What is the Carbon Initiative for Development?
The Carbon Initiative for Development (Ci-Dev) is a World Bank climate protection fund, in which the Climate Cent Foundation holds a stake of 23 million US$. The fund also numbers the governments of Great Britain and Sweden among its investors and is endowed with around 110 million US$ in total. It funds climate protection projects in little-developed countries, especially in Africa, focussing on improving access to renewable energy.
What is a climate protection fund?
A climate protection fund is a procurement scheme for the purchase of project-based certificates. The sourcing of certificates is handled by the fund operator, who concludes direct purchase agreements with the owners of climate protection projects.
The resulting certificates are distributed to fund participants according to their respective investment share.
In this blog, we will understand the genesis, objectives and structure of the Carbon Initiative for Development (Ci-Dev), launched by the World Bank.
The Carbon Initiative for Development (Ci-Dev) was launched in December 2011 to build capacity and develop tools and methodologies to help the world’s poorest countries access carbon finance, mainly in the area of energy access.
It is set up to use performance payments based on reduced emissions to support projects that use clean and efficient technologies in low-income countries.
Aims and objectives:
The objectives of the Ci-Dev are the following:
To demonstrate that performance-based payments for the purchase of certified carbon emission reductions (CERs) can lead to a successful and viable business model that promotes increased private sector participation, and share lessons for replication.
To influence future carbon market mechanisms so that low income countries, and especially least developed ones, receive a greater and fairer share of carbon finance, resulting in high development benefits that avoid carbon emissions.
To support low income countries in developing standardized baselines and establishing “suppressed demand” accounting standards in key areas such as rural electrification, household energy access and energy efficiency.
To contribute proposals to further improve and extend the scope of the Clean Development Mechanism (CDM) for use by least developed countries (LDCs), in particular for Programmes of Activities (POA).
Ci-Dev comprises two reinforcing components, the Readiness Fund and the Carbon Fund.
The Readiness Fund finances capacity building activities in least developed countries to develop standardized baselines and technical assistance for energy access programs.
It supports the development of new methodologies and proposals for simplified CDM rules, and dissemination of results.
Where needed, it also provides technical assistance to the projects and programs supported by the Carbon Fund.
The Carbon Fund provides performance-based payments to low-carbon investments in the form of purchases of certified carbon emission reductions.
Sub-Saharan Africa continues to suffer from a major energy deficit, with hundreds of millions of people lacking access to electricity and clean cooking fuels. There is a great need for innovative mechanisms that can help families access clean and affordable energy. The Carbon Initiative for Development (Ci-Dev) is one such mechanism.
A $125 million fund with a pipeline of 14 pilot projects in Africa, Ci-Dev will help improve living standards and sustainable energy through results-based finance. Along the way, it will generate valuable lessons in how reducing greenhouse gas emissions can generate tangible development benefits for local communities, like cleaner air, improved safety, and financial and time savings. These lessons can help in the delivery and scale up of innovative climate finance business models.
The fund is currently working on a portfolio of 12 climate protection programmes. Programmes have been set up in the fields of biogas use by private households, solar energy, efficient cooking appliances, small-scale hydropower, and power network extensions.
They are located in Ethiopia, Burkina Faso, Kenya, Madagascar, Mali, Rwanda, Senegal and Uganda. All programmes display innovative business models, which makes it more difficult to determine a programme’s funding requirements, i.e. a fair price per CER.
As in October 2017, the fund had signed a purchase agreement with ten programmes.