Carbon Finance at the World Bank. The World Bank March 2007

Transcription

1 Carbon Finance at the World Bank The World Bank March 2007

2 Climate Change a Truly Global Challenge Ton of Greenhouse Gas emitted has same global impact regardless of where emitted or mitigated/reduced Makes sense to reduce/mitigate wherever most cost effective Market based mechanism considered most effective way, allowing revenue and investment to be directed to projects in developing economies

3 Global Market Created by the Kyoto Protocol Most OECD countries have a reduction target, on average 5.2% below 1990 Targets to be achieved through: Carbon Market Reductions at home Purchasing emission reductions credits and international emission allowances Credits from projects in developing countries (Clean Development Mechanism CDM) Credits from projects in economies in transition (Joint Implementation JI) International Emissions Trading of allowances

4 Growth in Carbon Market Source: The World Bank, State and Trends of the Carbon Market data is for first quarter only

5 Carbon Trade and the CDM Developing country with no emissions cap Industrialized country with an emissions cap Domestic action Baseline emissions Emission Reductions (ERs) Project emissions ER $ $ Developing country/economy in transition benefits from technology and financial flows Purchase of ERs Purchase of allowances Emissions target Baseline Scenario Project Scenario

6 Why is the World Bank in the Carbon Market? IPCC conclusions on global climate change Impact of climate change on development Efficiency of market-based instruments to reduce GHG emissions

7 World Bank Carbon Finance Objectives To ensure that carbon finance contributes substantially to sustainable development, beyond its contribution to global environmental efforts. To assist in building, sustaining and expanding the international market for carbon emission reductions and its institutional and administrative structure. To further strengthen the capacity of developing countries to benefit from the emerging market for emission reduction credits.

8 How Carbon Funds Work Technology Technology $ $ Finance Finance Industrialized Governments and Companies Bank Managed Carbon Funds Developing & Transition Economy countries/projects CO 2 Equivalent Emission Reductions CO 2 Equivalent Emission Reductions Long-term revenue streams to climate-friendly projects

9 Growth of World Bank Carbon Funds 2500 million US$ Kyoto Protocol entered into effect in Year Total US$ 1.93 billion in 9 Funds = 13 governments, 62 companies

10 World Bank Carbon Funds & Facilities General purpose funds - Target practically any technology and project type that reduces emissions - Prototype Carbon Fund, Netherlands, Italian, Spanish, Danish Carbon Funds Special purpose funds: - Small projects with clear local community benefits (Community Development Carbon Fund) - Forestry and land use projects (BioCarbon Fund) - Large pre-identified projects (Umbrella Carbon Facility)

11 Technological Distribution (Number of Projects) Active Carbon Finance Unit Portfolio - Total 102 Projects Renewable Ene rgy: 36% Geothermal 3% Hydro 20% Wind 6% Bagasse <1% Biogas <1% SF6 Re cove ry <1% Transportation <1% Waste Management 18% Coal Mine Methane 3% Biomass 5% Oil and Gas Se ctor 4% Land Use, Land- Use Change and Forestry 22% Ene r gy Efficiency 14% HFC-23 Destruction 2%

12 Regional Distribution Active Carbon Finance Unit Portfolio - Total 102 Projects Middle East & North Africa 4% South Asia 10% (Number of Projects) Africa 16% Latin America & Caribbean 29% East Asia & Pacific 21% Europe & Central Asia 20%

13 Special Features of World Bank Carbon Funds Able to push technology envelope: New sectors, technologies Assist project owners to enter market Can take more Kyoto risk than most other buyers: Can agree to pay even if the project is not approved in Kyoto Protocol Can purchase longer than most other buyers, i.e. beyond 2012 Committed to building the capacity of host country and project owners to replicate projects Good strategic partner: Most experienced carbon fund manager, extensive staff and resources Reliable investors (i.e. highly secure payments) Bank s dialogue with host governments May be combined with World Bank loans, grants and technical assistance

14 Thank you