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[International] || International Finance Corporation

1.    Carbon Financing Unit

The Carbon Finance Unit serves as IFC’s in-house resource for all carbon finance-related issues, providing services directly to buyers and sellers. The Unit leads in the development of new products, and serves as an advisor on a variety of products and services to support private sector participation in the evolving carbon market.

IFC is well-positioned to assist project sponsors with participation in the rapidly growing market for ‘carbon credits’. Through the Carbon Finance Program, IFC contributes to the development of an important new market for environmental services.

The Carbon Finance Unit brings IFC’s extensive experience in project finance to manage long term and credit risks in emerging markets. Carbon Finance products and services include:

  • •    Finance Products and Services

?    Carbon Delivery Guarantee
?    Monetization of future cash flows from sales of carbon credits
?    Debt and equity for carbon rich products and businesses
?    Work with Financial Intermediaries and municipalities to help aggregate carbon credits from their various investment operations

Eligible Projects
What types of projects are potentially eligible?
IFC has a particular interest in projects of the following types:
?    renewable energy projects (e.g., biomass, wind, geothermal) that displace use of fossil fuels
?    energy efficiency projects, supply side or demand side, that reduce consumption of fossil fuels
?    recovery and utilization of methane from, for example, waste landfills and coal mines
?    switching from fuels with greater to lesser greenhouse gas (GHG) intensity (e.g., from coal to natural gas)
?    recovery and utilization or destruction of industrial gases that are potent GHGs (HFC, N20, PFCs,SF6)
What type of funding will be provided? If a project is approved, IFC will make periodic payments (e.g. annually) to the project company upon certification and transfer of the legal title for the actual credits.

What are the key terms in a carbon contract? A contract to purchase carbon credits will specify:
?    the volume of GHG emissions that are expected to be reduced, measured in metric tonnes of carbon dioxide equivalent (CO2 equivalent);
?    the price agreed per tonne of CO2 equivalent; and
?    the period over which credits will be purchased and payments made. All credits contracted for must be generated before the end of 2012.
Other terms and conditions will also be negotiated and agreed by IFC and the project company.

Can this contract be used to facilitate conventional financing? The contract will specify a series of cash flows to be paid to the company on delivery of certified credits over a period of time. Conventional providers of financing may choose to consider these additional cash flows when evaluating the capacity of the company to repay debt and/or provide a return on equity. IFC may consider monetizing this forward stream of revenues for projects that have signed CERPAs with creditworthy off-takers.

Project Selection Criteria
The main project selection criteria include, but are not limited, to:
?    Location: Projects must be located in an emerging market country that has either ratified the Kyoto Protocol or is in the process of doing so. A list of eligible countries is available on request.
?    Likely Project Closing: Projects must be likely to reach financial closing in the short term.
?    Amount of Credits: Projects must generate a minimum number of credits through to 2012. As this requirement varies by product, please contact IFC for more information.
?    Environmental and Social Impact: All projects, whether financed by IFC or not, must comply with IFC’s Environmental and Social Standards. Projects that have large-scale adverse environmental or social impacts will not be considered.
?    Host Country Approval: The government of the host country will have to approve the project under the Clean Development Mechanism or Joint Implementation mechanism of the Kyoto Protocol. IFC can support the application of the project company to the government for such approval. The host country will also need to have ratified, or initiated domestic procedures to ratify, the Kyoto Protocol.
?    Independent Verifications: The initial design of the project will need to be validated by an independent auditor, as required under the Kyoto Protocol. In addition, the credits generated by a project must be verified and certified periodically by auditors.
The International Finance Corporation, is exploring opportunities to support renewable options, such as geothermal, hydro, wind and solar, along with an energy efficiency program in the Caribbean,

Contact Information
For additional information, send an email to carbonfinance@ifc.org or write to:

International Finance Corporation
Carbon Finance Unit
2121 Pennsylvania Avenue NW
MSN F10K-1001
Washington, DC, 20433, U.S.A



Category/ies:Funding Opportunities.
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