The World Bank Emission Reduction Program (ERP) aims to help countries leverage the benefits of Emission Reduction Credits (ERC) markets, including increased revenue streams, reduced emissions, and improved environmental sustainability.

Find a list of helpful terms used in the Mobilizing ERC Finance Section.

Political risks are acute for ERC activities and arguably the most important and challenging to address to attract capital. ERC markets are fundamentally policy driven and still relatively novel, trading a credit that may not yet be considered by, let alone be clearly defined, in existing regulatory frameworks. Uncertain policy and regulatory frameworks, as well as unexpected government action, policy change including expropriation, or foreign investment restrictions, fundamentally put at risk the ability of an ERC activity to generate and transfer ERCs from a given jurisdiction.

These sections provides an overview of key findings to attract commercial investment for ERC activities and help scale ERC finance, including examples of how the bond or debt raise could be used to finance ERC activities. For smaller economies and many subnational entities, an aggregation facility that pools multiple ERC activities can help overcome some of the challenges to accessing finance and attract large-scale private sector capital, including through issuing ERC-backed debt.

Sections

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.

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.

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.

Case Studies with examples of commercial value capture divided in Countries.  Alternatively, view them by Sector or Category.

Case Studies with examples of commercial value capture divided in various sectors. Alternatively, view them by Country or Category.

Introduction to the Models - Appendix C

In addition to the Project Guidelines developed, this Appendix lays out the different models for potential public-private partnerships (or PPPs) to generate emissions reduction credits (ERCs) from deploying technologies that reduce or remove emissions. These could also include activities that are part of larger infrastructure-type investments.