State Department To Invest $15 million in Innovative Auction Approach to Reducing Methane Pollution

Media Note
Office of the Spokesperson
Washington, DC
September 23, 2014


Secretary of State John Kerry announced on September 22 that the United States intends to provide a $15 million contribution to the World Bank’s new Pilot Auction Facility for Methane and Climate Change Mitigation, an innovative climate finance instrument to stimulate funding for projects that reduce methane pollution.

Methane is the second most prevalent greenhouse gas emitted from human activities. As a short-lived climate pollutant, methane stays in the atmosphere for a shorter period than carbon dioxide, but is a much more potent greenhouse gas. Pound for pound, the impact of methane on climate change is more than 20 times greater than carbon dioxide over a 100 year time frame. The Pilot Auction Facility, announced by the World Bank on September 15, will pioneer an auction-based climate finance model that mobilizes investments in methane-reducing projects by lowering the risk for investors. The United States drove this concept forward since its G8 presidency in 2012. The U.S. pledge contributes to the Facility capitalization target of $100 million.

Projects to reduce methane have struggled to secure financing because they cannot promise sufficient or immediate financial return. The Facility directly addresses this issue by using an auction to provide a competitive, guaranteed price for pollution reductions achieved by projects. This provides project developers confidence that they will get a positive return on their investment and ensures that public funding goes to projects that demonstrate real, independently verified results.

Secretary Kerry announced the U.S. funding pledge for the Pilot Auction Facility at the “Climate Week NYC” opening event. In his remarks, Secretary Kerry outlined the progress the United States is making through the President’s Climate Action Plan to lay the groundwork for the clean-energy economy of the future. He encouraged all nations, companies, and civil society organizations to work together to create the political will for climate action, including transforming the way we produce and use energy and focusing on deploying low-carbon solutions. He also urged governments to put forward strong climate mitigation goals for an ambitious international climate agreement in 2015.

For more details about the Pilot Auction Facility, contact Ashley Allen, AllenA4@state.gov.