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Foundation for the Future of the Carbon Market provides start-up funding for PoAs

January 2012 - The German Environment Ministry and the KfW Bank have launched a new Foundation for the Future of the Carbon Market. Its function is to promote the use of programmatic CDM activities (Programmes of Activities, or PoAs) by providing initial financial support and boosting awareness of the PoA concept. Funding will largely be provided for investment in small-scale emission reduction measures such as the use of energy-efficient cookers, upgrading generic lighting with energy-saving lightbulbs, and the construction of biogas facilities and small-scale hydropower plants.

The funded projects must be viable in the longer term and reimburse the start-up funding provided. Ultimately, the projects should demonstrate their practicability and viability to incentivise banks and other finance institutions to step up investment in such activities. From the outset, the Foundation will seek cooperation opportunities with other finance partners. Its capital of €10 million is provided by the German Environment Ministry as part of the International Climate Initiative.

Funding will primarily target least-developed countries (LDCs) because from 2012, new CDM projects aiming to sell emission certificates to companies participating in the EU Emissions Trading Scheme must be conducted in LDCs. To date, LDCs have benefited very little from the carbon market and are in urgent need of support in tapping their emission reduction potential. This is where the Foundation comes in: without the start-up capital, many PoAs would not come to fruition and valuable emission reduction potential would go untapped.