On Monday, the World Bank announced it would be launching a new trust fund dedicated to funding projects that will reduce carbon dioxide emissions.
The fund will pool public funds that will provide grants for various projects of this kind, including such that are focused on retiring coal-fired power plants.
Called the Scaling Climate Action by Lowering Emissions (SCALE) fund, it will be aimed predominantly at developing economies as they deliver emission reduction results that have been predetermined.
SCALE is currently still in the process of capitalization and is scheduled to be launched at the upcoming COP27 climate change summit in Egypt next month and will act as the World Bank’s new umbrella trust fund for its climate finance and activities.
The bank has already outlined three focus areas for the financing grants: nature-based climate solutions (e.g., sustainable agriculture, forestry and oceans); financial solutions that can funnel resources into climate action; and sustainable infrastructure (e.g., transport and energy).
SCALE will aim to boost emissions reduction projects to help scale them and generate high-quality carbon credits, thus enabling low- and middle-income countries to access international carbon markets.
However, last week, U.S. Treasury Secretary Janet Yellen addressed several multilateral development banks, including the World Bank, saying they should broaden the scope of their business models to go beyond country-specific projects and, instead, address the climate crisis on a global level.
So far, the World Bank has not specified what the projected size of the SCALE fund will be.