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.