DURBAN: The World Bank launched two new financial initiatives to help the least-developed countries access financing for low-carbon investments, according to a statement.
The Carbon Initiative for Development (Ci-Dev) and the third tranche of the BioCarbon Fund (BioCF T3) will enable target countries to tap into carbon markets after 2012.
By focusing on agriculture and access to energy, the initiatives “will strengthen links … for the world’s poorest communities to these markets, as well as the flow of financing to action on the ground,” said Rachel Kyte, World Bank vice president for sustainable development.
“The World Bank is helping countries in the further development of carbon markets and other market mechanisms to support acceleration of mitigation efforts, and access to those markets for less developed countries,” said Kyte. “The bank wants to ensure that its suite of financial instruments, including private sources of capital via carbon markets, is accessible to all country clients so they can invest in their sustainable development.”
Through the carbon finance instruments, client countries can purchase certified emission reductions (commonly called ‘carbon credits’) from a diverse range of projects such as household biogas systems in Nepal, cook stoves in Africa, reforestation in the Democratic Republic of Congo, soil carbon in Kenya, and municipal solid waste in Uganda.
The Ci-Dev, aiming to raise $120 million, is a partnership of donor and recipient countries where public and private sector entities are pledging their support to capacity building and carbon market development in the poorest countries of the world.
The Walloon Region (Belgium) is seeking to pledge €5 million with an immediate €1.2 million by the end of 2011.
A number of public and private sector entities, including the Norwegian company Statoil, have expressed interest in the Ci-Dev as buyers of the ensuing carbon credits.
“We anticipate that the Ci-Dev, through successful demonstration and piloting, will have a multiplier effect to bring even greater resources to help these countries grow sustainably,” said Walloon Minister of Environment, Philippe Henry.
BioCF T3 will focus on reforestation and agriculture projects that go hand in hand with co-benefits such as decreased soil erosion and increased land fertility. The expansion of the BioCF will build on seven years of work in these areas.
Eight out of nine forestry projects registered in Africa to date have been developed by this World Bank initiative, the statement read.
“By focusing on forestry and agriculture, the projects will develop new opportunities in crucial sectors because the farm economy predominates and is the single-largest source of income, jobs, and livelihoods in the poorest countries including in Africa,” according to the World Bank.
Wondwossen Sintayehu, director of environmental law and policy division at Ethiopia’s Environmental Protection Authority, said, “For Ethiopia, sustainable land management, reforestation of degraded lands, improving agriculture yields and access to energy are critical development priorities. The carbon markets have provided capital to help Ethiopia start achieving this. But it’s not enough — we are eager to do many more projects, scale up those we have started and test new approaches to expand the financial resources available to our country, and the expanded BioCarbon Fund will help us do this.”
Despite current concerns in the carbon market stemming from uncertainty over the future of the Kyoto Protocol, the decision by the World Bank to launch post-2012 carbon initiatives is indicative of the institution’s commitment to support market-based instruments to fight climate change.
The World Bank is trustee of 12 carbon funds and facilities capitalized at $2.7 billion.
Twenty percent of the World Bank’s portfolio of Clean Development Mechanism (CDM) projects is in sub-Saharan Africa, substantially higher than the 2 percent average generally for CDM projects.
