Media contacts: In Washington: Kristyn Ebro +1-202-458-2736 Kebro@worldbank.org In Montreal: Anita Gordon +1-202-436-4791 Agordon@worldbank.org WASHINGTON, December 6, 2005—The World Bank’s Board of Executive Directors today endorsed a Carbon Finance Strategy that will give an edge to developing countries to participate in the growing carbon market, and will oversee the creation of an Umbrella Carbon Facility that will permit the purchase of carbon emission reductions on a larger scale. Under flexible mechanisms of the Kyoto Protocol, industrialized countries with greenhouse gas (GHG) emissions reduction obligations can purchase some of those reductions in developing countries or in countries with economies in transition in exchange for clean technology and additional financing. “With the window of opportunity for such purchases closing by 2012 – when the first commitment of the Kyoto Protocol ends – the new Strategy is timely because it increases the Bank’s ability to support poorer communities with carbon finance through existing funds, and will make it possible to facilitate emission reductions transactions in much larger volumes with greater participation by the private sector,” says Warren Evans, Director Environment Department, World Bank. The Bank already administers eight carbon funds, including the Community Development Carbon Fund and the BioCarbon Fund, which assist poor countries and communities to benefit from carbon trade. The new Umbrella Carbon Facility will pull together multiple sources of funding, including from the Bank’s existing carbon funds, to purchase very large volumes of carbon emissions from pre-identified projects on behalf of governments and private firms. Under current pricing scenarios, some of these purchases could reach $200 to $600 million, particularly in East Asia, South Asia, and Latin America. Carbon Finance in the World Bank has expanded from a “learning by doing” engagement in an emerging trade of emission reductions to an increasingly integral operational activity supporting sustainable development. The updated strategic approach is focused on three main objectives – to: (1) ensure that carbon finance contributes to sustainable development, beyond its contribution to global environment efforts; (2) assist in building, sustaining, and expanding the international market for carbon emission reductions and its institutional and administrative structure; and (3) further strengthen the capacity of developing countries to benefit from the emerging market for emission reduction credits. 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. According to Odin Knudsen, Senior Manager of Carbon Finance in the Bank, “The World Bank believes that climate change is as much a developmental as an environmental issue, and that the poor will be at the greatest disadvantage as a result of climate change. Improving the participation of developing countries in the carbon finance market is now not only necessary but feasible.” The new facility would ensure that a portion of the capital now accumulating in the OECD countries to meet emission reductions obligations flows to developing countries. Purchases of emission reductions from the Facility would help bring more liquidity to the market and ensure that industrialized country governments and companies can meet their emission reduction obligations. The kinds of projects that could benefit from the Umbrella Carbon Facility include capping of industrial gases like HFC-23 in China. HFC-23 is one of the most powerful greenhouse gases, with 11,700 times the global warming potential of carbon dioxide, and is a byproduct in the manufacturing process of HCFC-22 which is used as a refrigerant. Other potential areas include coal mine methane recovery and use, coal-fired power and hydropower facility rehabilitation, programs for landfill gas capture and use from existing landfill sites, and nitrous oxide capture from nitric acid production. The World Bank currently manages eight carbon funds totaling almost one billion dollars. With the Umbrella Carbon Facility, World Bank administered carbon funds are expected to total almost $1.4 billion by July 2006. From a minor experimental activity, carbon finance has grown to be an emerging line of World Bank assistance to developing countries. The carbon fund operations of the Bank are part of the Bank’s broader engagement in climate changes activities. For more information on the World Bank’s carbon finance and climate change activities, please go to: www.carbonfinance.org http://www.worldbank.org/features/2005/climatechange_1205.htm For more information on the Kyoto Protocol, please go to: www.unfccc.int Annex: World Bank Carbon Finance Activities The Bank’s engagement in carbon finance started with the establishment of the US$180 million Prototype Carbon Fund (PCF) in 1999. Since then the Bank has also agreed to administer country carbon funds for the Netherlands, Italy, Spain and Denmark. In addition the Bank established the Community Development Carbon Fund (CDCF) and the BioCarbon Fund in 2003. Bank administered carbon funds grew from $413.6 million in July 2004 to about $914.7 million in July 2005. # # # |
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