The World Bank’s Pilot Auction Facility (PAF) held its second successful auction in which it allocated USD 20 million in climate funds to reduce 5.7 million tonnes of CO2 emissions. As South Pole Group explains in a press release, the PAF is a results-based payment mechanism that sets a price guaranteed for future carbon credits in the form of a tradeable put option, sold exclusively in auctions.
South Pole Group was among the successful bidders to win the right to sell carbon offsets from its project portfolio at a fixed price to the World Bank over the next four years.
The price guarantee is important to the Zurich climate action organisation because it allows it to maintain its existing climate action projects and grow its portfolio of emission reduction initiatives around the world, particularly in least development countries in Africa and Asia.
Price guarantees also ensure that emission reduction projects can continue to operate while the international community works to bring into action market-based mechanisms under the Paris climate agreement by 2020.