Auctioning emission certificates
The sale or auctioning of emission certificates has significant long-term potential for development financing.
The European emissions trading scheme is designed to reduce carbon emissions and combat climate change. Under the scheme, national governments issue energy suppliers, energy-intensive industries and airlines with certificates that entitle them to a certain quantity of emissions. If they do not use all the certificates allocated to them, they can sell them to businesses whose emissions exceed the level permitted by their allowances.
In the EU around 20 per cent of emissions certificates are currently auctioned through the European emissions trading scheme. Some of the revenue is invested in climate change mitigation projects in developing countries.
The additional funds that Germany has been able to invest in international climate projects as a result of the emissions trading scheme totalled 120 million euros in 2008 and 230 million euros in both 2009 and 2010. This sum is due to be increased in future through Germany's newly created Energy and Climate Fund, into which all emissions revenue is channelled. Leveraging by means of market funds – i.e. topping up these monies with funds raised by KfW Development Bank on the capital market – enables even larger amounts of money to be made available for international climate change mitigation and environmental conservation.
In 2011 and 2012 alone this enabled the German Environment Ministry (BMU) and BMZ to make additional commitments worth 915 million euros.
- Germany’s International Approach to Climate Change | Spotlight on Africanew window, PDF 2.5 MB, accessible 10/2011 | pdf | 2.5 MB | 36 P. | accessible