An innovative carbon credit transaction was concluded between the governments of the Slovak Republic and Spain. Under the terms of the agreement, the Slovak Republic has allocated the proceeds from the sale of seven million Assigned Amount Units (AAUs) towards additional greenhouse gas (GHG) emission reduction projects in the Slovak Republic. The transaction was structured under the Green Carbon Fund of the Multilateral Carbon Credit Fund (MCCF), established and managed jointly by the EBRD and the European Investment Bank (EIB). This will help Spain to meet its emission reduction target under the Kyoto Protocol, while the Slovak Republic will reinvest these funds to further decarbonise its economy.
The programme was developed by all parties involved and is based on the highly successful Slovak Sustainable Energy Finance Facility (SlovSEFF), a credit line extended by the EBRD to local banks in the Slovak Republic. The planned extension of the EBRD-managed facility specifically targets renewable energy projects and energy efficiency in industry and buildings, with a view to maximising the programme’s emission reductions.
EBRD Director for Energy Efficiency and Climate Change, Terry McCallion, said: “This is an innovative carbon finance mechanism paired with a robust climate finance delivery instrument.”
The scheme is results-oriented and features an incentive mechanism that favours high-performing, greenhouse gas emission reduction projects over ventures that reduce fewer GHG emissions per euro of investment. The results will be independently verified by a consultant engaged by the EBRD. The programme will be co-financed by EBRD and is expected to mobilise additional private sector investment. Experience with this instrument may also help to inform future development of new market mechanisms for climate change mitigation. SlovSEFF is expected to launch in Slovakia in June.