Economic downturn could also hamper the Kyoto Protocol
Jamie Lee, Business Times 13 Nov 08;
THE credit crunch could delay carbon projects and threaten developed nations' need to meet the Kyoto Protocol's 2012 deadline, said a director of a Japanese non-profit organisation yesterday.
'These days, we are receiving urgent needs for finance from firms crying to us that they cannot implement their planned new projects because the prospects of funding them are poor,' said Fumio Hoshi, executive director of Japan Bank for International Cooperation (JBIC), at the Carbon Forum Asia 2008.
'Others state that their projects under construction are screeching to a halt because the credit crunch has frozen their funding,' adding that this is particularly so in East Europe, Asia and Russia.
With the 2012 deadline for the Kyoto Protocol drawing near, he said it was crucial for firms to secure medium- to long-term funding so as to provide enough carbon credits that developed nations can purchase to offset their carbon emissions.
Developed nations that signed the agreement must reduce their worldwide emissions of six greenhouse gases by an average of about 5 per cent below their 1990s level by 2012.
'If the financial crisis freezes the supply of funds, there's a risk of shortfall in supply of carbon credits over the medium term,' Mr Hoshi said.
But in the short-term, falling oil prices are likely to crimp demand for carbon credits against falling crude oil prices, he said.
Since April, JBIC has started to look into providing equity financing to give more direct support for projects, he added.
Earlier, Senior Minister of State for Trade and Industry S Iswaran said that while China and India are the world's largest suppliers of certified emissions reductions (CERs), the rest of Asia has 'immense potential to explore CDM (clean development mechanism) projects'.
He pointed to projects in South-east Asia which include biofuel ventures in Malaysia and Indonesia, as well as hydroelectric projects in Vietnam.
'It is imperative that Asia succeeds in this endeavour,' he said, as the region is expected to contribute up to 45 per cent of the total worldwide emissions by 2050, while those from OECD countries would drop to half of Asia's.
