The Asian Development Bank (ADB) has established a new fund using carbon credits generated beyond 2012 to provide urgently needed financing for clean energy projects in the Asia-Pacific region.
According to ADB here on Thursday, the current regulatory framework, based on the Kyoto Protocol's first commitment period, expires on December 31, 2012, level of interest in developing new clean energy projects and other climate change hampering the trade in carbon credits post-2012.
Many regions, countries and organisations already have or are developing their own mandatory or voluntary commitments to reduce greenhouse gas emissions. This would greatly affect the initiatives in developing countries. Without long-term price incentives for reducing greenhouse gas emissions, investment trends could quickly return to previous trends. The new ADB fund, called the Future Carbon Fund, can stimulate new investments in clean energy projects even before a new international agreement is reached.
Participants in the fund may include both public and private sector entities in the 67 member countries of ADB. The fund will be a public-private partnership between the ADB, governments and companies, and 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 US $100 million, but may be increased to US $200 million if there is sufficient demand.
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 US $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 Karachi, Bangkok, Jakarta, Manila, Mumbai, and Shanghai are vulnerable to flooding.
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