Romania has the potential to generate up to $1.5 billion in carbon revenues over the next 3 to 5 years. These opportunities can be realized through: Trading of Surplus Emission Allowances under the Kyoto Protocol - OECD countries will have to purchase around 2 billion tonnes of surplus emission allowances to meet their commitments under the Kyoto Protocol. There is likely to be significant competition in this market since transition economies together have about 6 billion tonnes of surplus allowances; about 6% is available in Romania. Also, OECD buyers have indicated their interest in purchasing surplus allowances only if they are “greened”, i.e. sales are linked to investments that reduce emissions of greenhouse gases and/ or increase carbon sequestration, so called “Green Investment Schemes” (GIS). One benefit of “greening” is that Romania, by selling a part of its existing surplus allowances (estimated at around 350 million), can invest in emission reduction projects up to and beyond 2012. Romania could aim for a first tranche transaction involving 30 million emission allowances in 2006, followed by similar amounts in 2007 and 2008. Indications are that Romania could mobilize funds in the range of US$700 to US$800 million from these transactions, with the prospect of leveraging similar amounts from private sector to invest in GIS. Romania has requested the World Bank to assist in developing the GIS and the Bank is now in the process of mobilizing grant funds for this task. Implementing Projects that Reduce Greenhouse Gas Emissions or Enhance Sequestration - OECD countries are expected to purchase between 0.5 and 0.8 billion tonnes of emission reductions through investments in projects that reduce emissions of greenhouse gas or enhance sequestration; the so called Joint Implementation mechanism. Romania has the potential to achieve emission reductions through the use of cleaner fuels and renewable energy in the power and heat generation sectors and the modernization and rehabilitation of hot water transmission networks; investments in energy saving measures in the residential and service sectors; reductions in methane emissions in gas transportation and distribution networks; and improved waste and agricultural management. JI would be complementary to GIS. Timing is Critical - The window of opportunity is rapidly closing due to uncertainty in the carbon market at the end of 2012; the first commitment period under the Kyoto Protocol. Large scale trading opportunities and the majority of project based transactions are targeted at meeting OECD compliance needs up to 2012. This emphasizes the need for quick action, also because of the likely competition for the sale of surplus allowances from other countries. The World Bank Can Help to Realize these Opportunities - The World Bank is Trustee of a number of carbon funds comprising public and private buyers. Over US$ 1 billion of funds are currently under management, targeted at project based transactions and the purchase of surplus allowances that have been “greened”. Through its experience in the market, the Bank brings to the table its ability to mobilize in-house and external expertise, links to sources of funding and technical support for carbon project development and supervision. The Bank supports host country capacity building through its CF-Assist (grant) program and training provided by the World Bank Institute. Further information is available online [www.carbonfinance.org] and through:
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