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Catalysing private and public action for climate change mitigation: the World Bank’s role in international carbon markets


Michaelowa, Axel; Michaelowa, Katharina; Shishlov, Igor; Brescia, Dario (2021). Catalysing private and public action for climate change mitigation: the World Bank’s role in international carbon markets. Climate Policy, 21(1):120-132.

Abstract

This policy analysis examines the role of the World Bank in shaping and stimulating international carbon markets. Adopting a public choice perspective, we argue that its engagement can be understood as a response to the joint goal of reputational and financial benefits. The detailed empirical account of the Bank’s activities – from its pioneering role through the Prototype Carbon Fund in the early 2000s, to its initiatives for upscaled crediting subsequent to the 2015 Paris Agreement – is broadly in line with this interpretation. The period between 2005 and 2011 most clearly shows that the Bank was ready to forego some reputational benefits for the sake of financial benefits. During this period, it followed a flourishing privately driven carbon market, mostly competing with, rather than catalysing, private activities. After the Paris Agreement opened the door for a new phase of carbon markets, the Bank again took up a pioneering role, now focusing on the public sector. However, since transparency in relation to its activities is limited – thus reducing reputational risk – these activities may not meet the quality standards, notably with respect to additionality, that are a precondition for carbon markets to be an effective tool for climate change mitigation.

Abstract

This policy analysis examines the role of the World Bank in shaping and stimulating international carbon markets. Adopting a public choice perspective, we argue that its engagement can be understood as a response to the joint goal of reputational and financial benefits. The detailed empirical account of the Bank’s activities – from its pioneering role through the Prototype Carbon Fund in the early 2000s, to its initiatives for upscaled crediting subsequent to the 2015 Paris Agreement – is broadly in line with this interpretation. The period between 2005 and 2011 most clearly shows that the Bank was ready to forego some reputational benefits for the sake of financial benefits. During this period, it followed a flourishing privately driven carbon market, mostly competing with, rather than catalysing, private activities. After the Paris Agreement opened the door for a new phase of carbon markets, the Bank again took up a pioneering role, now focusing on the public sector. However, since transparency in relation to its activities is limited – thus reducing reputational risk – these activities may not meet the quality standards, notably with respect to additionality, that are a precondition for carbon markets to be an effective tool for climate change mitigation.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:06 Faculty of Arts > Institute of Political Science
Dewey Decimal Classification:320 Political science
Scopus Subject Areas:Physical Sciences > Global and Planetary Change
Physical Sciences > Environmental Science (miscellaneous)
Physical Sciences > Atmospheric Science
Physical Sciences > Management, Monitoring, Policy and Law
Uncontrolled Keywords:atmospheric science, general environmental science international carbon markets, carbon credits, world bank, paris agreement, kyoto protocol
Language:English
Date:January 2021
Deposited On:21 Jan 2021 11:33
Last Modified:25 Mar 2024 02:46
Publisher:Taylor & Francis
ISSN:1469-3062
OA Status:Green
Publisher DOI:https://doi.org/10.1080/14693062.2020.1790334
  • Content: Accepted Version
  • Language: English
  • Licence: Creative Commons: Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0)