Carbon finance for sustainable development : 2013 annual report

Abstract

This report covers the carbon funds, facilities, and financial instruments managed by the World Bank between January 1, 2013 and December 31, 2013. The Carbon Finance unit at the World Bank Group supports putting a price on carbon by providing assistance on and piloting innovative cost-effective climate change mitigation approaches in World Bank client countries. Such approaches include international mechanisms, emissions trading schemes, carbon taxes, and results- based finance. 2013 saw the continuation of two emerging trends in the global carbon pricing landscape: 1) with credits from the Clean Development Mechanism (CDM) worth no more than a few cents and the coverage of the Kyoto Protocol shrinking to 12 percent of global greenhouse gas (GHG) emissions, there was an increasing number of domestic initiatives that are putting a price on carbon; and 2) the Carbon Finance unit continued to develop and deepen innovative financial instruments that support results-based mitigation. In 2013 staff worked with 90 countries, including donors and recipients, to deliver results. The Carbon Finance unit raised $643 million for next generation carbon market initiatives: the Forest Carbon Partnership Facility (FCPF), the Carbon Partnership Facility (CPF), the Partnership for Market Readiness (PMR), the BioCarbon Fund Initiative for Sustainable Forest Landscapes (ISFL), and the Carbon Initiative for Development (Ci-Dev). These carbon initiatives have a total fund allocation of $1.5 billion, including $0.5 billion committed for technical assistance. Carbon finance has been a valuable instrument in helping to put a price on carbon. While scaling up mitigation activities for maximum impact continues to be a challenge, carbon initiatives such as the CPF, FCPF, and the ISFL are pioneers in supporting large-scale interventions. It is also a matter of putting the right price on carbon. Carbon markets are one way of achieving this. The World Bank Group is moving towards expanding the use of results-based payments and developing the next generation of innovative financial instruments.