The World Bank’s ‘Prototype Carbon Fund’ steals the march on Clean Development Mechanism

Over the next three years, the World Bank plans to invest a maximum of US$150 million in 20 ‘clean’ projects – projects that emit fewer greenhouse gas emissions than traditional technology – in the developing world. Companies and governments contributing funds to the scheme will be awarded carbon credits.

Although companies or governments amassing carbon credits can’t yet put them to use, the World Bank expects that when the Clean Development Mechanism (CDM) gets underway those who have amassed carbon credits will be ahead of the game because the credits will be accepted. “There are companies like KPMG who are already providing third-party certification of carbon credits,” a World Bank spokesperson told edie.

Most qualifying projects will be identified from The World Bank’s regular list of potential investments, but applications from the private sector are also welcome. The primary focus will be on renewable energy technology, including wind, small hydro and biomass projects.

Thus far, 4 governments (Finland, the Netherlands, Norway and Sweden) and nine companies have said they will participate and have committed funds. Total contributions to the PCF stand at US$85 million, with a cap of US$150 million having been set in advance. The participating companies include six Japanese municipal power companies, two Japanese trading houses and Belgian electricity utility Electrabel.

According to the World Bank other companies, including Statoil and NorskHydro of Norway, Gaz de France, SK Power in Denmark and Environment Banc and Exchange LCC of the US are discussing possible participation.

Twenty countries having expressed interest in hosting a PCF project, with two specific projects already detailed on the PCF website. The first is a waste management system for the city and region of Liepaja, Latvia. Collection of landfill-generated methane will form the ‘green’ aspect of the project. The methane collected will be used to generate electricity. The second project is called the Costa Rica Ecomarkets Project. It will aim to develop local markets for environmental services provided by forest ecosystems, as well as for energy generation at the regional and national level.

The PCF will launch officially in April. The World Bank has stated that it will withdraw from such CDM-style funding once the CDM proper (as well as other emission trading schemes) are up and running.