Eco fund

The Carbon Market Initiative is expected to get funds from companies required to buy carbon credits under the Kyoto Protocol.

At least two companies have come forward to invest 20 million each in this fund

Our Bureau

Hyderabad , May 6

Keeping in mind shortage in carbon credits and increasing demand for them, the Asian Development Bank has decided to set up a fund this year that will support initiatives in developing countries to produce clean energy and, in turn, carbon credits.

The Carbon Market Initiative (CMI), which is in `consultation phase', is expected to get funds from companies that might be required to buy carbon credits under the Kyoto Protocol. The fund willbe ready by year-end.

"There are not enough carbon credits available for companies to buy. There is a need to create such credits," Mr Bindu N. Lohani, Director-General and Chief Compliance Officer of ADB's Regional and Sustainable Development Department, said.

Addressing a press conference on ADB's clean energy initiatives here on Saturday, he said several companies showed interest in investing in this fund. If they invested, that would take care of their carbon credit needs. "It is like securitising their investments to get carbon credits," Mr Lohani, who is also Special Advisor to President on Clean Energy and Environment, said.

He said at least two companies came forward to invest 20 million euros each in this fund.

"The CMI will be a mechanism to boost the viability of alternative clean energy sources in developing countries and to assist developed countries meet their commitments under the Kyoto Protocol. It can be an effective tool for addressing two of the most pressing global issues — energy security and climate change," he said.

Referring to criticism by civil society groups on climate change safeguards, Mr Lohani said the bank would make them more stringent, allaying fears that there would be a dilution.

Four-year roadmap

Meanwhile, the ADB has prepared a four-year roadmap for its three-phased Energy Efficiency Initiative. The initiative isaimed at assisting developing member countries (DMCs) in changing their energy use patterns and to secure a low-carbon future in the region.

The move got further impetus with the ADB President, Mr Haruhito Kuroda's announcement that the bank would earmark $1 billion for clean energy projects.

The initiative had completed the first phase that brought home the message about the need for ADB action and investments.

The second phase will see preparation of operational details by 2007. The bank will study the energy efficiency potential, policies, and specific investment market segments in the DMCs.

It will consult governments and the main stakeholders in target countries and select priority market segments and define investment instruments.