(Reuters) - Luxembourg-based Althelia Climate Fund has invested $10 million in a Kenyan project that is part of a United Nations scheme to take a market-based approach to curbing destruction of forests in developing nations.
The move is the latest sign of growing private sector investment into projects underlying the U.N.'s Reducing Emissions from Deforestation and forest Degradation (REDD) mechanism.
The 30-year project will protect 200,000 hectares of forest in Kenya, generating 1 million carbon credits annually that can be sold to companies looking to voluntarily offset their greenhouse gas emissions.
Deforestation accounts for almost a fifth of the world's greenhouse gas emissions, blamed by scientists for causing dangerous climate change.
Althelia was set up last June with backing from a number of funding agencies, including the European Investment Bank, Dutch development bank FMO and development finance company Finnfund.
The Taita Hills project, developed and managed by California-based Wildlife Works, is the fund's first investment.