The World Bank Carbon Funds and Facilities
July 8, 2013
The World Bank Carbon Finance Unit (CFU) uses money contributed by governments and companies in OECD countries to purchase project-based greenhouse gas emission reductions in developing countries and countries with economies in transition. The emission reductions are purchased through one of the CFU's carbon funds or facilities on behalf of the contributor, and within the framework of the Kyoto Protocols Clean Development Mechanism (CDM) or Joint Implementation (JI).
The World Bank created the Prototype Carbon Fund in 1999 and currently, the Bank is Trustee of 15 carbon initiatives. The first 10 carbon funds and facilities that were established with the objective to provide its Fund Participants with emission reductions for their obligations under the first commitment period of the Kyoto Protocol are capitalized at $2.3 billion (using exchange rates of 12/31/2012). The World Bank's carbon funds have supported over 150 projects in 65 countries.
They have demonstrated the role market instruments can play in supporting cost-effective emission reductions and channeling mitigation finance to developing countries. Furthermore, the World Bank has taken a leadership role in shaping the next generation of carbon instruments for the post-2012 period by developing new approaches to performance-based payments beyond the initial carbon funds and facilities.
The World Bank's five most recent carbon instruments aim to scale up emission reductions, focus on readiness for market-based carbon initiatives, increase access to energy in least developed countries, and reduce emissions from deforestation and forest degradation. These five carbon inititaives have a total fund allocation of over $1 billion.
A partnership between twelve companies and six governments, and managed by the World Bank, the PCF became operational in April 2000. As the first carbon fund, its mission is to pioneer the market for project-based greenhouse gas emission reductions while promoting sustainable development and offering a learning-by-doing opportunity to its stakeholders. The Fund has a total capital of $195.55 million. Read more
The CDCF provides carbon finance to projects in the poorer areas of the developing world. The Fund, a public/private initiative designed in cooperation with the International Emissions Trading Association and the United Nations Framework Convention on Climate Change, became operational in March 2003. The first tranche of the CDCF is capitalized at $128.6 million with nine governments and 16 corporations/organizations participating in it and is closed to further subscriptions. Read more
Since its creation in 2004, the BioCarbon Fund has allocated resources to projects that transform landscapes and directly benefit poor farmers. It was the first carbon fund established in the world to focus on land use. Read more
The World Bank announced an agreement with The Netherlands in May 2002, establishing a facility to purchase greenhouse gas emission reduction credits. The Facility supports projects in developing countries that generate potential credits under the CDM established by the Kyoto Protocol to the UN Framework Convention on Climate Change. Read more
The Netherlands, acting through its Ministry of Economic Affairs, the World Bank and the International Finance Corporation (IFC) in August 2004, signed an agreement appointing the World Bank and the IFC as Trustees of the Netherlands European Carbon Facility, in order to purchase greenhouse gas emission reductions for the benefit of the Netherlands. The Facility purchases emission reductions from JI projects only, i.e. from projects located in countries with economies in transition. Read more
In fall 2003, the World Bank entered into an agreement with the Ministry for the Environment and Territory of Italy to create a fund to purchase greenhouse gas emission reductions from projects in developing countries and countries with economies in transition that may be recognized under such mechanisms as the Kyoto Protocol's CDM and JI. The Fund is open to the participation of Italian private and public sector entities and has a total capital of $155.6 million. Read more
The Danish Carbon Fund (DCF) was established in January 2005 with an initial capitalization of €26.4 million. The full capitalization of the DCF now stands at €58.09 million. The fund consists of five Participants: the Danish Ministry of Climate and Energy, DONG Energy A/S, Aalborg Portland A.S., Maersk Olie og Gas A.S., and NEAS Energy. Read more
The Spanish Carbon Fund was created in 2004 in an agreement between the Ministries of Environment and Economy of Spain and the World Bank. This fund was established to purchase greenhouse gas emission reductions from projects developed under the Kyoto Protocol to mitigate climate change while promoting the use of cleaner technologies and sustainable development in developing countries and countries with economies in transition. The Fund has a total capital of $278.6 million. Read more
The Carbon Fund for Europe (CFE) is designed to help European countries meet their commitments to the Kyoto Protocol and the European Union's Emissions Trading Scheme (EU ETS). The CFE is a trust fund established by the World Bank, in cooperation with the European Investment Bank (EIB). The Fund will purchase greenhouse gas emission reductions through the Kyoto Protocol’s Clean Development Mechanism and Joint Implementation from climate-friendly investment projects from either bank’s portfolio as well as self-standing projects. Read more
As initially established, the Umbrella Carbon Facility (UCF) was intended to manage the purchase of very large volumes of emission reductions (over 10 million tons CO2e) for varying groups of participants in multiple tranches. In 2006, the first tranche of the UCF (UCFT1) contracted to purchase 129.3 million tons of certified emission reductions (CERs) generated from two Chinese HFC-23 incinerators. That tranche included 16 participants, five of which were other Carbon Funds. Tranche 2 of the UCF was intended to provide Participants with a facility to obtain post-2102 CERs. The objective of the facility was to sign new ERPAs with projects in the World Bank's existing Carbon Finance portfolio. The UCF's current capitalization is €105 million. Tranche 1 | Tranche 2
The Carbon Partnership Facility (CPF) is one of the World Bank’s major new carbon finance instruments targeting the post-2012 period. The CPF's objective is to develop emission reductions and support their purchase, on a larger scale through the provision of carbon finance to long-term investments. Read more
The Forest Carbon Partnership Facility (FCPF) assists developing countries in their efforts to reduce emissions from deforestation and forest degradation and foster conservation, sustainable management of forests, and enhancement of forest carbon stocks (all activities commonly referred to as "REDD+") by providing value to standing forests. Read more
The Partnership for Market Readiness (PMR) is a grant-based, global partnership of developed and developing countries that provides funding and technical assistance for the collective innovation and piloting of market-based instruments for GHG emissions reduction. In addition, the PMR also provides a platform for technical discussions of such instruments to spur innovation and support implementation. Read more
The Carbon Initiative for Development (Ci-Dev) was launched in December 2011. It will build capacity and develop tools and methodologies to help the poorest countries of the world access carbon finance, mainly in the area of energy access. It will also use emission reduction-based performance payments to support projects that use clean and efficient technologies in low-income countries. Read more