The USFG should implement RBCF and SCF initiatives in climate policy

Focusing on results creates incentives to take action -- from planting trees on degraded land or expanding access to clean energy, to enabling energy efficiency in industries. The promise of future payouts drives transformative change in many settings and among many stakeholder groups. The Carbon Initiative for Development (Ci-Dev) is making it easier for countries to access this versatile tool.  

Rebuilding economies after the COVID-19 pandemic will put enormous strain on countries’ fiscal budgets and finance flows from development partners. Results-Based Climate Finance (RBCF) — payments made for achieving agreed-upon climate-related results, particularly reducing carbon emissions — can offer an important source of liquidity at this critical moment and support a resilient, equitable, low-carbon recovery.

<blockquote> <h3>"Results-Based Climate Finance — payments made for achieving agreed-upon climate-related results, particularly reducing carbon emissions — can offer an important source of liquidity at this critical moment and support a resilient, equitable, low-carbon recovery."</h3> </blockquote>  

When Ci-Dev, backed by the World Bank, commits to results-based payments, the agreement often acts as collateral to catalyze vital private sector investment in climate projects.  This approach appeals to project donors as they only pay for results achieved. It offers recipient countries another funding stream outside of already-pinched national budgets and traditional development assistance that prioritizes and scales up climate action. And it provides incentives to strengthen domestic institutions and infrastructure and spur local communities, private sector players, and other stakeholders to participate in and benefit from climate-smart activities.

But for all its utility, until recently RBCF has been a complicated tool to employ, putting off many would-be users. For some results-based climate mitigation projects, participants are working to achieve verified emissions reductions, which are converted into carbon credits for purchase. Payment only comes when emissions reduction targets are met, which . Even with patience and projects structured with interim results, countries may not have the capacity to follow through with the complex carbon crediting processes. Demanding requirements for data monitoring, reporting, and verification (MRV) have burdened many low-income countries with high administrative and financial costs and slowed their entry into the carbon marketplace. 

Standardized Crediting Framework (SCF)

To ease access to carbon credits and other Results-Based Climate Finance, Ci-Dev developed a Standardized Crediting Framework (SCF). The SCF builds on the World Bank’s successes and lessons learned implementing the Clean Development Mechanism (CDM), one of the main international systems for enabling conversion of emissions reductions into carbon credits under the Kyoto Protocol. It is a country-driven approach in which client countries and Ci-Dev work together to develop a crediting framework tailored to their circumstances. The SCF helps reduce time and expense incurred by countries by streamlining processes, aligning the crediting start date with the implementation date, eliminating the validation step, simplifying the project cycle, and standardizing the MRV system.

In a nutshell, the SCF allows program teams to