ADB to up clean-energy spending

Business Times 10 Sep 09;

(SINGAPORE) The Asian Development Bank (ADB), which has committed about US$375 million to clean-energy funds, plans to 'scale up' spending in pollution- reduction projects in Asia as developers struggle to borrow in a recession, an official said.

The bank may complete investing the remaining portion of the US$155 million Asia-Pacific Carbon Fund by this year, said Josh Carmody, manager of the fund and a senior project specialist at ADB.

Almost US$130 million of the fund has been invested in carbon credits from United Nations-sponsored emission-reduction projects in the Asia-Pacific under the organisation's Clean Development Mechanism (CDM), he said.

The ADB has committed more than US$1 billion to cut emissions in Asia by sponsoring energy-reduction projects as lending from private funds and commercial banks slows.

Financial institutions want an extension of the 1997 Kyoto Protocol, an agreement among developed nations to curb global warming, beyond 2012 before purchasing credits or extending loans.

'Banks are lending less because of the global financial crisis and the uncertainty over regulation,' Mr Carmody said in an interview by telephone from Manila yesterday.

Nations will seek to negotiate a new climate-change treaty in Copenhagen to cut emissions and slow global warming by improving the energy efficiency of vehicles and buildings, installing solar panels and adding wind farms.

India and China are key to a successful outcome for the talks in December. The two nations said that developed countries ought to share more carbon-reducing technologies with poorer nations and help finance projects.

Demand for carbon credits and their prices may improve as the world economy starts growing and the US enacts a climate-change bill, said Mr Carmody. 'More developers are entering into forward contracts for CDM credits in India,' he said.

The recession has affected demand for credits 'to a point', Mr Carmody said. 'We now see prices of credits coming up as economies start reporting positive data.'

Certified emission reduction credits, approved by the United Nations under the CDM mechanism, rose 0.4 per cent on Tuesday to 13.58 euros (S$28) a tonne on London's European Climate Exchange. They have gained about 84 per cent from a low of 7.39 euros in February.

The Asia-Pacific Carbon fund has invested in more than 1,000 MW of renewable energy projects in Asia led by China and India, in addition to biomass, geothermal and waste-to-energy ventures, Mr Carmody said.

The Future Carbon Fund, a second ADB fund with commitments from countries including Finland, Belgium and Sweden, has US$120 million to buy carbon credits after the expiry of the Kyoto Protocol in 2012, he said\. \-- Bloomberg