Pilot Auction Facility for Methane and Climate Change Mitigation Framework


The Pilot Auction Facility for Methane and Climate Change Mitigation ("PAF") is an innovative results-based climate finance facility aimed at stimulating investment in low-cost greenhouse gas emission reductions. The PAF would auction put options that guarantee a floor price on carbon emission reduction credits ("ERs").

Paese/Regione Tema Periodo Budget
Mondo
Climate-friendly growth
31.10.2014 - 31.12.2022
CHF 2'375'000
Contesto

In 2013 the G8 commissioned a Methane Finance Study Group to find innovative pay-for-performance mechanisms that can target this potent short lived climate pollutant. The World Bank was requested to serve as a secretariat to the Study Group. In its final report, the group recommendation included the piloting of an auctioning approach. Subsequently, the World Bank, at the request of two Study Group members, Sweden and the United States, commenced a process to design a Pilot Auction Facility for Methane and Climate Change Mitigation.

Obiettivi

The PAF is intended to facilitate low-carbon development by stimulating climate mitigation and innovation in the delivery of climate finance. The PAF is expected to achieve the following goals:

a) informing the design of scaled-up pay-for-performance climate finance approaches, including the Green Climate Forming the design of scaled-up pay-for-performance climate finance approaches, including the Green Climate Fund, by piloting an innovative climate finance mechanism that leverages private capital and uses auctions to ensure maximum value-for-money.

b) initially achieving "quick-win" methane emission reductions that otherwise would be released into the atmosphere due to a lack of other policy or financial incentives.

c) maximizing the direct engagement and expertise of the private sector.

d) testing an innovative contract structure by offering put options to guarantee a minimum carbon price.

Effetti a medio termine

Methane emission reductions that otherwise would be released into the atmosphere due to a lack of other policy or financial incentives.

The facility is a pilot for climate finance, which will test a new model to incentivize private sector action in a cost effective way.

The pay-for-performance approach will bring important lessons and if successful, can be scaled up by others, including the Green climate Fund.

Risultati

Risultati principali attesi:  

Execution of four to five auction rounds of USD 25 millions.

Issuing of put options.

Generating of Emmission Reductions (ER).


Direzione/Ufficio responsabile SECO
Credito Cooperazione allo sviluppo
Partner del progetto Partner contrattuale
  • International Development Agency


Budget Fase in corso Budget Svizzera CHF   2'375'000 Budget svizzero attualmente già speso CHF   0 Budget inclusi partner del progetto CHF   54'000'000
Fasi del progetto Fase 1 31.10.2014 - 31.12.2022   (Fase in corso)