Cross-border ERC Trade
Cross-border ERC trade and clarification of the process for authorization of international transfer of ERCs
Fund: Liveligoods Carbon Fund 3
The Livelihoods Carbon Fund 3 (LCF3) launched in 2021 and combines equity capital from some international investors seeking ERC returns and others seeking financial returns to provide upfront financing for ERC activities.
Rights to ERCs and Their Benefits
Clarifying the legal nature of ERCs is crucial to clearly inform how ERCs are regulated.
ERC Activity Risk
Operational and reputational risks of ERC are relatively manageable mainly through good activity design and development.
Credit Risk in ERC Finance Transactions
Credit risk is a major, fundamental consideration in every ERC finance transaction.
Key Enablers of ERC Finance
Through a series of working group meetings and additional consultations with experts in the field of ERC finance, the World Bank ERP Finance Working Group identified four key risks that influence ERC transactions (Figure 10) and the most effective or promising tools or approaches for mitigating those risks. ERC generation as an economic activity and the associated technologies and practices remain unfamiliar to most financiers, and the market is still small and shallow and is fundamentally policy driven.
Equity: The London Stock Exchange and Foresight Sustainable Forestry
Equity: The London Stock Exchange and Foresight Sustainable Forestry
Financing structures to address key risks
Though the ERC market is still in the lower half of its financing curve, see Figure 5, there are some promising examples of financial structures that have successfully tapped into capital markets or a highly diverse base of international investors.
Current Landscape of ERC Financing
Emission Reduction Credit activity-level investment has steadily increased over the last ten years and needs to scale significantly to meet exponentially increasing ERC demand.
Financing ERC Generation
Demand for ERCs is expected to grow exponentially this decade in response to an increasing global focus on climate action. At the current level of market maturity there is not sufficient investment to support scaling up the market to meet the expected exponential growth in ERC demand and ERC activity-level investment needs to scale significantly to meet exponentially increasing ERC demand.