First Pilot Auction to Capture Methane a Success

Stocks and Financial Services Press Releases Friday July 17, 2015 11:49
WASHINGTON--17 Jul--World Bank

WASHINGTON, July 17, 2015— Private sector bidders taking part in the Pilot Auction Facility for Methane and Climate Change Mitigation's (PAF) first online auction bought price guarantees for 8.7 million tons of CO2e emissions reductions to cut methane emissions in waste management at a clearing price of $2.40 per credit.

The first auction which allocated carbon credit price guarantees, marks a new and innovate way to finance reductions of emissions of methane gas. Methane is a highly potent greenhouse gas with a global warming potential 25 times that of carbon dioxide.

The results now in from the first auction on July 15 show it attracted 28 bidders. The bidders came from developed and developing countries, ranging in size from large multinational companies to small local businesses. 12 companies won (please seewww.pilotauctionfacility.org for a complete list).

"The success of this pilot auction sends a clear signal that this new approach to financing climate change mitigation has potential to deliver dividends to reduce methane emissions and benefit communities by helping cut air pollution," said Rachel Kyte, World Bank Group Vice President and Special Envoy for Climate Change. "This is just the kind of financial innovation needed to help bolster the impact of scarce public funds and entice the private sector to make investments in projects that reduce greenhouse gas emissions."

The first auction focused on methane-reduction projects at landfills, agriculture and wastewater sites. Most of the eligible projects are in Brazil, India, Indonesia, Malaysia, Mexico and Thailand. The auction winners will purchase a special type of World Bank bond that pays holders a guaranteed price upon delivery of eligible carbon credits.

"Delivering this price guarantee to support climate-friendly projects through a structured World Bank bond is an innovation for the capital markets that complements our pioneering issuance of Green Bonds to deliver climate financing. The PAF's structure has the potential to be applied to other climate pollutants in addition to methane, which we are excited to explore," said Doris Herrera-Pol, Global Head of Capital Markets at the World Bank.

By using auctions to bid the guarantee price, or price floor down, the PAF aims to achieve the most results for climate change mitigation from limited public funds. Additionally, as it is set up on a pay-for-performance basis, the PAF will only pay the auction's guarantee price, if exercised, once results are achieved.

"Today capturing methane isn't always worth the cost, despite the fact that technologies to reduce methane are relatively inexpensive," said Vikram Widge, Head of Climate and Carbon Finance for the World Bank Group. "Right now, the price of carbon credits is so low that over one thousand methane-reducing projects are in danger of shutting down. These projects, if sustained, could keep hundreds of millions of tons of methane out of the atmosphere."

Donors are Germany, Sweden, Switzerland and the United States and have agreed to contribute more than $50 million to the PAF. It has a capitalization target of $100 million dollars and is actively fund-raising to hold two to three more test auctions over the next year and a half.


Latest Press Release

SET unveils Digital Gateway to access the National Digital ID Platform

The Stock Exchange of Thailand (SET) is poised to introduce its Digital Gateway to enable an efficient, secure and cost-effective means to access the National Digital ID Platform (NDID). The NDID Platform is Thailand's financial market infrastructure...

Photo Release: Ichitan Group opens Ichitan Green Factory welcomes investors from MBKET

Mr. Tan Passakornnatee, Chief Executive Officer of Ichitan Group Public Company Limited along with Mr. Tanapan Khongnuntha Executive Vice President Sales and Distribution, Mr. Viroj Supasoon Executive Vice President Plant and Product And Mr. Apichat...

Photo Release: KBank showcases financial innovation of the future

Mr. Veerathai Santiprabhob (center), Governor of the Bank of Thailand, and Mr. Predee Daochai (third from left) , KBank President, opened the KBank booth in the Bangkok FinTech Fair 2019, which showcases financial service and lifestyle of the future....

CapBridge Partners Hana Financial Investment to Extend Footprint in South Korea

Global private capital platform CapBridge Pte Ltd ("CapBridge") today announced a strategic business partnership with Hana Financial Investment Company Limited ("HFI"), a member of Hana Financial Group, one of the largest bank holding companies in South...

Blockchain Start-up RENDBO Ready to Launch Pre-ICO

Eco Smart Energies Ltd (www.renbdo.io) is pleased to reveal that the company is now ready to start the pre-ICO campaign for their upcoming project RENDBO or Renewable Energy Network Based on Decentralized Organization. The goal of this campaign is to...

Related Topics