking to improve land management in the U.S. and Australia, including soil sequestration, growing biofuel crops, and planting trees.”

Soil sequestration involves encouraging less intensive farming practices that retain organic matter in the soil, thereby storing carbon.

Last week, the U.S. House Energy and Commerce Committee approved a draft bill that would create an emissions trading scheme to help cut U.S. greenhouse gas emissions by 17 percent below 2005 levels by 2020.

The proposed scheme allows companies to meet emissions targets through buying offsets generated by clean energy projects, but it not yet known what specific types of projects will be eligible.

Regardless, Newcombe, a veteran of the $126 billion global emissions market, is confident his investments will bear fruit.

“It is so unlikely that our types of offsets won’t be admissible that we don’t have any problem going ahead and investing,” he said.

A vote on the bill in the full House could happen in August but it’s unclear if it will get through the Senate this year. (Reporting by Michael Szabo; Editing by Anthony Barker)

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