Jul 09, 2014 12:36 PM IST
Asia’s economic rise has yielded enormous dividends. Much of the region is transitioning to middle income status. Poverty, though still chronic in parts, is ebbing in absolute terms. For example, between 2005 and 2010, the number of extremely poor people living below $1.25 a day dropped by more than 150 million.
Epochal challenges remain, however, impeding the region’s progress toward a sustainable future. One of the most daunting is climate change. If current emission trends continue, mean global temperatures by the end of this century are expected to rise between 2 and 4 degrees Celsius over pre-industrial levels.
Rising sea-levels will expand the number of people living in Asia’s flood-prone cities by more than 100 million to 410 million by 2025. Nine out of ten megacities that are most at risk from climate change happen to be in Asia and the Pacific. Agricultural crop yields will fall and food prices will climb—with every 10 per cent rise pushing another 64 million Asians into poverty.
Rising energy demand across developing Asia doubled its share of global greenhouse gas (GHG) emissions in just 20 years to more than 40 per cent in 2011. Surging automobile use, substandard public transport systems in many urban areas, and rising demand for fossil-fuel fired energy has increased per capita emissions of carbon dioxide (CO2) from about 3 metric tonnes in 2008 to almost 3.6 metric tonnes in 2011. If these trends continue, Asia’s CO2 emissions from the energy sector alone are likely to account for more than half of the global total by 2035.
This is a challenge—for the region and for the world. Although there has been progress in steering Asia’s economies towards low-carbon pathways, much more needs to be done. One crucial step is to promote the adoption of advanced low-carbon technologies to spur green economic growth.
Developing countries often face difficulties gaining access to ground-breaking technologies that can decouple their growth from GHG emissions. In 2012, parties to the United Nations Framework Convention on Climate Change agreed to develop new market-based mechanisms to make GHG mitigation efforts cheaper and more accessible.
One such new initiative is the Joint Credit Mechanism (JCM). This is a carbon market mechanism that operates bilaterally between Japan and developing countries to promote projects that aim at GHG emission reduction. It complements multilateral carbon market schemes, such as the Clean Development Mechanism (CDM), and follows a similar approach to the CDM in financing and accounting for verified GHG emissions reductions, but with simplified procedures. These emission reductions can be credited between Japan and the partner developing country, based on their respective contributions to the project.
The JCM aims to foster advanced low-carbon technologies that will trigger long-term GHG emission reductions. Its main focus is on proven technologies such as smart grids and waste-to-energy schemes that are not yet widespread in developing countries. Some pilot projects have been launched, including small-scale solar power plants in island states and a high performance biomass power generation facility.
Asian Development Bank (ADB) President Takehiko Nakao and Japan’s Minister of the Environment Nobuteru Ishihara announced the establishment of a new trust fund to support GHG emission reduction projects under the JCM, during a signing ceremony this week for a Letter of Intent for cooperation on environmental issues.
Established with a grant of ¥1.8 billion (about $17.65 million), the Japan Fund for the Joint Carbon Mechanism (JFJCM) will provide grants for low-carbon technologies in ADB-financed projects in developing member countries that have signed memoranda of understanding for the JCM with Japan. There are eight such countries in Asia and the Pacific at present—Bangladesh, Cambodia, Indonesia, Lao People’s Democratic Republic, Maldives, Mongolia, Palau, and Viet Nam—and Japan plans to expand this list.
This is the first such trust fund to be hosted by a multilateral development bank under the JCM. The JFJCM will provide finance and technical assistance to overcome barriers to adoption of low-carbon technologies, including high initial up-front costs and perceived risks that such technologies may not perform. Moreover, it will help demonstrate the suitability of these technologies in places where they are not yet widely used. The JFJCM will be available to support sovereign and private sector low-carbon projects in participating countries.
Asia’s transition to low-carbon growth is crucial to global efforts to mitigate climate change. Funds such as the JFJCM are among the many new promising initiatives to promote low-carbon growth where it is needed most.
Bindu N. Lohani is Vice-President for knowledge management and sustainable development at the Asian Development Bank.
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