The ADB is to press on with its carbon fund initiatives
despite growing uncertainty about the future of carbon
WooChong Um, the ADB director who has spearheaded the
banks carbon trading initiatives, said: Basically
in the last 12 months some of the events were less than ideal.
But Im still optimistic that there will be some kind of
The ADB has launched two carbon funds. The Asia Pacific
Carbon Fund, which was launched in 2007 and raised $151.8
million from European nations, invests in clean energy projects
and buys the carbon credits that come from them. It has
allocated most of its money in projects such as hydropower,
landfill and biomass to energy in countries including Vietnam,
India and China.
A second, innovative Future Carbon Fund was launched in 2008
to invest in projects that will generate carbon credits after
the expiry of the Kyoto agreement in 2012, and has raised $100
million, including $20 million from Korea. This was designed to
ensure that clean energy projects were not delayed by the
uncertainty about carbon markets future structure, which
has intensified since the Copenhagen climate conference last
The development of carbon markets based on the clean
development mechanism in which polluters in wealthy
countries offset their emissions by buying credits generated by
clean energy projects in the developing world has
suffered a series of setbacks in the last six months.
The Copenhagen agreement failed to deliver clarity on the
structure for carbon credits after the Kyoto accord expires,
and several countries who had pledged to develop carbon trading
initiatives have delayed or abandoned them.
Most recently Australia announced its cap-and-trade system
will not now be launched until there is a clear post-2012
structure, and even then it will clearly face a challenge to be
passed into law.
Both the ADBs funds are distinctive because they
commit money up front, whereas others do not contribute until
the project is built and generating credits.
The effectiveness of carbon markets divides opinion.
The carbon market is an effective tool primarily for
meeting the commitments of developed countries to mitigate
[their pollution] at lower cost, Prodipto Ghosh, a member
of the Indian Prime Ministers Council on Climate Change,
and former Indian environment minister, said. But it is
not a tool for financing developing countries own actions
Philippe Delhaise, CEO of Carbon Management Consulting,
disagreed. It [carbon markets] helps, because it makes
the difference between a project that would not be undertaken
and a project that is. Theres a huge transfer of
technology and funds going to 2000 projects all over the world.
The volumes are small, but we have a war here, we have to do
something and every bit helps.
Delhaise said that despite uncertainty, it was inconceivable
that the carbon market would not have a future post 2012.
Nobody really knows, but the one thing that is certain is
you can not, on December 31 2012, tell your Guatemala pig
farmer reducing methane emissions: Sorry, you expected 21
years of carbon credits, but now nobody will buy them from
you. That is nonsense. Its not going to