Japan's First Carbon Fund to be Launched This Summer

Two government-affiliated financial institutions, the Japan Bank for International Cooperation (JBIC) and the Development Bank of Japan (DBJ), will establish Japan's first carbon fund in cooperation with the private sector this summer of 2004. About 20 companies involved in oil, power, trade and other areas will participate in the fund. The total amount of the fund is to be 10 billion yen (about U.S.$96 million).

JBIC and participating companies will support energy-saving projects in developing countries by providing financial resources and technology through the fund. In return for the support, they will receive greenhouse gas (GHG) emission credits as dividends to use for achieving the targets of their reduction set in the Kyoto Protocol.

Japan is required to cut GHG emissions by six percent from 1990 levels by 2008-2012. In reality, however, reduction programs are making little progress, and GHG emissions are actually increasing. Since the demand for GHG emission credits is expected to grow in the future, the fund may expand the contributions from companies if necessary. The fund has not yet decided on which projects to finance, but is now considering biomass power generation projects and the improvement of thermal power plants in Asian countries such as China.

The Kyoto Protocol sets emissions reduction targets for most developed countries. An article in the Protocol allows the trading of emission credits between developed and developing countries to facilitate their efforts to combat global warming. In accordance with the article, the Prototype Carbon Fund (PCF) was established by the World Bank in 2000 in an attempt to create a market for emission credits. The fund has shown favorable results.

JBIC has already obtained emission credits by contributing to the PCF and has know-how in emission credit trading. The bank also envisages financing emission reduction projects in concert with private banks.




Posted: 2004/07/16 09:55:23 AM
Japanese version