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| Japan Minister of Environment Nobuteru Ishihara and President Nakao. [PHOTO: ADB] |
The Minister of the Environment of Japan Nobuteru Ishihara
and ADB President Takehiko Nakao 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.