Wednesday, 9 July 2008 11:23 PM
ADB Establishes Future Carbon Fund
MANILA, PHILIPPINES - The Asian Development Bank (ADB) has established a new fund that will use carbon credits generated beyond 2012 to provide urgently needed financing for clean energy projects in the Asia-Pacific region.
The current regulatory framework, based on the Kyoto Protocol's first commitment period expires on 31 December 2012, hampering the trading in post-2012 carbon credits. This would affect the level of interest in developing new clean energy projects and other climate change initiatives in developing countries. Without long-term price incentives for reducing greenhouse gas emissions, investment trends could quickly return to business as usual.
"The new fund offers an opportunity to take long-term action on climate change now," ADB Vice President Ursula Schäfer-Preuss said.
"We cannot afford to wait. We urgently need new sources of financing for clean energy projects to better design the large infrastructure being built across Asia that will lock in emissions for the next 20-30 years. Proper incentives can lead to more balanced, low-carbon investments."
Future Carbon Fund, can stimulate new investments in clean energy projects even before a new in
The new ADB fund, called the called the Future Carbon Fund, can stimulate new investments in clean energy projects even before a new international agreement is reached. Many regions, countries and organizations now have, or are developing their own mandatory or voluntary commitments to reduce greenhouse gas emissions, such as the Member States of the European Union, Australia, Japan, New Zealand, and Norway, as well as California and some of the northeastern U.S. states. Participants in the fund may include both public and private sector entities in ADB's 67 member countries. It is a public-private partnership between ADB and governments and companies who have decided to act now.
The fund will provide financing up front for ADB-supported projects that will continue to generate carbon credits after 2012. The initial target size of the fund is $100 million. It may be increased to $200 million if there is sufficient demand.
"The new fund will provide an incentive for ADB's developing member countries to scale up energy efficiency and the use of renewable energy sources that will contribute to both climate change mitigation and enhanced energy security," Ms. Schäfer-Preuss said.
The new fund will complement ADB's ongoing Carbon Market Initiative (CMI), which provides finance and technical support to projects in the lead-up to 2012. CMI's Asia Pacific Carbon Fund, focusing on carbon credits up to the end of 2012, became operational in May last year and has raised over $150 million.
The Asia-Pacific region is particularly vulnerable to climate change. Some 1.2 billion people could experience freshwater shortages by 2020, while crop yields in Central and South Asia could drop by half between now and 2050. Asia's major coastal cities, including Bangkok, Jakarta, Karachi, Manila, Mumbai, and Shanghai are vulnerable to flooding.