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climate finance

Efforts to Protect Tropical Forests Take Big Step Forward – and Money Awaits

Ken Andrasko's picture


 

Last week in Paris, the Forest Carbon Partnership Facility’s partners and stakeholders agreed on groundbreaking rules for investments in tropical forest protection in developing nations – a framework that will also help reduce greenhouse gas emissions in our rapidly warming world.

Capping an intense five days of negotiations, this major milestone unblocks $390 million in funding held in escrow in the facility’s Carbon Fund. The agreement (formally known as a Methodological Framework) spells out how tropical countries should design and implement large-scale protection programs in the lowland and mountain forests of the tropics.

In return, the countries get results-based payments from donor countries that support climate policy and social development goals.

It’s the first time an international organization has put on paper the operational rules for purchasing so-called REDD+ credits to reduce greenhouse gas emissions. (REDD is short for Reducing Emissions from Deforestation and Forest Degradation.)

Reaching consensus on the operational roadmap for REDD+ required input from a diverse set of sometimes-contradictory viewpoints.

Seated at the table to negotiate through the many issues in Paris were donor countries, private corporations, officials from tropical countries willing to experiment with REDD+, civil society organizations and representatives from indigenous groups who were championing the rights of traditional dwellers in tropical forests.

New Funding to Expand Carbon Finance in Low-Income Countries

Brice Jean Marie Quesnel's picture





One of the few bright spots at the recent UN climate talks in Warsaw was the announcement of new financial commitments to the World Bank’s BioCarbon Fund.

Coming hard on the heels of that groundbreaking initiative for sustainable forest landscapes is another piece of good news in international efforts to bring more carbon finance to low-income nations.

The governments of the United Kingdom and Sweden and the Switzerland-based Climate Cent Foundation have pledged more than $125 million for the World Bank’s Carbon Initiative for Development (Ci-Dev), a financial initiative that, like the third tranche of the BioCarbon Fund, will help the least-developed countries access financing for low-carbon investments.

More specifically, the new funding allows the World Bank to focus on helping the world’s poorest countries – especially in Africa – access carbon finance to develop clean energy sources.

It will enable the development and scaling up of a diverse range of projects similar to household biogas systems in Nepal or solar home systems in Bangladesh. It’s also an example of how the World Bank continues its efforts to mobilize private-sector investments for clean development and climate mitigation.

We’re showing, through actions on the ground, that putting a price on carbon is a key part of the solution to the climate challenge.

Treading Water While Sea Levels Rise

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At the UN climate talks that ended wearily on Saturday night in Warsaw, negotiators showed little appetite for making firm climate finance commitments or promising ambitious climate action. But they did succeed, again, in keeping hope alive for a 2015 agreement.

The final outcome was a broad framework agreement that outlines a system for pledging emissions cuts and a new mechanism to tackle loss and damage. There were new pledges and payments for reducing deforestation through REDD+ and for the Adaptation Fund, however the meeting did little more than avoid creating roadblocks on the road to a Paris agreement in 2015. In one of the few new financial commitments, the United Kingdom, Norway, and the United States together contributed $280 million to building sustainable landscapes through the BioCarbon Fund set up by the World Bank Group.

At the same time, COP19 was an increasingly emotional Conference of Parties to the UN Framework Convention on Climate Change. The overture to this round of climate drama was provided by Typhoon Haiyan. Haiyan added, sadly, more to the mounting evidence of the costs of failure in tackling climate change. The language is inexorably moving towards one of solidarity, of justice. But for the moment, this framing is insufficient to prevent emission reduction commitments from moving backwards.

And yet again, as was the case in the climate conferences in Cancun, Durban, Doha, and now Warsaw, outside the official negotiations, there is growing pragmatic climate action driven by climate leaders from every walk of life.

The sense of urgency and opportunity is building, it just fails to translate into textual agreement.

Committed to Healthier Forests and Landscapes

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Today, three countries – Norway, the United Kingdom and the United States – pledged $280 million to the World Bank’s BioCarbon Fund, kicking off a groundbreaking initiative for sustainable forest landscapes. 

Their significant commitment to land and forest preservation is important for two reasons.

The new Initiative for Sustainable Forest Landscapes will manage landscapes in a holistic fashion by working across sectors, rather than in “silos.” It also brings in the private sector already in the design phase, recognizing that many private firms are committed to “greening” and securing their supply chains from the impact of climate change.

Kenya’s first Carbon Credits from Geothermal Energy Pay for Schools

Patricia Marcos Huidobro's picture

Kids at the Oloirowua Primary School in Suswa, Kenya.

Last month, I drove through dust on bumpy dirt roads from Nairobi to visit the Oloirowua Primary School in Suswa, 140 kilometers northeast of the Kenya capital. The school sits on the vast savannah near Hell’s Gate National Park, an area with substantial geothermal potential.

Here, KenGen, Kenya’s electric generating company, has built the country’s largest geothermal plant with support from the World Bank. It’s part of the utility’s effort to “green the grid.”

At the school, classes are being taught outdoors and kids sit under a few trees with notebooks in their laps. Their old and crumbling school will soon be replaced by a new building that will accommodate 200 students. Their faces light up when they talk about the new school, and I feel thankful for being able to work with projects like this where I see the direct effects of our work on kids’ education.

Countries Push Forward with Greenhouse Gas Market Plans

Sarah Moyer's picture

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On the outskirts of Marrakesh’s historic medina, amid bustling construction and new housing developments, the Partnership for Market Readiness’ governing group gathered this month for its final meeting of 2013.

After nearly three years of operation, this group of 30 countries has much to be proud of.

So far, nearly $30 million in grant funding has been allocated to 16 nations to support the design and development of market approaches to greenhouse gas emission reductions. A one-of-a-kind platform to exchange ideas and lessons on market approaches to mitigation has been created. And a technical work program has been launched to support country implementation of critical tools such as data management systems, offset standards, and policy mapping exercises.

Set the Right Price on Carbon and Investors Will Come

Karin Rives's picture

 Dana Smillie/World Bank

This was not the time to discuss the science of climate change, or ways to protect coastal cities against monster storms.

The development experts, journalists, policy wonks and investment professionals who gathered at the Center for Global Development in Washington this week were there to sort out a much thornier issue: How to mobilize and spend the $700 billion or so the world will need annually – above what’s already being spent – to slow and adapt to climate change.

Their consensus: Current levels of public and private finance won’t even begin to do the job.

What’s a Group of Indigenous Peoples Doing in a Baroque Castle in Germany?

Kennan Rapp's picture

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It is not often that you find Indigenous Peoples from around the world meeting in one of the most important baroque castles of Germany. Perched on a cliff, with a natural moat created by the river Lahn, the castle of Weilburg allows a bird’s eye view of the surrounding forest landscape.

These forests were not always lush and thriving. Centuries before, the construction of the castle led to massive logging in the adjacent forests and finally the ruling aristocrat ordered restricted use of timber for construction and introduced a new building code. As a result, Weilburg became the national center of a novel construction technique using clay and straw, which is now seen in towns across Germany.

Coincidently, a new approach to tackling deforestation is also what 80 Indigenous Peoples’ leaders, government representatives, civil society practitioners and international experts from 24 countries discussed this week at a three day workshop in Weilburg’s castle.

The central challenge was to identify practical approaches to ensure the full and effective participation of Indigenous Peoples in REDD+, a performance-based mechanism for reducing emissions from deforestation and forest degradation. The meeting was jointly organized by the Federal Ministry for Economic Cooperation and Development (BMZ), the Forest Carbon Partnership Facility (FCPF) and the UN-REDD Programme.

Reducing Methane with Innovative Finance

Brice Jean Marie Quesnel's picture

 Curt Carnemark/World Bank

One key to addressing climate change is attracting private capital to finance low-carbon sustainable development.   For 2013, the World Bank estimates over US$1 trillion will flow to developing countries from private sources.  In order to increase capital flows to finance low-carbon investment, many forms of innovation are needed.  One source of innovation could come in the shape of results-based finance (RBF).   RBF, also known as pay-for-performance, was pioneered in the health sector and serves as the backbone of anticipated payments for protecting forests. It is increasingly being considered as a means for financing the adoption of low-carbon development pathways and greenhouse gas (GHG) emissions abatement. RBF provides payments for success, and only upon the delivery of pre-defined, verified results.

To see how such a results-based approach to mobilizing private sector funding could work in methane reduction, the World Bank convened - at the request of the G8 - a dedicated study group which looked at the role that pay-for-performance mechanisms could play. The resulting report from the methane finance study group found that, when implemented, pay-for-performance provided by a credit-worthy third party can be a powerful catalyst for private investment. There is potentially much wider scope for the use of pay-for-performance mechanism in climate finance for its deployment to target other GHGs in addition to methane.

World Bank Green Bonds Surpass US$4 Billion Mark – Reflections Five Years On

Heike Reichelt's picture

 Dave Lawrence/World Bank

Since the launch in 2008, the World Bank’s green bonds have grown quickly and reached an important milestone in August. Earlier, this month, the World Bank launched a US$550 million green bond bumping the total amount of World Bank green bonds issued to over $4 billion dollars since the green bond program began. This milestone prompted us to pause and take stock of the program and the new market it helped start.

As countries move toward a low-carbon, climate resilient future, the appetite for innovative climate finance is growing. One way to fill this financing need is through the capital markets. The World Bank’s green bonds, first launched in 2008, have been recognized as a catalyst for the growing market of climate bonds. This market is on its way to becoming an important source of funding for countries looking to grow in a clean and sustainable manner. A sampling of expected project results – over 165,000 tons of carbon dioxide equivalent emission reduction benefits per year in Belarus, and 800,000 tons per year in China, reducing vulnerability to climate-related flooding and water scarcity flood events for about 500,000 farmer households in Indonesia, and producing 6MWhs of electricity out of a landfill in Jordan – highlights the crucial role green bonds and other innovative funding mechanisms could play in financing the fight against climate change.

The World Bank started issuing green bonds in 2008, responding to a group of Scandinavian pension funds interested in supporting activities that address mitigation and adaptation to climate. Skandinaviska Enskilda Banken (SEB) was the lead manager of this inaugural green bond.

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