World Bank sees key role for offsets in post-Kyoto deal[fr][de] 

"We expect that international offsets will continue to be part of the future landscape, mainly as a way to encourage and provide financial incentives to developing countries to undertake climate change mitigation immediately," Chassard said. 

In the World Bank's view, the enormous development needs of poor countries would justify continuing to provide them with initial financing under the Kyoto Protocol's clean development (CDM) or Joint Implementation (JI) mechanisms, she explained. 

International offsets have been criticised on the grounds that they hinder emissions cuts in industrialised countries, by allowing them to invest in projects that reduce emissions in developing countries instead of financing more expensive emission reduction at home. 

Chassard argued that international offsets lower global mitigation costs, allowing the international community to adopt more ambitious reduction targets.

"We have the evidence that Europe and Japan are doing a lot domestically, but they are also relying partly on international offsets to meet their overall reduction targets. I don't see that as a problem," she concluded.

In its proposals for a global climate deal, the European Commission wants entire industrial sectors in advanced developing countries like China to first meet certain efficiency or emissions standards before earning CDM credits. 

Chassard said the World Bank supports this idea, and said it is already working on what it sees as a real evolution: to move from projects to programmes, and eventually to comprehensive and strategic national mitigation plans.

"With the challenge we are facing, [...] we now think that we need to find ways to scale up these mitigation efforts and the use of market mechanisms to achieve large-scale mitigation and emissions reductions," she argued.

On the EU's desire to create an OECD-wide carbon market, Chassard said she expected this to happen only gradually. "But yes, we think that is the way to go," she stated, adding that the experience of carbon markets so far had been positive.

Chassard agreed, however, with many developing countries that the market cannot deliver all the necessary financing. "What the market has facilitated in our view is leverage of significant amounts of private-sector financing to support investment in climate change mitigation. It's one instrument, but cannot be the only one," she said.

Chassard pointed out that the regular lending operations of the World Bank are already providing financing for developing countries. The bank is increasing its focus on climate change mitigation and adaptation activities, she added.

Asked which financial instruments she would like to see included in the Copenhagen climate deal, Chassard stressed the importance of creating a framework to encourage pure investment financing from both the public and private sectors, to meet the objectives of the climate change convention.

"We haven't found the magic instrument," she said. "We believe very strongly in making the best use of the ability to package different financing instruments to actually deliver large-scale programmes for climate change mitigation and also adaptation," she concluded.

To read the interview in full, please click here.