By Joelle Chassard
Manager, Climate Finance Unit, The World Bank
The future looks a little brighter in Senegal following a unique agreement last month between the Senegalese
Rural Electrification Agency and the World Bank to provide some 1.5 million compact fluorescent lamps to tens
of thousands of rural households. While half a world away in northern Russia, estimated emissions of 6.7
million tons of CO2 equivalent are set to be avoided, following an agreement with the Bank for the recovery
and utilization of the associated petroleum gas at the Komsomolskoye oil field.
The two activities, Senegal’s first CDM ‘programme of activities’ to reduce greenhouse
gases, and Russia’s first Joint Implementation activity of such scale targeting gas flaring reduction,
are two recent examples of World Bank efforts to find innovative ways to leverage investment and catalyze
Over the years, the World Bank Group has acquired substantial experience in mobilizing and leveraging finance
to support development projects with climate benefits, most notably through its carbon finance activities (a
key channel to catalyze low-carbon investment in developing countries and economies in transition), and
through the GEF (critical to develop a knowledge base for adaptation).
As a pioneer of the carbon market, its efforts encompass the following:
- Manage an active portfolio of ten carbon funds and facilities that have pioneered and deepened
the market for emission reductions in every continent and in a wide range of sectors and development
- Purchase carbon credits beyond 2012 (through the new Carbon Partnership Facility), to help
provide carbon market continuity and increase the stream of carbon revenues to projects with positive
implications for their financing
- Enable reducing emissions from deforestation and degradation (through the new Forest Carbon
- Explore frontloading mechanisms, to encourage lending against anticipated carbon revenue streams
and, more recently, carbon-linked bonds to direct the capital so-raised to low-carbon investment
- Develop risk-management products (such as IFC Carbon Delivery Guarantee or MIGA political risk
insurance), to increase the confidence of potential carbon asset buyers or of potential investors in
the underlying projects
- Innovate in asset creation, such as development of methodologies – with a focus on
underserved sectors like energy efficiency or forestry assets, or assistance to countries setting up
Green Investment Schemes
- Share knowledge, raise awareness and build capacity in host countries, most notably through the
Carbon Finance Assist (CF-Assist), an active partner in the Nairobi Framework.
Today, the challenge before us is to scale up the carbon market, reduce the transaction costs, and expand
from a project by project approach to approaches that promote and reward lower emission trends. Critical here
is the need to strengthen certainty around carbon markets after 2012, building on the endorsement given by
Parties at the United Nations Climate Change Talks in Bangkok earlier this year to continue the market-based
mechanisms under the Kyoto Protocol beyond 2012.
Progress at the upcoming climate negotiations in Poznań in this respect is critical.
In the meantime, a group of industrialized nations recently pledged more than US$6.1 billion to the Climate
Investment Funds (CIF), a pair of international investment instruments designed to provide interim, scale-up
funding to help developing countries in their efforts to mitigate increases in greenhouse gas emissions and
adapt to climate change.
The Clean Technology Fund will invest in projects and programmes in developing countries that contribute to
the demonstration, deployment and transfer of low-carbon technologies. The Strategic Climate Fund will serve
as an overarching fund for various programmes to test innovative approaches to climate change.
The funds, to be disbursed as grants, highly concessional loans and/or risk mitigation instruments, will be
administered through the World Bank Group and other multilateral development banks.
In designing the funds, and in support of the Bali Action Plan, the World Bank in consultation with developed
and developing countries took care to recognize the primacy of the UNFCCC in global climate negotiations. The
countries are equally represented in the governance structure. All funds and programmes under the CIF have a
sunset clause in order not to prejudice UNFCCC deliberations regarding the future of the climate change
The climate change debate is changing rapidly. Not long ago, the issue was the domain of environment
ministers. They helped us to understand the challenge as a development issue, and our efforts to help
countries address climate change are now captured in the Development and Climate Change Strategic Framework
for the World Bank Group.
The stories from countries as different as Senegal and Russia show what can be achieved when there is a will
and a way; yet such actions need to be repeated across the globe. Innovative financing in the fight against
climate change is needed now, more than ever, if we are to confront what has emerged as the major threat to
the development priorities of the poorest countries and communities.