Four European countries – Germany, Norway, Sweden, and Switzerland – have announced a USD 500 million initiative to find new ways to create incentives aimed at large scale cuts in greenhouse gas emissions in developing countries including India to combat climate change.

The World Bank Group worked with the countries to develop the initiative "Transformative Carbon Asset Facility", which was launched on Monday at the COP21 climate summit.

"This new initiative is planned to start operations in 2016 with an initial expected commitment of more than USD 250 million from contributing countries. The facility will remain open for additional contributions until a target of USD 500 million is reached," the World Bank Group said in a statement.

It is expected that the new facility’s support will be provided alongside USD 2 billion of investment and policy- related lending by the World Bank Group and other sources.

"We want to help developing countries find a credible pathway toward low carbon development. This initiative is one such way because it will help countries create and pay for the next generation of carbon credits," World Bank Group President Jim Yong Kim said.

In the statement, Norway Prime Miniser Erna Solberg said: "We are pleased to support this initiative that will help guide the next generation of carbon market programs."

"Putting market forces to work is an efficient way of reducing emissions. We expect to achieve significant impact on the ground through the facility and ensure the sustainability of reducing emissions even beyond the facility s initial support," he added.

According to the World Bank, the initiative will help developing countries implement their plans to cut emissions by working with them to create new classes of carbon assets associated with reduced greenhouse gas emission reductions, including those achieved through policy actions.

The facility will measure and pay for emission cuts in large scale programs in areas like renewable energy, transport, energy efficiency, solid waste management, and low carbon cities, it said.

For example, it could make payments for emission reductions to countries that remove fossil fuel subsidies or embark on other reforms like simplifying regulations for renewable energy.

This facility will work alongside a range of global initiatives and national climate plans to help both developed and developing countries achieve their mitigation goals.

It will pay for carbon assets with high environmental integrity and a strong likelihood to comply with future international rules, and will share its learning with the international community, the statement added.