The UK Government gave its backing to a global scheme which will help developing countries cut their carbon emissions.
The UK Government will support the World Bank’s Partnership for Market Readiness to help developing countries set up their own carbon trading systems to cut emissions. This will allow more investment in green technologies across the world and help stimulate private sector low carbon investment opportunities.
The UK’s support joins financial contributions from the European Commission, Germany, Norway, Australia and the United States, and will help up to 15 developing countries to set up market-based policies including better international crediting systems and domestic trading schemes.
Energy and Climate Change Secretary Chris Huhne said:
“Carbon trading is one of the most cost effective ways for countries to reduce emissions so it’s vital that developing countries have the funds to invest and introduce their own schemes.
“Here in the UK, almost half of our emissions are managed through carbon trading which contributes to energy security, supports jobs and encourages private finance.
“The UK is contributing £7m to the World Bank, on top of that we will be offering developing countries our expertise in designing and running trading systems, such as our current collaboration with the Government of India on the design and implementation of their new energy efficiency trading system.”
Andrew Mitchell, the Secretary of State for International Development said:
“Establishing their own carbon trading mechanisms will allow developing countries to play their own role in reducing their carbon emissions.
“This funding will kick start innovative carbon programmes that will help poor communities cope with climate change challenges.
“By better harnessing the innovation of the private sector, developing countries will have the tools to create jobs and develop local solutions that will increase access to clean energy and improve the lives of the world’s poorest people”.
Notes for editors:
The UK Government will contribute £7M ($11M) to the World Bank’s PMR through the International Climate Fund.
The key aims of the PMR are:
• Increase the number of experts in 10-15 developing countries to design and implement market-based schemes;
• Test and pilot new market schemes in a minimum of 5 developing countries by 2015; and
• Create a forum to enable experts from different countries and organisations to share experience and knowledge.
The World Bank’s Partnership for Market Readiness (PMR), launched in Cancun in December 2010, Several developing countries have expressed an interest in participating in the PMR. Countries and sectors will be selected by a Partnership Committee made up of developed country contributors and developing country participants. To gain a seat on the Partnership Committee, donor countries will have to contribute at least $5 million up-front.
The World Bank are seeking to mobilise a total of $100 million.
Key facts about carbon markets:
• The Clean Development Mechanism (CDM) is currently the main tool for developing countries to participate in the carbon market. It works by allowing companies and governments in developed countries to purchase credits for projects that reduce emissions in developing countries.
• The global carbon market delivered over $3bn of financial flows to the developing world (mainly through the Clean Development Mechanism) in 2009. The final report of the Advisory Group on Finance (AGF) estimates that figure could rise to $30-50bn by 2020. However, this would require moving beyond the CDM to the kind of new large-scale market mechanisms that are supported by this World Bank initiative.
• The UK estimates the Copenhagen Accord commitments would cost around 25% more to deliver without the ability to trade in carbon. As the world takes on greater commitments, the contribution of carbon markets can only increase.