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Annual Report

Alleviating Uncertainty in Carbon Markets

India's Rural Women

Our Post-2012 Carbon Facility can help ensure the continuation of climate-friendly projects.

The lack of a global climate agreement could harm the environment—but it’s already hurting markets. Countries and companies need certainty to make investment decisions. Without a global framework, financing for climate-friendly projects is jeopardized and uncertainty prevails in carbon markets.

 

To mitigate these risks and promote low-carbon growth, IFC launched the Post-2012 Carbon Facility in February 2011. The fund closed, fully subscribed, in June 2011. It will purchase Certified Emission Reductions—or CERs, a type of carbon credit governed under the Kyoto Protocol—through 2020, long after the first commitment period for the protocol expires in 2012.

 

Without a new international framework, the market for carbon credits is uncertain. As a result, funding for carbon-reduction projects in emerging markets has been, and will continue to be, limited.

 

The IFC facility can help address some of this uncertainty by purchasing carbon credits directly from companies with projects that reduce greenhouse emissions. This will provide a much-needed revenue stream that will enable the continuation of climate-friendly projects.

 

IFC has committed €15 million for our account to the fund, and we have mobilized an additional €135 million from European energy groups. These forward-looking investors see a significant business opportunity in post-2012 emissions reductions.

 

As part of the World Bank Group, IFC has also partnered with the Carbon Disclosure Project—the world’s largest database of corporate climate change information—in which member organizations voluntarily disclose emissions information to attract funding from potential investors.

 

Reducing the effects of climate change on developing countries is a top priority for us. At the same time, the largest growth in demand for energy is coming from the world’s fastest-developing countries. That’s why we aim to make at least 20 percent of our investment commitments climate friendly by FY13, an increase from the current level of about 14 percent.

BY FY13, AT LEAST
20% OF IFC’S INVESTMENTS
WILL BE CLIMATE-FRIENDLY

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