What types of projects are potentially eligible? IFC has a particular interest in projects of the following types:
renewable energy projects (e.g., biomass, wind, geothermal) that displace use of fossil fuels
energy efficiency projects, supply side or demand side, that reduce consumption of fossil fuels
recovery and utilization of methane from, for example, waste landfills and coal mines
switching from fuels with greater to lesser greenhouse gas (GHG) intensity (e.g., from coal to natural gas)
recovery and utilization or destruction of industrial gases that are potent GHGs (HFC, N20, PFCs,SF6)
What type of funding will be provided? If a project is approved, IFC will make periodic payments (e.g. annually) to the project company upon certification and transfer of the legal title for the actual credits.
What are the key terms in a carbon contract? A contract to purchase carbon credits will specify:
the volume of GHG emissions that are expected to be reduced, measured in metric tonnes of carbon dioxide equivalent (CO2 equivalent);
the price agreed per tonne of CO2 equivalent; and
the period over which credits will be purchased and payments made. All credits contracted for must be generated before the end of 2012.
Other terms and conditions will also be negotiated and agreed by IFC and the project company.
Can this contract be used to facilitate conventional financing? The contract will specify a series of cash flows to be paid to the company on delivery of certified credits over a period of time. Conventional providers of financing may choose to consider these additional cash flows when evaluating the capacity of the company to repay debt and/or provide a return on equity. IFC may consider monetizing this forward stream of revenues for projects that have signed CERPAs with creditworthy off-takers.
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