World Bank Group | Landfill Gas (LFG)

Carbon Emission Reductions as a Tool for Development

The private market for project–based emission reductions, still in an early stage, does not yet have significant volume, and the potential benefits have not reached many developing countries.

The World Bank’s carbon finance products help grow the market by extending and expanding carbon finance to both developing countries and economies in transition—linking private sector buyers of carbon credits with climate friendly projects seeking financing. These carbon finance products are helping to create an environment in which the private sector can more easily use their resources in support of climate–friendly and environmentally and socially responsible projects.

The Prototype Carbon Fund (PCF) (http://prototypecarbonfund.org/splash.html) is a partnership between 17 companies and 6 governments, managed by the World Bank, the PCF became operational in April 2000. 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 Netherlands Clean Development Facility (http://carbonfinance.org/NetherlandsClean.htm) – The World Bank announced an agreement with The Netherlands in May 2002, establishing a facility to purchase greenhouse gas emission reduction credits. The Facility will support projects in developing countries that generate potential credits under the Clean Development Mechanism (CDM) established by the Kyoto Protocol to the UN Framework Convention on Climate Change.

The Community Development Carbon Fund (CDCF) (http://communitycarbonfund.org/) – The CDCF will provide carbon finance to small-scale projects in the poorer rural areas of the developing world. The Fund is a public/private initiative, building on the Bank’s experience with the PCF. On September 2, 2002, The World Bank launched the CDCF in collaboration with the International Emissions Trading Association (IETA) in Johannesburg, South Africa. The target size for the Fund is US$100 million.

The Biocarbon Fund (http://biocarbonfund.org/) - The World Bank intends to mobilize a new fund to demonstrate projects that sequester or conserve carbon in forest and agro-ecosystems. The Fund, a public/private initiative administered by the World Bank, will aim to deliver cost-effective emission reductions, while promoting biodiversity conservation and poverty alleviation. On November 5, 2002, the BioCarbon Fund was publicly launched at the Katoomba Group Forestry Meeting in Tokyo, Japan. The target size of the Fund is US$100 million. The BioCarbon Fund has been approved by the World Bank Executive Board and will be open for Participant subscriptions in October, 2003 and is expected to become operational in March, 2004.

The World Bank Climate Protection Program (http://carbonfinance.org/carbon_footprint.htm) – The World Bank is seeking to reduce its own carbon footprint. In a first move to deal with its carbon emissions, the World Bank's Environmentally and Socially Sustainable Development (ESSD) Vice-Presidency has committed resources to offset its carbon emissions for 2001. These offsets will directly support community-level projects in developing countries that also produce carbon ERs.

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