Driving innovation in climate finance

The Transformative Carbon Asset Facility (TCAF) supports developing countries in implementing their Nationally Determined Contributions (NDCs), which are greenhouse gas (GHG) emission reductions that countries pledge to achieve under the Paris Agreement. Using conservative baselines and accounting practices, TCAF supports countries in generating carbon assets that have strong environmental integrity and comply with the international carbon accounting and reporting system.

TCAF funds the Innovative Carbon Resource Application for Energy Transition Project (iCRAFT) in Uzbekistan. It is the Bank Group’s first policy-crediting program and the first international carbon finance operation in Central Asia under Article 6 of the Paris Agreement. Disbursement of TCAF financing of $46.3 million is linked to verified emission reductions resulting from decreased end-user energy consumption associated with energy tariff reforms. Once verified by an independent third party, the project will make results-based payments to the government. In June 2024, Uzbekistan earned its first payment of $7.5 million from TCAF for successfully cutting 500,000 tons of carbon emissions.

An estimated 62.5 million tons of GHG emission reductions will be generated over the project’s lifespan, with 5% of these carbon assets to be sold to selected TCAF donors. Uzbekistan can use the rest for sale in international carbon markets using systems developed under iCRAFT or for domestic compliance. This innovative project is expected to be scaled up and replicated in other Bank Group operations.

The activities in this story were implemented with the generous support of the following development partners:

Canada, Climate Cent Foundation, Germany, Norway, Spain, Sweden, Switzerland, United Kingdom.

For more information on how trust funds help coordinate, innovate and catalyze development action, please see the World Bank Group’s FY24 Trust Fund Annual Report.