Submitted 16th November 2005
Our mission is to catalyze a global carbon market through the purchase of high quality emission reductions in climate-friendly projects in developing countries and economies in transition.
The World Bank`s carbon finance initiatives are part of the larger global effort to combat climate change, and go hand in hand with the Bank`s mission to reduce poverty and improve living standards in the developing world. The threat climate change poses to long-term development and the ability of the poor to escape from poverty is of particular concern to the World Bank. The impacts of climate change could unravel many of the development gains of the last several decades.
The Bank is therefore making every effort to ensure that developing countries and economies in transition can benefit from international efforts to address climate change, including the emerging carbon market for greenhouse gas emission reductions. Carbon finance is the first large scale initiative that seeks to catalyze private sector investments to address a global environmental issue.
Carbon finance is a means of leveraging new private and public investment into projects that reduce greenhouse gas emissions, thereby mitigating climate change and promoting sustainable development. An increasing number of governments and companies are entering the market, which is projected to grow significantly. Companies can supplement their commitments at home by purchasing potentially lower-cost emission reductions in developing countries and countries with economies in transition. As a result, projects in these countries will get a new source of financing for sustainable development in the energy, industrial and waste management sectors, land rehabilitation, and in the introduction of clean and renewable technologies.
The Carbon Finance Business (CFB) has built strategic coalitions with both the public and private sectors to mobilize new resources for sustainable development and to address global environmental problems through market based mechanisms.
Carbon Finance Projects
The World Bank Carbon Finance Business (CFB) projects generate emission reductions with are expected to be registered for the purposes of the Kyoto Protocol`s Article 12 (Clean Development Mechanism) or Article 6 (Joint Implementation).
Experience has shown that the full engagement of developing countries in market mechanisms for greenhouse gas emission reduction and sequestration will only take place in the presence of local environments that support project identification, preparation.
The World Bank has developed concepts for additionality and baseline for a number of years now and has applied these concepts to several projects. In the World Bank Carbon Finance Business approach, additionality is established as a positive difference.
The CFB experience shows that the complexity of methodologies depends on the sector to which they are applied. The methodologies for waste management projects are relatively straightforward and use a financial analysis based on the expected rate of return
The PCFplus Program which supplements the work of the PCF in the areas of outreach and capacity building, and research and training, was initiated in Nov 2000. The objectives are to build capacity of host countries and PCF participants.