ADB plans carbon fund to finance clean energy projects
Nov 22, 2006 - 6:54:07 PM
, Reviewed by: Priya Saxena
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The upfront payments from the APCF will cover up to one half of the CERs expected up to the end of the Kyoto Protocol's first commitment period. The remaining CERs can later be sold freely by project sponsors.
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By Indo Asian News Service,
[RxPG] New Delhi, Nov 22 (IANS) The Asian Development Bank (ADB) is planning to set up a carbon market trust fund to boost the number of clean energy projects in the Asia and Pacific region.
The ADB board of directors has approved the creation of 'the Asia Pacific Carbon Fund (APCF), part of ADB's broader Carbon Market Initiative (CMI) under development', a statement from Manila-based multilateral body said Wednesday.
To be fully launched early next year, the CMI will involve two components besides the fund. One will be a technical support facility (TSF) for capacity building, due diligence, documentation and implementation support. The other will be a credit marketing facility (CMF) to assist sponsors in marketing the additional carbon credits generated, beyond those that have been sold upfront to the APCF.
Under the Kyoto Protocol, developed countries can meet their obligations to reduce carbon emissions by buying Certified Emission Reductions (CERs), or 'carbon credits', from developing countries. Up till now, payments for CERs have been made predominantly 'on delivery', helping only those projects that have sufficient capital to move forward on their own.
The new fund joins several other initiatives by global bodies to promote energy efficient and environment friendly technologies to help reduce carbon emission leading to global warming and climate change.
The target fund size is $150 million. It will be combined with ADB's public and private sector financial services to provide upfront capital and enable clean energy projects - addressing renewable energy and energy efficiency - to move forward.
'The fund will provide an additional source of finance at the early stage of project formulation by providing payments for CERs that are expected to be generated later,' the ADB has stated.
The upfront payments from the APCF will cover up to one half of the CERs expected up to the end of the Kyoto Protocol's first commitment period. The remaining CERs can later be sold freely by project sponsors.
The overall value of the global carbon market was estimated at more than $10 billion in 2005, with the value of carbon market transactions reaching $7.5 billion in the first quarter of 2006 alone.
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