Washington, D.C., June 02, 2006 –
The IFC-Netherlands Carbon Facility, a joint initiative of the International
Finance Corporation and the government of the Netherlands, today signed
an emissions reduction purchase agreement worth more than $6 million. Under
this agreement, IFC will use Dutch government funds to purchase greenhouse
gas (GHG) emission reductions from a landfill gas project in Argentina.
In accordance with the Clean Development Mechanism of the Kyoto Protocol,
the Dutch government will then use the purchased Certified Emission Reductions
(CERs) to help comply with its commitment under the Protocol.
Rachel Kyte, Director of IFC’s Environment and Social Development Department,
said, “The Clean Development Mechanism is now a real opportunity for companies
to invest in environmental projects in emerging markets. This is a win-win
situation. Greenhouse gas emissions will be reduced, a landfill in Argentina
will be better managed, and the Netherlands is helping fulfill its emission
reduction commitments.”
CERs are independently verified reductions of carbon dioxide, methane,
and other GHG emissions in developing countries. Under the Kyoto Protocol’s
Clean Development Mechanism, they are eligible for trade and can be sold
in countries that have undertaken such reductions.
Atul Mehta, IFC’s Director for Latin America and the Caribbean, noted
that, “Our role in helping the region’s companies participate in the
carbon credit markets follows IFC’s objective to provide innovative and
effective solutions for the private sector, both in Argentina and throughout
the region.”
The project is managed by Van der Wiel Stortgas b.v. (VdW), a Dutch company
that specializes in engineering, design, and supply of systems for extracting
and using landfill gas. VdW has implemented a system of gas collection
wells and pipes at the Villa Dominico landfill, which is located south
of Buenos Aires and owned by a government agency. VdW collects the
gas, which contains significant quantities of methane, and burns it in
a controlled flare to reduce its global warming potency. Since Argentina,
like many other emerging market countries, has no laws requiring collection
and destruction of landfill gas, this project is a significant contribution
to environmental protection. It is being implemented specifically to reduce
greenhouse gas emissions under the Kyoto Protocol. VdW and the landfill
owner will share the revenues from the sale of CERs according to an agreed
formula.
IFC manages two carbon purchase facilities and offers financial products
for the growing carbon market, including an AAA-rated carbon delivery guarantee
on behalf of projects generating emission reductions as well as loans against
forward contracts. For more information on IFC’s carbon finance
offerings, contact carbonfinance@ifc.org.
From July 2005 to March 2006, IFC committed $233 million for its own account
and an additional $383 million in syndications in private sector projects
in Argentina. IFC’s total portfolio in the country as of December 2005
is $1.029 billion.
In Argentina, IFC has shifted its focus from short-term lines to long-term
financing. IFC’s priority for its direct investments is to provide
long-term financing and structured finance products to companies and projects
in strategic sectors, with a focus on businesses expanding into other developing
countries and on export-facilitating projects. Strategic sectors
for investment include oil, gas, and mining; agribusiness and forestry
products; and the financial sector. IFC is emphasizing high-impact
projects, such as housing finance and support of export-oriented small
and medium enterprises.
The International Finance Corporation is the private sector arm of the
World Bank Group and is headquartered in Washington, D.C. IFC coordinates
its activities with the other institutions of the World Bank Group but
is legally and financially independent. Its 178 member countries
provide its share capital and collectively determine its policies.
The mission of IFC is to promote sustainable private sector investment
in developing and transition countries, helping to reduce poverty and improve
people’s lives. IFC finances private sector investments in the developing
world, mobilizes capital in the international financial markets, helps
clients improve social and environmental sustainability, and provides technical
assistance and advice to governments and businesses. From its founding
in 1956 through FY05, IFC has committed more than $49 billion of its own
funds and arranged $24 billion in syndications for 3,319 companies in 140
developing countries. IFC’s worldwide committed portfolio as of FY05 was
$19.3 billion for its own account and $5.3 billion held for participants
in loan syndications. For more information, visit www.ifc.org.