World Bank Carbon Funds and Facilities

March 19, 2014

Annika Ostman / World Bank

The World Bank Carbon Finance Unit uses funds contributed by governments and companies in Organization for Economic Cooperation and Development (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 unit's carbon funds or facilities on behalf of the contributor, and within the framework of the Kyoto Protocols Clean Development Mechanism or Joint Implementation. These carbon funds have demonstrated the role market instruments can play in supporting cost-effective emission reductions and channeling mitigation finance to developing countries.

The World Bank created the first carbon fund and today, the Bank is trustee of 15 carbon initiatives. The first 10 carbon funds and facilities are capitalized at $2.3 billion (using exchange rates of 12/31/2012). These so-called Kyoto funds have supported more than 145 active projects in 75 client countries. Since 2000, these initiatives have reduced the equivalent of 187 million tons of carbon dioxide emissions through the projects they support.

The World Bank has also 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.

The World Bank's six 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 carbon inititaives have a total fund allocation of more than $1 billion and $0.5 billion committed for technical assistance. In 2013 alone, $640 million was raised for these new carbon initiatives.

Building the Next Generation of Carbon Markets: