Opening remarks by Bambang Susantono, ADB Vice-President for Knowledge Management and Sustainable Development, at the ADB Launch Event at COP26: Climate Action Catalyst Fund (CACF), at the 26th session of the Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC), 8 November 2021, Glasgow, UK
Distinguished guests, ladies, and gentlemen:
On behalf of the Asian Development Bank, it is my honor to launch ADB’s new carbon fund—the Climate Action Catalyst Fund, or CACF.
ADB’s Climate Change Strategy
As we all know, the Asia and Pacific region is on the frontline of climate change. Our long-term Strategy 2030 stresses the importance of climate action. As part of this Strategy, ADB will use its own climate finance resources to reach at least a cumulative $80 billion by 2030. In fact, just last month, we announced we are raising our ambition to deliver cumulative climate financing to $100 billion from 2019 to 2030.
ADB has also just approved a new energy policy that promotes a low-carbon transition across Asia and the Pacific. It describes our holistic approach to carbon markets by mobilizing international carbon finance through trust funds and technical support. It also describes the role international carbon markets play in mobilizing carbon finance to invest more in advanced low-carbon technologies.
ADB’s Carbon Market Program
This holistic approach to tackling climate change helps us support our developing members take advantage of carbon markets toward achieving their Paris Agreement commitments—and in some cases, even increasing them. ADB has extensive experience with carbon markets. We have, for example, a flagship program, called Carbon Market Program. It encourages investments in mitigation action by providing innovative support through technical assistance, capacity building, and in mobilizing carbon finance.
Under this Program, ADB has mobilized carbon finance through the Asia Pacific Carbon Fund, the Future Carbon Fund, and the Japan Fund for the Joint Crediting Mechanism. I am proud to say that ADB, so far, is the only Multilateral Development Bank to have a fund under the Joint Crediting Mechanism—which is widely regarded as the forerunner of Article 6.2 of the Paris Agreement. We are also well-prepared to help our developing members operationalize Article 6 through our Article 6 Support Facility.
Strategic importance of Article 6 in Asia and the Pacific
Article 6 sets out new frameworks for international carbon markets and is key to advancing climate action. It opens a window for mobilizing carbon finance and allows for the greater use of advanced low-carbon technologies. It can lower financial barriers and ease cross-border trade in electricity. It will also enhance the share of renewables in the power supply mix and boost regional integration. It is a major force in helping countries pursue decarbonization and put together a fair and just energy transition.
Asia and the Pacific has a unique advantage in operationalizing Article 6. The region has a lot of experience using international carbon markets. Approximately 80% of all Clean Development Mechanism projects, as well as roughly 90% of all Joint Crediting Mechanism projects, are hosted in our region. Thus, the regional potential to reduce greenhouse-gas emissions at scale—coupled with the existing expertise and interest in using carbon markets—positions the region as the epicenter for the next generation of carbon markets.
This all leads me to our new Climate Action Catalyst Fund, or CACF, that we are launching today. The CACF furthers our multi-pronged approach to mobilizing finance for projects that provide both climate change mitigation and sustainable development. By helping drive mitigation investments—including the deployment of low-carbon technologies—the CACF will help our members both meet their NDC targets and raise their ambitions.
The CACF will also give our financing partners more than simple access to a diverse portfolio of mitigation outcomes. As the first-of-its-kind carbon fund since the Paris Agreement was adopted, the CACF will allow our financing partners—contribute to creating new international carbon markets. Like all important initiatives, this Facility is a fruit of collaboration with the international community. We believe that the CACF will set an example of new carbon finance transactions during the “Paris Agreement era”. It will also provide price signals and build confidence in how to use market mechanisms to achieve climate ambitions.
Distinguished colleagues, ladies, and gentlemen,
Let me end here by taking the opportunity to invite our current and future funding partners to join us through the CACF to better build and use international carbon markets under Article 6. I hope that you will find today’s session insightful, and that you leave wanting to hear more.