The World Bank has launched a new fund to provide grants to developing countries for projects that reduce greenhouse gas (GHG) emissions.
The new Scaling Climate Action by Lowering Emissions (SCALE) fund will pool money from the global community to provide grants to developing countries as they deliver pre-agreed, verifiable reductions in GHG emissions.
SCALE will help countries generate verified carbon credits that they can apply towards their national emission reduction targets, with any excess credits potentially made available to carbon markets.
"The verifiable emission reductions created by SCALE and similar mechanisms will also be an important step toward building effective carbon credit markets," World Bank president David Malpass said.
The fund has an initial target of $1bn by the end of 2023 and aims to provide an average of $50mn in results-based finance per project. The medium-term ambition is to hit $5bn in funding.
SCALE will provide needed assistance in bridging the supply gap for high quality emission reductions and unlocking additional private sector finance from international carbon markets, according to the World Bank.
"The key recognition for the global community is the need to actually have projects and concepts that reduce greenhouse gas emissions," Malpass said at the Cop 27 UN climate summit. "That's been the missing piece, and we are presenting that today within this SCALE initiative."
The fund will support GHG emissions reductions through natural climate solutions, sustainable infrastructure solutions and fiscal and financial solutions.
"It is my firm belief that the World Bank will have the role of managing the flow of capital from climate funds and other funds so that we can make the target," Vietnam's minister of natural resources and environment Tran Hong Ha said at Cop 27.
