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Foundation “Future of the Carbon Market”

Kenianische Fischer auf einem Boot im Dunkeln, auf einer Schwimminsel davor eine elektrische Lampe.
(Photo: Siemens Pressebild/Siemens AG)

The implementation of Programmatic market-based mitigation projects, such as CDM Programmes of Activities faces barriers. One particular problem developers face is the lack of seed funding. Against this background, BMU initiated the Future of the Carbon Market Foundation and endowed it with financial resources of €10 million to support selected programmatic mitigation initiatives. Funding by the Foundation is usually provided in form of advance payments against future carbon revenues.

Programmatic market-based mitigation projects, such as CDM Programmes of Activities, can be an effective tool for the dissemination of sustainable climate-friendly technologies, even under difficult circumstances. However, the implementation of programmes faces barriers. One particular problem developers face is the lack of seed funding. Against this background, BMU initiated the Future of the Carbon Market Foundation and endowed it with financial resources of €10 million to support selected programmatic mitigation initiatives. Funding by the Foundation is usually provided in form of advance payments against future carbon revenues.

The start-up financing is complemented with consulting activities aiming to increase public awareness, to alleviate reservations against investment in climate-friendly technologies and to build government capacity in developing countries.

The main focus of the Foundation is on small-scale emission reductions in sectors currently underrepresented in the CDM that require a high degree of organisation and have a high likelihood of being replicated in other regions or countries. However, the Foundation also intends to support initiatives which help Governments in the implementation of ambitious climate policies, making use of market-based approaches.

Long-Term Perspective on Market Development

The Foundation is set up for a timeframe of at least ten years. With this long-term perspective, the Foundation promotes programmes with strategic considerations, focusing on proposals with an innovative approach. Supported Programmes have to fulfil certain prerequisites, which are detailed in the Funding Guidelines (available on the Foundation’s website). These notably include financial viability and emission mitigation potential. A supported programme has to demonstrate strong potential for long-term sustainable operation and is required to lead to substantial emission reductions with a high replication potential.

Any programme funded by the Foundation is required to be in line with the host country’s climate policies and help to implement sustainable development goals. Beyond this, the Foundation has a special focus on approaches that play a direct role in the host country’s national climate strategy. This can include the implementation of ambitious climate policies which promote the use of market-based mechanisms.

Initial Phase of Operation

The Foundation identified its first funding initiatives in 2013. Details on the supported programmes are published on the Foundation’s website. The Foundation also supports the development of Standardised Baselines and has recently started to assess the potential in the charcoal sector in West African countries.

The Future of the Carbon Markets Foundation launched its second call for proposals in February 2014. The foundation aims to support an average of two PoAs per year. The maximum funding amount per project is €2 million.

Foundation “Future of the Carbon Market”

Implementation: Kommunalkredit Public Consulting

Lifecycle: 2011-2021

Further information: www.carbonmarket-foundation.org

Contact: Martin Gauss, m.gauss@kommunalkredit.at