Placing a high priority on environmental and social sustainability, IFC has launched a new product to support companies in developing countries address the global challenge of climate change.
Under the new carbon delivery guarantee, IFC facilitates delivery of carbon credits from companies in developing countries to buyers in developed countries. IFC acts as an intermediary, selling companies’ credits in the market and passing an attractive price back to the projects.
Clients profit from IFC’s AAA credit rating by gaining access to markets and benefit from full price transparency. For buyers in developed countries, IFC also eliminates the risk of not receiving the promised carbon credits.
IFC’s carbon delivery guarantee has been launched in South Africa and India. In South Africa, IFC entered a transaction to purchase up to 900,000 carbon credits from Omnia, one of the country’s leading fertilizer producers. In India, IFC signed a deal for 850,000 carbon credits from Rain CII Carbon (India), an IFC client for over 15 years and now the largest merchant of calcined coke in the world with production in India and the United States.
WORLD BANK PRIORITY
Tackling climate change in developing countries is one of the World Bank Group's priorities. In 2004, the World Bank Group committed to scale up its support for renewable energy and energy efficiency by 20 percent annually through 2010.
As part of that commitment, IFC is helping private clients identify business risks and opportunities associated with climate change, including in the carbon credits market. By IFC leveraging its extensive project finance experience in developing countries, IFC is able to identify and structure emission reduction projects to help minimize key risks associated with delivery of carbon credits.
“IFC is in a unique position to help clients maximize the benefits of the carbon credit market, given our experience in the carbon market and our financial strength,” said IFC Executive Vice President and CEO Lars Thunell. “We are eager to work with companies in developing countries who want to undertake climate friendly projects and commercialize carbon assets.”
Under the Clean Development Mechanism of the Kyoto Protocol, companies in developing countries can qualify to sell carbon credits in global commodity markets when they reduce their output of environmentally harmful substances. The process aims to decouple economic growth from an increase in the greenhouse gases that cause global warming.
The new carbon delivery guarantee is an integral part of IFC’s climate change strategy, through which IFC helps its clients maximize their potential for clean energy, including the generation and selling of carbon credits. With demand from developing countries a key factor driving today’s energy prices, carbon delivery guarantees are an important new component in IFC’s ongoing effort to promote greater energy efficiency and smaller carbon footprints among our clients.
KYOTO PROTOCOL COMMITMENT
IFC has been active in the carbon market since 2002, largely through the IFC-Netherlands Carbon Facility and the Netherlands European Carbon Facility. IFC purchases emissions reductions in developing countries on behalf of the Dutch government, which, in turn, uses the emissions reductions to comply with its Kyoto Protocol commitment.
Omnia’s emission reductions will come from a nitrous oxide destruction facility that will significantly reduce emissions. Nitrous dioxide and other greenhouse gases are considered the leading cause of global climate change.
In Rain’s case, the Indian company worked with IFC’s Chemicals Division to finance the installation of waste heat recovery facilities that help eliminate its dependence on fossil fuels for power generation and generate carbon credits as a result.
For more information contact:
Houtan Bassiri
Communications Officer
Johannessburg, South Africa
Tel: +27-11-731-3179
Email: BBassiri@ifc.org
