Carbon fund for upfront finance
Dr. M.S. Kapadia
The ADB has approved the establishment of a carbon market
trust fund to boost the number of clean energy projects in Asia and the Pacific.
The Asia Pacific Carbon Fund (APCF), part of ADB's broader Carbon Market
Initiative (CMI), will provide an additional source of finance at the early
stage of project formulation by providing payments for Certified Emission
Reductions (CERs) that are expected to be generated later.
The target fund size is $150 million and ADB has already received several
expressions of interest to the fund from its member countries. The upfront
payments from APCF will cover up to one half of CERs expected up to the end of
Kyoto Protocol's first commitment period. The project sponsors in the market,
including through CMF, can later sell the remaining CERs freely.
The overall value of the global carbon market was estimated at more than $10
billion in 2005, with the value of carbon market transactions reaching $ 7.5
billion in the first quarter of 2006 alone. The global carbon market is expected
to grow significantly; Europe is already considering a continuation of the EU
Emissions Trading Scheme well beyond 2012.
[27 November 2006]