Recognizing that global warming will have the greatest impact on its borrowing client countries, on 20 July 1999, the Executive Directors of the World Bank approved the establishment of the Prototype Carbon Fund.
The Prototype Carbon Fund (PCF), with the operational objective of mitigating climate change, aspires to promote the Bank's tenet of sustainable development, to demonstrate the possibilities of public-private partnerships, and to offer a "learning-by-doing" opportunity to its stakeholders.
The PCF focuses on three main areas:
- High-Quality Emission Reductions: The PCF funds projects that produce high quality greenhouse gas emission reductions which could be registered with the United Nations Framework Convention on Climate Change (UNFCCC) for the purposes of the Kyoto Protocol. To increase the likelihood that the reductions will be recognized by the Parties to the UNFCCC, independent experts provide baseline validation and verification/certification procedures for emissions reductions that respond to UNFCCC rules as they develop.
- Knowledge: By transacting the business of reducing greenhouse gas emissions, the PCF is developing a knowledge base of business processes and practice to facilitate climate-friendly investment and inform the ongoing UNFCCC negotiations. PCF is pioneering approaches to achieving environmentally credible emissions reductions beginning with defining baselines for more climate-friendly activities to verification, certification, and transfer of emissions reductions achieved. The analyses, independent opinions, and contracts which underpin this process will be made public, along with lessons learned.
- Public-Private Partnership: PCF resources are provided by both the public and private sectors. The PCF demonstrates how insights and experience from both sectors can be pooled to mobilize additional resources for sustainable development and address global environmental concerns. The active participation of both sectors ensures that the PCF operates efficiently and in accordance with the Kyoto Protocol (UNFCCC) while serving the interests of World Bank client countries.
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