15 February 2012
Golden Climate Neutrality Fund
2nd Draft, Proposal F. J. Radermacher
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(1) Mission
World Bank and Senate of Economy (initiator of the World Forest Initiative)
join efforts to mobilize major voluntary investments by organizations, companies and individuals to promote sustainable development and climate protection through the Golden Climate Neutrality Fund.
(2) UN Support
World Bank und Senate of Economy will seek full UN support for the Golden
Climate Neutrality Fund.
(3) Legal Character
Investments through the Golden Climate Neutrality Fund are connected with
a particular year. They earn a carbon credit and credits for promoting sustainable development for that year and are lost investments otherwise. In
particular, investors will not gain any additional ownership rights or entitlements connected with implementation activities financed via the fund. Also,
their investments is not tied to particular instruments used but to the general operation of the fund.
(4) Voluntary Character
Credits generated via Golden Climate Neutrality Fund are intended to serve
on a voluntary basis. They complement, enrich and eventually sharpen legal
requirements that have to be fulfilled by the investors in other ways. Sharpening can e.g. be the result of taking emission rights out of business. Their
complete voluntary character means that they are “on top” contributions,
undertaken by the investors in order to help solve urgent problems of hu-
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mankind. On the carbon side, participation offers investors a way to reduce
their individual negative climate effects or even reach climate neutrality
(taking voluntary compensation activities into account).
(5) Reputational Aspects
In order to make offered voluntary credits reputation-risk-free for the investors, the highest degree of care is taken by World Bank and Senate for
Economy in organizing the golden climate neutrality fund.
(6) Cost of Credits
Under the Golden Climate Neutrality Fund, costs are expected to be around
5 US Dollars above cost for average high-quality carbon credits, either voluntary carbon credits for forest protection and restauration or for legal certificates of the European Emission Trading System or of CDM type.
(7) Implementation Schemes
For implementation activities with direct carbon effects, four approaches will
be flexibly combined: (1) Forest protection via World Bank …………….. Fund
or compatible instruments offered by other actors, (2) Restauration of forests and landscapes via World Bank …………… Fund or compatible instruments offered by other actors, (3) Promotion of more powerful agricultural
production width, simultaneously, positive CO2 effects via World Bank …………
Fund or compatible instruments offered by other actors, (4) Purchase of legal climate certificates, e.g. of the European Emission Trading System or of
CDM type, to take them out of business.
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(8) Sharpening Effect
The eventual use of legal credits either of the European Emission Trading
System or the CDM type for voluntary purposes on the one hand strengthens credit markets and stabilizes and increases prices, on the other hand by
that improves climate activities.
(9) Management by World Bank
The Golden Climate Neutrality Fund is managed with highest care by World
Bank. World Bank manages money inflows over a year, balances the flows,
develops a pricing policy for the credits offered and a pricing policy and procedure for eventually buying legal certificates to use them on a voluntary
basis. The price policy is very much on an annual basis and aims at a certain
stability while, at the same time, the fund will try to optimize purchasing
and implementation cost, e.g. using available carbon credit purchasing opportunities in an anti-cyclic manner to make more money available for other, in particular social services aimed at via implementation activities
through the Golden Climate Neutrality Fund.
(10) Additional Services
What are intended additional services? Particularly important are upfront
investments into intended forest and landscape restauration programs as
well as agricultural activities and investments into capacity building of all
type required. By that, a great lever will be made available to allow much
more investments by other parties into the World Bank programs mentioned
and similar programs of other actors. This concerns investment, exclusively
limited to carbon credits connected with forests and agricultural activities in
action.
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(11) Safeguards
The operational Fund management is exclusively with World Bank. As far as
possible, World Bank will use own instruments already in place as described.
All standard safeguards of World Bank will thus be fully in place. This will also be true for using the new instrument of purchasing climate certificates to
take them out of business and will also be true for all upfront investments
undertaking under the fund.
(12) Local Implementation
How is implementation done? World Bank will organize implementation exclusively with and through governments and with local communities and local actors. In doing so, World Bank will involve its standard dialogue procedures, among others, concerning the local population and indigenous people.
(13) Government involvement
To increase the reputation risk-free character of the Golden Climate Neutrality Fund, there will be guarantees established with regard to the home
countries of the investors. The aim is that investments in the Golden Climate Neutrality Fund will be treated as re-considerable expenditures of
normal economic behaviour at least to the point that complete climate neutrality of a company is achieved.
(14) Neutrality awards business interests
The World Bank, in cooperation with the respective government, will finance
implementation projects at place through local partner only. World Bank will
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guarantee complete neutrality from business interests and market activities
involved. Business interests and market driven activities are fully welcome
and the basis for efficient implementation, but this has to take place completely separate from World Bank activities. Again, World Bank will always
work with the government, people and companies in place.
(15) Lessons learned
World Bank will organize a broad “lessons learned” process concerning all
activities in the Golden Climate Neutrality Fund in order to accelerate performance along the learning curve by all participants involved.
(16) Supervisory board
The Golden Climate Neutrality Fond will be monitored and controlled by a
supervisory board in which the following non-governmental organizations
are involved: CoR (Club of Rome), GP (Greenpeace), IUCN (International
Union of Conservation of Nature), WFF (World Forest Foundation / associated with the Senate of Economy), WWF (World Wide Fund For Nature). The
work of members of the supervisory board will be adequately rewarded.
There will also be financial means available for supporting a working-level
support staff.
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