Japan, ADB announce fund to promote low-carbon technologies in Asia

TOKYO, JAPAN – The Asian Development Bank (ADB) announced  the establishment of a new trust fund to support the adoption of advanced low-carbon technologies in its developing member countries (DMCs), with a grant of ¥1.8 billion (about $17.65 million) from the Government of Japan.

The Minister of the Environment of Japan Nobuteru Ishihara and ADB President Takehiko Nakao today signed a Letter of Intent for Cooperation on Environmental Issues, which will include cooperation for effective implementation of the Japan Fund for the Joint Crediting Mechanism (JFJCM).

“The establishment of the JFJCM is a timely step to help meet the demands of the Asia and Pacific region for sustainable low-carbon infrastructure,” Mr. Nakao said at the signing ceremony. “The fund will provide grant finance to reduce the cost of advanced low-carbon technologies, such as those related to waste-to-energy schemes and smart grids, which often have initial high investment costs and long cost recovery periods.”

Due to rapid economic growth, the region has become a major source of greenhouse gas (GHG) emissions, with the region’s carbon dioxide (CO2) emissions accounting for 43% of the world’s CO2 emissions in 2010. This share could rise to 50% of world CO2 emissions by 2035. The region’s developing countries need considerable investments to make the transition to a low-carbon development path.

Many advanced low-carbon technologies face significant barriers to adoption such as high up-front costs and perceived risk that the technology will not perform to expectations. The JFJCM will offer up-front grant financing and technical assistance to address these barriers.

With the establishment of the JFJCM, ADB is the first multilateral development bank to have a trust fund for supporting GHG reduction projects under the Joint Crediting Mechanism (JCM).

The JCM is a bilateral carbon market mechanism between the Government of Japan and developing countries to promote GHG emissions reduction projects. It complements multilateral carbon market schemes, such as the Clean Development Mechanism (CDM), and follows a similar approach to the CDM for financing and accounting of verified GHG emissions reductions.

The eligible countries of the JFJCM are DMCs of ADB that have signed memoranda of understanding for the JCM with the Government of Japan. To date, eight DMCs are eligible—Bangladesh, Cambodia, Indonesia, Lao People’s Democratic Republic, Maldives, Mongolia, Palau, and Viet Nam—and the list of eligible DMCs is expected to expand.

The JFJCM will help finance the adoption of advanced low-carbon technologies that are proven but not yet widely used in developing countries, including smart grids, waste-to-energy schemes, and energy efficiency measures in facilities such as water supply and sanitation plants, transport systems, and buildings.

Under the Letter of Intent, ADB and the Ministry of the Environment will also deepen their collaboration in fields such as air quality management, strengthening enforcement of environment laws, and responding to climate change.- ADB

June 26, 2014