Developing Countries Show Increasing Benefits from a Decade of World Bank Carbon Finance

Contacts:

Anita Gordon  202-473-1799

Agordon@worldbank.org

Robert Bisset  202-458-5191

Rbisset@worldbank.org     

Washington, DC, May 15, 2009¾ The World Bank today released the annual report on its carbon finance activities showing that developing countries, particularly in Africa, are increasingly benefitting from Bank-managed carbon funds and facilities.

The figures released show how, in tandem with the growth of the carbon market,  the Bank’s carbon finance operations have expanded from a single fund a decade ago—the $180 million Prototype Carbon Fund—to 11 funds and facilities ( a 12^th will start operations in 2009) with a total asset value of more than US$2.6 billion today.  The Bank has more than 186 projects in its carbon finance portfolio. Out of these, 119 projects have signed emission reductions purchase agreements with a value of over $1.8 billion, up from 89 projects (totaling over $1.5 billion) in 2007.

The East Asia and Pacific region—in particular China—with a total emission reduction value of over $1.3 billion makes up the largest share of all active projects. The Latin America and the Caribbean and Europe and Central Asia regions have the second and the third largest share of the portfolio as a result of several renewable energy, waste management, and oil and gas sector projects. Over the time period covered by the report, there were 10 purchase agreements signed in the Africa region, many for renewable energy projects.

According to the Carbon Finance Annual Report 2008, much of the value of the agreements signed by the funds and facilities within the last year was in the renewable energy sector, more than $300 million worth of carbon assets, followed by the energy efficiency sector, while the waste management sector accounted for about 9% of the total.   The charts below show both the geography and technology distribution of the World Bank’s Carbon Finance portfolio.

In addition, a new carbon facility— the Forest Carbon Partnership Facility—was made operational and its capitalization target was increased by US$50 million to $350 million due to high demand for participation in it. A second tranche of the Spanish Carbon Fund with capital of €70 million was established and the Carbon Partnership Facility (CPF) was opened for contributions. To date contributions of €72 million have been committed to the CPF.

“We have learned a great deal to take us to this point. To carry us to the next stage, the post-2012 commitments that will be negotiated in Copenhagen in 2009, we have set up two new carbon facilities,” said  Joëlle Chassard, manager of the World Bank’s Carbon Finance Unit. “The Forest Carbon Partnership Facility will give us the opportunity to pilot finance mechanisms to help address the enormous challenges in the field of climate change and forests.  The new agenda for reducing emissions from deforestation and forest degradation offers reason to be hopeful and focuses renewed attention and financial resources to address the root causes of these problems.  The Carbon Partnership Facility to be launched in 2009 will target large-scale program for clean technology.”

From gas-flaring reductions in Russia to clean energy in Sub-Saharan Africa and renewable energy in Latin America, carbon finance has been integrated into all the regions where the World Bank operates. 

Many of the Bank-managed projects are firsts. For example, the first project ever registered by the UN Executive Board for the Clean Development Mechanism was a PCF project, Brazil Alta Mogiana Bagasse Cogeneration.   The first two land use, land-use change, and forestry (LULUCF) projects registered by the U.N. Board for the Clean Development Mechanism were from the Bank-managed BioCarbon Fund. The first was the China Reforestation for Guangxi Watershed Management in the Pearl River Basin. In 2008, the CDM Executive Board officially registered the Moldova Soil Conservation Project making it the second land-use change and forestry project to be registered. A reforestation project given the green light by the UNFCCC demonstrates that the carbon market can work for rural communities and that forests can play a major role in dealing with climate change.

In two weeks (May 27^th-May 29^th) the World Bank will co-sponsor Carbon Expo 2009 in Barcelona, Spain. The Bank will bring delegates from more than 60 developing countries and countries with economies in transition to explore the potential of carbon finance in their countries.