"Asian Development Bank and the CDM Fund: Partners for Clean Development"
Speech By
Haruhiko Kuroda
President
Asian Development Bank
At the Inauguration Ceremony for the China Clean Development Mechanism Fund
9 November 2007
Beijing, People's Republic of China
Introduction
Distinguished guests, ladies and gentlemen, good morning. Let me start by congratulating Minister Xie Xuren on assuming the position of Minister of Finance of People's Republic of China.
On this auspicious occasion of the Launching Ceremony of the China CDM Fund, I extend my greetings to the other senior officials representing the ministries that govern the CDM Fund.
On behalf of the Asian Development Bank, I congratulate the China CDM Fund on its official inauguration.
I wish to take this opportunity to present some of my views on climate change and the immense opportunities presented by the Kyoto Protocol; outline some areas where ADB has been active; and offer some thoughts on the way forward for future cooperation.
Climate change is an undeniable reality
There is no longer any serious debate whether climate change is occurring. The Intergovernmental Panel on Climate Change (IPCC), the co-winner of the 2007 Nobel Peace Prize, in its 2007 report warns that "Warming of the climate system is unequivocal, as is now evident from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice, and rising global mean sea level." Moreover, "Eleven of the last twelve years (1995-2006) rank among the 12 warmest years in the instrumental record of global surface temperature (since 1850)." Such global warming severely hinders long-term efforts to create a more healthy, prosperous and sustainable world. However, the solution lies within our hands. The Stern Review estimates that the likely cost of stabilizing emissions to a level corresponding to a 2oC temperature rise will be around 1% of global GDP by 2050. The economic impact of not taking adequate action far exceeds this amount.
Kyoto Protocol is an important first step
Climate change is directly linked to greenhouse gas emissions, which are primarily the consequence of the rapid growth in fossil fuel use during the 20th Century. The international community is struggling to formulate an appropriate response that enables burden sharing in this global issue.
The Kyoto Protocol, through which 160 countries have committed to reduce global greenhouse gas emissions or engage in emissions trading, has proven to be an effective and important first step. With the emergence of international emissions trading and the Clean Development Mechanism (CDM), capital is effectively being transferred to developing countries for investment in projects that reduce carbon emissions.
It has been estimated that international carbon trading and carbon finance has the potential to generate up to 100 billion dollars in annual green investment flows. To achieve this scale of investment and reap the benefits, it will require certainty about the nature of the international climate change regime going forward. The global community now needs to look beyond the arrangement under the Kyoto Protocol (i.e. beyond 2012) and send a long-term price signal that gives confidence to both governments and project developers. We now look toward the December 2007 UNFCCC conference in Bali to provide leadership in the long march to a low carbon world.
ADB's has been actively supporting CDM in PRC
The Clean Development Mechanism is the key means of promoting the transfer of carbon revenues and technology to developing countries. PRC has emerged as the largest single provider of CDM carbon credits.
In response to requirements of our developing member countries, ADB has developed a number of innovative financing mechanisms to support clean energy projects. In early 2007, ADB launched the Carbon Market Initiative (CMI), including the Asia Pacific Carbon Fund, which provide upfront purchase of up to 50% of project CDM credits.
Additionally, ADB has launched the Energy Efficiency Initiative which aims to expand our clean energy portfolio to $1 billion a year by 2008. Our operations are being supported through the Sustainable Urban Transport Initiative, the Climate Change Adaptation Program, and the targeting of clean energy projects in our private sector operations. The Clean Energy Financing Partnership Facility enables us to bring donor support for clean energy projects.
Our involvement in the CDM activities in PRC started in 2002, with a technical assistance project "Opportunities for the Clean Development Mechanism in the Energy Sector".
Since then we have included the CDM in a large number of our projects here. For example, an ADB project in Gansu was the first hydropower plant in PRC to be developed as a CDM project. In Shanxi we supported application of the CDM to the world's largest coal mine methane power plant. We are currently providing technical support to over 15 projects for development under the CDM.
Cooperation between ADB and CDM Fund
Recognizing the potential of the CDM Fund, we provided a technical assistance grant in 2005 for its initial development. This included the design and development of operational regulations for fee collection, the governance structure of the fund, the fund's operational manual, and capacity and dissemination programs. Under the guidance of Ministry of Finance and the related ministries and agencies, the CDM fund has enormous potential to significantly strengthen PRC's response to the climate change challenge.
At this point, I would like to pause to recognize the immensely important contribution by Mr. Ju Kuilin, the late and the first Director General of the CDM Fund. Mr. Ju Kuilin had also served as PRC's Executive Director on the ADB Board of Directors from September 2002 to January 2005, during which time he developed a close relationship with ADB and truly became part of the extended ADB family. We were deeply saddened by his untimely demise, and that of Ms. Wei Lijun, another staff of the CDM Fund. We take heart in knowing we continue to pursue a cause which was dear to Mr. Ju Kuilin.
Conclusion
In closing, climate change is a reality that will shape the future of the planet. As the premier regional financial institution, ADB is committed to the promotion of clean energy in Asia and the Pacific to mitigate climate change and promote sustainable development.
The CDM Fund is an innovative example of how proceeds from international carbon markets can be used to address domestic barriers for moving to a low carbon economy. We at ADB look forward to its success.
Thank you
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