ADB sets up new carbon fund

July 8th, 2008 - 11:50 am ICT by IANS  

Manila, July 8 (DPA) The Asian Development Bank (ADB) said Tuesday it 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 Manila-based bank said the Future Carbon Fund (FCF) could stimulate new investments in clean energy projects even after the current regulatory framework, based on the Kyoto Protocol’s first commitment period, expires on Dec 31, 2012.

“The new fund offers an opportunity to take long-term action on climate change now,” ADB Vice President Ursula Schaefer-Preuss said.

“We cannot afford to wait,” she added.

“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 noted that the lack of a new international agreement on post-2012 carbon credits could hamper 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 bank said.

The bank said the FCF, with an initial target size of $100 million, will provide financing up front for ADB-supported projects that will continue to generate carbon credits after 2012.

It added that the fund may increase 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,” Schaefer-Preuss said.

The new fund will complement ADB’s ongoing Carbon Market Initiative, which provides finance and technical support to projects in the lead-up to 2012.

The ADB noted that the Asia-Pacific region is particularly vulnerable to climate change, with some 1.2 billion people facing possible freshwater shortage by 2020.

It added that crop yields in central and south Asia could drop by half between now and 2050, while Asia’s major coastal cities, including Bangkok, Jakarta, Karachi, Manila, Mumbai and Shanghai, are vulnerable to flooding.

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