The World Bank Group has auctioned $8.25 million dollars of climate funds, which could lead to a reduction of the equivalent of 4.2 million tons of carbon dioxide emissions by the end of 2020.
Twenty-one companies took part in a pilot online auction for the right to sell carbon credits. Eligible projects will cut methane emissions from waste disposal including landfill, wastewater, and agricultural waste.
Methane is a highly potent greenhouse gas with a global warming potential of at least 25 times that of carbon dioxide.
Pilot auction facility designed for methane emissions
This auction attracted bidders in nine developed and developing countries, ranging from large multinationals to small, local businesses.
Bernice van Bronkhorst, global director for climate change at the World Bank Group, commented: “The Pilot Auction Facility provides a way for companies to get a certain revenue stream and fund critical climate investments while making the most of limited climate finance.
“It also offers valuable learning that can be replicated, helping countries to take actions today that can deliver medium to longer term results.”
This is the fourth auction of the Pilot Auction Facility for Methane and Climate Change Mitigation (PAF).
The PAF tests multiple auction formats to attract private sector investments, maximising the use of public finance dedicated for climate results by having private companies compete against one another to deliver the most emission reductions at the lowest cost.
This auction was funded through public contributions and money raised from the private sector in previous auctions.
In this auction, 15 winners paid $0.30 for the right to sell a carbon credit to the PAF at $1.98 per credit. The winners will receive contracts as Pilot Auction Facility Emission Reduction Notes, issued as World Bank bonds.
To be eligible, emissions must be monitored and verified by a third party. Credits verified under the Clean Development Mechanism, Gold Standard, and Verified Carbon Standard are eligible in the auction.