Financing Low-Carbon Urban Development in South Asia: A Post-2012 Context

The cities of South Asia are growing at an unprecedented rate, and there is potential to steer this development onto a sustainable and green path. Carbon financing serves as a valuable revenue source to help cities earn additional income to support low-carbon development.

With the end of the first commitment period of the Kyoto Protocol on 31 December 2012, a fragmented international carbon market now exists with various approaches to reducing greenhouse gas emissions outside the national borders of Annex I (industrialized) countries.

Considering the potential for low-carbon development in South Asia, there is a need to help countries understand and navigate this new international carbon market. This guidance note (i) provides an overview of the carbon financing market in the post-2012 context, (ii) guides readers on how to access carbon finance, and (iii) highlights good practices in low-carbon urban development. It is aimed at government officials and project developers throughout South Asia, and is structured in a question-and-answer format for quick and easy reference.

Conclusion

International climate change negotiations are continuing with the aim of limiting global greenhouse gas emissions to a level that would avoid a 2°C increase in temperature. Part of this effort involves finding a cost-effective mitigation tool for the future, and determining how carbon markets can support these efforts. Key considerations for continued access to carbon financing in the post-2012 context are as follows:

• Least developed countries, including Bangladesh, Bhutan, and Nepal, can continue to use the Clean Development Mechanism and explore emerging market mechanisms.
• Non-Least developed countries can explore future opportunities in bilateral and internal markets, as well as new market mechanisms that are under development.