The Asian Development Bank (ADB) announced yesterday that it has received financing commitments of over $100 million for a new post-2012 carbon fund that will begin operations in January.
The ADB-administered Future Carbon Fund aims to raise up to $200 million to help finance renewable energy, energy efficiency and other greenhouse gas (GHG) mitigation projects undertaken in its developing member countries (DMCs).
"The Future Carbon Fund is a public-private partnership between ADB and the governments and companies who have decided to act now," ADB Vice President Ms. Ursula Schaefer-Preuss told reporters at the United Nations Framework Convention on Climate Change in Poznan, Poland.
By making upfront payments to developers at the outset of a project for carbon credits generated after 2012, the Fund will help reduce the initial heavy capital constraints involved in projects and stimulate new investment.
At the same time, it will provide countries or organizations that have, or are developing, GHG emission reduction goals–even in the absence of a global framework–the chance to invest in low-carbon projects in the Asia-Pacific region and receive carbon offsets in return.
It differs from other post-2012 carbon schemes, as it makes finance available upfront to project developers, instead of the standard "payment on delivery" method. The first project financing could come as early as the second half of 2009, the ADB said.
ADB has now exceeded its public sector funding target for the Fund with participants including Finland and Sweden providing approximately half of the total. Seminars are planned in Asia, Europe and North America to invite the private sector from ADB’s member countries for the remaining half. The main focus will be on companies with large emission footprints, such as power utilities, manufacturers and airlines.
ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific. Established in 1966, it is owned by 67 members–48 from the region. In 2007, it approved $10.1 billion of loans, $673 million of grant projects, and technical assistance amounting to $243 million.
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