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About Prototype Carbon Fund (PCF)

Introduction
Climate change, and accompanying disrupted weather patterns—caused by the greenhouse effect through atmospheric loading of greenhouse gases (carbon dioxide, methane, etc) could wreak havoc on the planet, particularly large parts of the developing world. The cost-effective reduction of greenhouse gas emission to avert the most severe impacts of climate change remains one of the widely accepted priorities for global action.

Recognizing that climate change will have the most impact on its borrowing client countries, on July 20th, 1999 the Executive Directors of the World Bank approved the establishment of the Prototype Carbon Fund (PCF). The PCF, with the operational objective of combating climate change, aspires to promote the Bank’s tenet of sustainable development, demonstrate the possibilities of public/private partnerships, and offer a "learning-by-doing" opportunity to its stakeholders.

PCF Operations
The PCF will pilot production of Emission Reductions within the framework of Joint Implementation (JI) and the Clean Development Mechanism (CDM). The PCF will invest contributions made by companies and governments in projects designed to produce Emission Reductions fully consistent with the Kyoto Protocol and the emerging framework for JI and the CDM. Contributors, or "Participants" in the PCF, will receive a pro rata share of the Emission Reductions, verified and certified in accordance with agreements reached with the respective countries "hosting" the projects.

PCF Strategic Objectives
From its inception, the PCF has followed three primary strategic objectives:
  • High-Quality Emission Reductions: to show how project-based greenhouse gas Emission Reduction transactions can promote and contribute to sustainable development and lower the cost of compliance with Kyoto Protocol;
  • Knowledge Dissemination: to provide the Parties to the UNFCCC, the private sector, and other interested parties with an opportunity to "learn-by-doing" in the development of policies, rules, and business processes for the achievement of Emission Reductions under CDM and JI;
  • Public-Private Partnerships: to demonstrate how the World Bank can work in partnership with the public and private sectors to mobilize new resources for its borrowing member countries while addressing global environmental problems through market-based mechanisms.
Committed to Reduce Carbon
Companies can supplement their commitments at home by purchasing potentially lower-cost emission reductions in developing countries and countries with economies in transition. As a result, projects in these countries will get a new source of financing for sustainable development in the energy, industrial and waste management sectors, land rehabilitation, and in the introduction of clean and renewable technologies. Industrialized countries can meet part of their Kyoto obligation, while the threat of climate change is reduced at a lower overall cost. The Prototype Carbon Fund (PCF) was created as a response to the need to understand and test the procedures for creating a market in project-based emission reductions under the Kyoto Protocol's flexible mechanisms. The PCF has played a pioneering role in developing the market for greenhouse gas emission reductions, while promoting sustainable development, and offering a learning by doing opportunity to its stakeholders, and has paved the way for the additional carbon funds established by the World Bank.


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