Carbon Finance

What an interesting question, Tom! There is no immediate solution in sight in the UNFCCC. The main obstacles include the question of attribution (who gets the carbon credit -- the entity planting the trees? The one buying the table? Or the one using the table?), and the issue of verification (how to verify the continued carbon sequestration in the wood products?).

In terms of accounting, a full debit is registered when the wood is harvested (it is assumed that all of the carbon contained in the wood is emitted), and no credit can be accrued for sequestration in products.

I am afraid there might not be great potential for a garment factory to benefit from carbon finance. The reason is that garment manufacturing is not very energy-intensive; therefore the potential for reducing emissions through energy efficiency improvements is relatively limited on site; in addition, justifying additionality for such improvements -- a key principle in the Clean Development Mechanism -- would be very difficult.

The greatest potential is more at the source of electricity generation that powers the plant. There, especially in India, there is a lot to be done to move towards electricity generation with a lower carbon content. We hope to work more closely with India on this in the future.

The beauty of the Kyoto Protocol is that it set up market mechanisms that enable companies in industrialized countries to support emission reductions in developing countries by buying carbon credits. It is quite an innovation in the world of development as it brings companies in industrialized countries in direct contact with projects in developing countries that have as specific objective to reduce emissions of greenhouse gases and in the process allows for technology transfer.

For example, the World Bank has set up a number of carbon funds that do just that (www.carbonfinance.org). These funds have received money from a wide range of companies in Europe and Japan (look at our annual report on our website for a list of these); with this money, the World Bank purchases carbon credits from investments made by project developers in developing countries.

Hi!

I don't have the answer at my finger tips, but I will be happy to research this topic for you. Please email our communications specialist, Ms. Isabel Hagbrink, at ihagbrink@worldbank.org, and she will follow up.

Charles, we are always looking for financing! We have a number of funds that might interest you. Why don't you call Isabel Hagbrink to discuss? Her number is +1 202 458 0422. Looking forward to talking to you.

Good morning or afternoon if you are writing from Africa…

Let me try to answer your very interesting questions. It is a fact that Africa has low emissions, so it is not surprising that there are not as many CDM projects as in other parts of the world. It is also a region where the private sector, that is taking most of the initiative elsewhere, is not as proactive. It is a fact that the Clean Development Mechanism requires a significant upfront investment in capacity building and training, both on the investor and government side. It takes time to understand how it works and the benefits thereof. We have been helping countries to bridge that gap.
From our perspective, the continent is of high priority and through our carbon funds, we are actually involved in quite a few projects (about 17% of our projects last year were in Africa). Several of these are in the very sectors you mention. However, we realize that there is much more that can be done and we are exploring how to intensify our activities in these key sectors.

This is the last question for which I have time today to answer. Thank you all for your interest. Please feel free to contact us through our help desk on or our communications specialist, Ms. Isabel Hagbrink, at ihagbrink@worldbank.org.

Hi! This looks interesting.

Please send your project idea note (PIN) to our help desk .

We'll be happy to have a look at it.

I am not sure I agree with you. Although it is a slow process and we are still in the early stages of climate change mitigation, our experience with carbon funds such as the Community Development Carbon Fund (www.carbonfinance.org) shows us that it is possible to reach out to local communities and poor populations to work with them so that they can access cleaner energy alternatives. For example, we are working with Grameen Bank in Bangladesh to promote solar energy for poor households. There is much more that can be done in this area working in tandem with microfinance institutions. Please feel free to contact our fund manager if you work in microfinance through our help desk.

Although there is a general slowdown in project-based carbon market transactions, the World Bank is continuing to increase its support for emission-reduction projects. My unit (www.carbonfinance.org) manages carbon funds that buy emission reductions generated by investments in a large number of developing countries. In particular, we have quite a few activities in Africa, in energy, forestry and waste management. Also, we are helping countries develop strategies for forest conservation.

Despite the financial crisis, we are pushing ahead with these activities and the World Bank in general is providing a strong impetus to climate change mitigation in the developing world. If you mean by “negative externality” the impact of climate change on your country’s development prospects, such as increased extreme weather events (e.g., floods, prolonged droughts, more frequent hurricanes), the World Bank is ramping up its work on “adaptation”, starting with a lot of analysis on what it means and costs, working with individual countries on assessing their needs to adapt and how they can meet these needs. Watch out for an upcoming World Bank report on the economics of adaptation that will be launched in October.

There are two avenues currently available for carbon crediting: (a) the voluntary carbon market and (b) the Clean Development Mechanism (CDM) in the Kyoto Protocol. Each has its own set of eligibility conditions and processes for implementing activities that can then earn carbon credits. Information can be accessed from their respective websites. Your eligibility will depend, amongst others, on how, when the type of land and the scale of planting. Your first point of contact should be the climate change (CDM) focal point in Kenya at the Ministry of Environment and Natural Resources. Alternately you could approach organizations such as the Green Belt Movement that are active in mobilizing communities for tree plantations for carbon crediting in Kenya. The World Bank Team can assist in providing further information. Just go to our help desk.

Bonjour de Washington! Quelques mots généraux sur le protocole de Kyoto y le Mécanisme pour un Développement Propre (MDP)

Le protocole de Kyoto adopte en 1997, fixe des engagements chiffres et contraignants de limitation ou de réduction des émissions de gaz a effet de serre (GES) pour les pays industrialises et en transition vers une économie de marche, et ce pour la période 2008-2012. Afin de limiter le cout économique résultant de la réduction des émissions de GES la ou il est possible de le faire a moindre cout, le protocole de Kyoto prévoit trois «mécanismes de flexibilité» fondés sur le marché: l'échange des droits d'émission, l'application conjointe et le mécanisme de développement propre (MDP).
Ces mécanismes visent à permettre aux pays industrialisés d'atteindre leurs objectifs en échangeant entre eux des droits d'émission et en obtenant des crédits supplémentaires en mettant en œuvre des projets de réduction des émissions à l'étranger. L'application conjointe se rapporte aux projets lancés dans des pays qui doivent eux aussi respecter des objectifs d'émission, et le mécanisme de développement propre concerne les projets menés dans des pays en développement auxquels il n'a pas été attribué d'objectifs.
Le protocole de Kyoto a permis ainsi le lancement et la mise en place d’un marché international du carbone. En parallèle, d’autres initiatives de réduction d’émission de GES diverses dans leur approche (mandataire ou volontaire) existent ou sont en cours de développement, comme le cas du marché carbone volontaire ou les unités de réductions volontaires sont commercialisées.
Comme c’est encore le cas pour plusieurs pays d’Afrique sub-saharienne, il n’y a pas encore d’opération carbone au Togo (ni selon le MDP, ni selon le Gold Standard et le Voluntary Carbon Standard, deux principaux standards du marché volontaire), en particulier en raison de sa faible empreinte carbone. Il existe cependant certains potentiels qui pourraient faire l’objet de transactions de crédits carbone: des projets de cogénération dans les usines de conditionnement de la canne à sucre (utilisant les résidus agricoles) et des projets de conversion de centrales électriques vers des combustibles moins émetteurs (comme le gaz naturel).

Bonjour de Washington!

Madagascar a plusieurs operations carbone en cours. Dans le secteur des forêts, par exemple, le Ministère de l’ Environnement, Eaux et Forêts est en train de mettre en œuvre un projet de reboisenement avec des essences autochtones dans la région de Moramanga, avec l’appui de Conservation International (CI) et de la Banque mondiale (BM). Madagascar est aussi un des premiers pays à mettre en œuvre des projets REDD – Réduction des émissions liées à la déforestation et dégradation des forêts, y compris un projet assez avancé dans le Corridor Ankenihenzy-Zahamena, avec CI et la BM et un autre project dans le Parc de Makira, avec WCS. Ces projets sont en train de commercialiser des crédits carbone sur le marché volontaire, car les activités REDD ne sont pas éligibles dans le Mécanisme de Développement Propre du Protocole de Kyoto.

English Translation:In Madagascar there are several carbon-related operations under way. In the forestry sector, for example, the Ministry of Environment, Water and Forests is in the process of implementing a reforestation project in the Moramanga region, using indigenous species, with the support of Conservation International (CI) and the World Bank. Madagascar is also one of the first countries to implement Reduced Emissions from Deforestation and Forest Degradation (REDD) projects, including a project at a fairly advanced stage along the Ankenihenzy-Zahamena Corridor, in collaboration with CI and the World Bank, and another project in the Makira Natural Park, with WCS (Wildlife Conservation Society). These projects are also serving to promote carbon credits in the voluntary market as REDD activities are not eligible under the Kyoto Protocol’s Clean Development Mechanism.

Bonjour! Puisque vous semblez être québécois, laissez-moi répondre en français. En effet, nous travaillons sur le développement de methodologies s’appliquant au transport urbain dans le cadre du mécanisme de développement propre.

English Translation:
Good morning! Since it appears that you are from Quebec, I will respond in French. We are, in fact, working on developing methodologies for addressing urban transport within the framework of the Clean Development Mechanism.

Le Cameroun est un des pays qui participent dans le Fonds de Partenariat pour le Carbone Forestier (FCPF) de la Banque mondiale (Forest Carbon Partnership Facility), dont le but est d’appuyer les pays dans la préparation et mise en œuvre d’une stratégie nationale pour la réduction des émissions dues à la déforestation et la dégradation des forêts (REDD).

Le Cameroun a déjà signé son Accord de Participation avec le FCPF et doit bientôt commencer à préparer sa stratégie nationale. Dans cette stratégie, il est possible que le pays adopte un mécanisme pour compenser les propriétaires directement, mais ça dépendra du pays. Vous pourriez obtenir plus d’information auprès du Ministère de l’Environnement et de la Protection de la Nature.

Une autre possibilité pour qu’un propriétaire puisse accéder directement au marché de carbone, c’est le marché volontaire pour lequel il faudrait préparer un dossier de projet pour présenter à des acheteurs intéressés.

English Translation:
Cameroon is among the countries participating in the World Bank's Forest Carbon Partnership Facility (FCPF)—http://www.forestcarbonpartnership.org/fcp/node/11—which aims to support countries in the preparation and implementation of a national strategy for the reduction of emissions from deforestation and forest degradation (REDD).

Cameroon has already signed the FCPF Participation Agreement and will soon begin preparing its national strategy. As part of this strategy, it is possible for the country to adopt a mechanism for direct compensation of landowners, but that depends on the country. You may obtain more information from the Ministry of Environment and Nature Protection.

Another possible way for a landowner to gain access to the carbon market directly is through the voluntary market, for which it would be necessary to prepare a project proposal for submission to interested buyers.