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Financing Greenhouse Gas Mitigation Projects Through Carbon Revenue

Financing Greenhouse Gas Mitigation Projects Through Carbon Revenue

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Published by Revamp Twentyone
Greenhouse Gas Mitigation Projects
Greenhouse Gas Mitigation Projects

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Published by: Revamp Twentyone on May 27, 2010
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Co-financing Greenhouse Gas Mitigation Projects throughCarbon Revenue
Opening Remarks byPaul J. HeytensCountry Director, Bangladesh Resident MissionAsian Development Bank19 October 2009Sheraton Hotel, Dhaka
Honorable Secretary for Environment and Forests Dr. Mihir Kanti Mazumder, distinguishedguests, ladies and gentlemen:Good morning. It is a privilege, for me to welcome you here on behalf of the Asian DevelopmentBank. This event will help us to work together to mitigate climate change and capture newbusiness opportunities presented by the carbon market. Your presence here today highlights thewide interest in, and importance of, today's topic.
Impacts of Climate Change
What is now clear is that the emission of greenhouse gasses from human activities is causingglobal warming at a rate that has become alarming and threatening to all of us. Even more so,rising global temperatures create a compounding effect on forests, water and other naturalresources, which is likely to exacerbate the damage to human lives.The poorest countries and the poorest people are the first and worst victims of climate changeand the disasters induced by it. The Asia-Pacific region and Bangladesh in particular is expectedto suffer significantly from the detrimental impacts.For example, about 1.2 billion people could face freshwater shortages by 2020 in Asia; cropyields in Central and South Asia could drop by 50% by 2050; Asia's numerous mega citiesincluding Dhaka are vulnerable to flooding and damage from unpredictable weather patterns;and within this century, citizens of small islands and other low-lying nations and regions may beforced to become "climate refugees."In Bangladesh, disasters, including severe floods and cyclones, disproportionately affect thepoor. Damaged municipal and community infrastructure, including waste and sewerage facilities,raise health risks and many who are dependent on natural resources are left without livelihoodoptions.Bangladesh is predicted to be one of the countries most affected by climate change with morethan 70 million people and 20% of the coastal area at risk from direct impacts. Already,riverbank erosion annually deprives an estimated 100,000 inhabitants of their livelihood. Most of those affected are extremely poor.Unfortunately, developing countries like Bangladesh bear the consequences of climate changethough they have contributed least to the build up of greenhouse gases.Moreover, although average GHG emissions per capita in South Asia are much lower than thoseof non-Annex I countries, unmitigated climate change, in the long term, is likely to exceed thecapacity of natural, managed and human systems to adapt. Therefore, even for South Asiancountries like Bangladesh, high-carbon economic development is not a sustainable optionanymore.So, in the interest of self-preservation, Bangladesh must join global efforts and exploreopportunities to continue economic development on a low-carbon path. Finding financing for lowcarbon technologies is often the main challenge and we must look at innovative ways and makeuse of market based mechanisms such as theClean Development Mechanism (CDM)under theKyoto Protocol to move forward.
Carbon Market Opportunities
ADB has been working to support the carbon market development in the Asia-Pacific regionbecause it has shown a significant potential to leverage domestic and international investments.The carbon market is now estimated at over €90 billion, with CDM representing approximatelyone quarter, or about €25 billion, and demands are expected to increase in the near future.
However, the CDM market in Asia has been mostly concentrated in just a few countries such asthe Peoples Republic of China and India.To date, Bangladesh has only 2 registered CDM projects among the over 1,800 worldwide. Thefact that such few projects have been developed in Bangladesh means that ample opportunityexists to scale up efforts.We feel that Bangladesh has significant potential for various CDM projects in the area of renewable energy, energy efficiency, urban development, and transport. However, we need to beaware of the issues and challenges of developing CDM projects here. High transaction costs, thelong project cycle, and uncertainty over post 2012 issues are some of the barriers that we needaddress. Under CDM, payment for carbon credits is usually made after the project isimplemented, therefore helping the cash flow but not the project financing, which is often themain barrier for many clean energy projects.
ADB's Response
Here in Bangladesh, ADB is assisting the Government and its line agencies to mainstreamclimate change adaptation and mitigation. ADB has developed a country specific Climate ChangeImplementation Plan to assist the country to transform to a more climate resilient and lowcarbon development path, starting with its own project activities.Turning to some specific activities, following the unveiling of the Bangladesh Climate ChangeStrategy and Action Plan (BCCSAP), ADB approved a $2 million technical assistance grant tobuild capacity in relevant government agencies to implement the BCCSAP with a special focuson project preparation, implementation, and policy formulation. Bangladesh is also participatingin an ADB-financed regional study on the economics of climate change in South Asia. Inaddition, ADB, together with the World Bank is also moving ahead with the Pilot Program forClimate Resilience in Bangladesh, which could provide up to $60 million in financing to pilot testand demonstrate ways to integrate climate risk and resilience into core development planning.The main focus of today's event, however, is another ADB program to support climate changemitigation through theCarbon Market Initiative(or CMI). The initiative provides upfrontfinancing and technical support to project developers with GHG mitigation benefits that can beeligible for the carbon market. I would especially like to highlight theFuture Carbon Fundthatcan provide upfront financing for projects that generate carbon credits beyond 2012, when thefirst commitment of the Kyoto Protocol expires.ADB therefore is strongly committed to assisting Bangladesh to improve its economic growthaspirations following low carbon path.We are looking forward to further collaboration, especially for projects with GHG reductionpotential, to maximize the benefits of the carbon market.
Concluding Remarks
We are fortunate to have with us here today the country's key movers of climate change action -top policy makers, project sponsors and developers, and CDM practitioners.We encourage you to actively interact and exchange ideas and know-how on making CDMprojects happen. Let us aim to convert our discussions into tangible projects.We also have ADB staff and CDM experts who will brief you on the ADB project processing cycleand services offered under the CMI, and will later be happy to meet with you for project specificconsultations.Climate change and energy security are crucial issues for Bangladesh and the Asia-Pacific regionas a whole. But this challenge is also an opportunity to progress down the path of sustainableand climate-responsive development. Now is the time to implement sound policies, and to makeprograms and projects happen.Let us work together to identify projects and activities at the country, community, corporate andpersonal levels that promote low carbon, sustainable growth in Bangladesh. We look forward toyour fruitful discussions during the day and hope this catalyzes concrete project activities.Thank you very much.
Asian Low Carbon Green Growth in the Global Context
Opening Address byHaruhiko KurodaPresidentAsian Development BankAt the East Asia Climate Forum29 May 2009Seoul, Korea
Excellencies, distinguished guests, ladies and gentlemen:On behalf of the Asian Development Bank, I wish to extend my deepest sympathy at the passingaway of former President, Roh Moo-hyun.I would like to thank Prime Minister Han Seung-Soo and Professor Kim Hyung-kook, Co-chair of Presidential Committee on Green Growth for inviting me to this East Asia Climate Forum. I amdelighted to have this opportunity to discuss the challenges we now face in addressing climatechange and generating and financing low-carbon growth in Asia and the Pacific. I am alsopleased to share with you some of ADB's actions and experiences in promoting low-carbongreen growth in the region.I would like to extend my deepest appreciation to the Government of the Republic of Korea forhosting the Forum, and to the Korean people for their warm and gracious hospitality. I am alsopleased to see here so many officials from ADB's member countries together withrepresentatives from our development partners, nongovernment organizations, the privatesector, and other stakeholders. I thank all of you for joining us today for this important event.
Responding to the Global Climate Change Crisis
It is now widely accepted that increased concentrations of human-caused greenhouse gases(GHGs) in our atmosphere are linked to rising global temperatures. Such rising temperatureswill have adverse consequences on people's health, safety and livelihoods around the world,with the poor disproportionately affected. The latest scientific evidence suggests that thisprocess may be occurring even faster than previously predicted. Clearly the entire globaleconomy must reduce its reliance on the combustion of fossil fuels, or else the negative impactsof climate change will seriously drag down global economic growth. In Asia and the Pacific,climate change threatens to undermine the considerable social and economic progress achievedin recent years. Responding to climate change has therefore become a central element of theADB's work.Intense negotiations are underway towards a new agreement on how the world will collectivelyaddress the climate change challenge. Global greenhouse gas emissions must be cutsubstantially. And it is critical to reach a common understanding on transitioning to low-carbongrowth - in both the developed and developing worlds - and preparing for the inevitable adverseimpacts of climate change. Mitigation and adaptation measures must also be backed bytechnology transfer and international financing. Unless decisive actions are taken, it is likely thatthe effects of climate change will take millennia to reverse, and will threaten the core of ourplanet's life support system, upon which we all depend.But there are promising signs that we will see meaningful progress in Copenhagen later thisyear. The European Union has committed to significant emission cuts by 2020; the United Stateshas rejoined the negotiations and is considering its own measures to greatly reduce emissionsover time. Progress also has been made in the United Nations Framework Convention onClimate Change (UNFCCC) negotiations - and also through the G20 and other forums - onidentifying the adjustments needed in the energy and transport sectors of developing countries,as well as ways to reduce deforestation.World economic leaders have rightly focused their attention on addressing the global economicdownturn. At the same time, a number of countries have sought ways to stimulate demandwhile simultaneously laying the groundwork for more climate-friendly development - so-called"green stimulus" measures. I believe such programs can help countries generate long-term

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