The Asian Development Bank is hoping to bridge the gap in financing for clean energy projects in Asia by establishing a new fund that uses carbon credits generated beyond 2012.
The Future Carbon Fund will provide funding for ADB-supported projects that will continue to generate carbon credits after 2012, when the Kyoto Protocol’s first commitment period expires. The ADB says the initial target size of the fund will be $100 million.
The ADB has previously been vocal about the lack of financing for clean energy projects in Asia, and is also concerned about the impact of the post-2012 period on the region’s energy sector.
“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.”
The ADB hopes that the new fund will stimulate new investments in clean energy projects before a new Kyoto-style international agreement is reached. It will also provide an incentive for developing countries to promote energy efficiency and renewable energy.
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, says ADB. 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.
In May the ADB called on governments in Asia to do more to attract funding for clean energy projects. The region’s share of worldwide greenhouse gas emissions is rising and new policies are needed that put a price on carbon, says the ADB.
Around $6.4 trillion of investment will be needed in Asia’s energy infrastructure by 2030 to meet rising demand, but the majority of clean energy sector financing flows into Europe and other developed regions.
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