How to access Japan's new ADB fund for low-carbon technologies in Asia-Pacific

Solar energy panels in Sumba, Indonesia. The Asian Development Bank and Japanese government have created a new trust fund to promote low-carbon technologies in Asia-Pacific. Photo by: ADB / CC BY-NC-ND

How do you encourage rapid socio-economic growth while maintaining a climate-sensitive and environmentally-responsible approach to development?

The Asian Development Bank and the Japanese government have a plan in mind: establishing a new trust fund that will promote low-carbon technologies in a rapidly changing Asia-Pacific. The Japan Fund for the Joint Crediting Mechanism will initially be worth $17.65 million given by the Japanese government and will be co-implemented by ADB to “help meet the demands of the … region for a sustainable low-carbon infrastructure by promoting the adoption of low-carbon technologies in ADB projects,” Ryuzo Sugimoto, ADB’s environment specialist, told Devex.

Asia-Pacific, according to the Manila-based institution, is a growing source of greenhouse gas emissions in the world, with over 40 percent share of carbon dioxide emissions in 2010 — and this is expected to climb to over 50 percent by 2035.

For Sugimoto, a proactive financial mechanism like this can not only reduce global emissions, but even push the region to play a key role in “addressing global climate change issues.”

Step forward

One of the biggest obstacles in low-carbon technology proliferation is the high-cost to procure, scale up and maintain these kinds of equipments — something that the fund will attempt to address.

“The fund will offer incentives to eligible developing member countries of ADB to help them overcome the high initial capital costs, including maintenance, through a grant component and/or buying down the interest of the ADB loan to the project,” Sugimoto explained. “This will strengthen the financial viability of the projects and provide a source of additional funding.”

He added that apart from the financial incentive for DMCs, technical assistance will also be given including capacity development, research and policy advice.

Currently, eight nations in ADB member countries have so far signed the prerequisite memorandum of understanding for the crediting mechanism with Japan and are eligible to access the fund: Bangladesh, Cambodia, Indonesia, Laos, the Maldives, Mongolia, Palau and Vietnam.

The bank said the list is “expected to expand.”

How to join

Different development partners and stakeholders are encouraged to work with ADB and member countries on the fund. For instance, contractors can access the project through the bidding process, while for those in ADB non-sovereign projects a set of eligibility criteria will have to be met, Sugimoto said.

For country projects, on the other hand, adoption of low-carbon technologies is required in the bidding component in the ADB project. Some of the requirements include:

   ● Proof that development partners’ proposed technology has been applied to actual projects in developed and developing countries.

   ● Documentation regarding the technology’s technical effectiveness and GHG emission reduction capacity.

“It would be good for development partners to prepare this requirement in advance,” Sugimoto concluded.

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About the author

  • Lean 2

    Lean Alfred Santos

    Lean Alfred Santos is a Devex development reporter focusing on the development community in Asia-Pacific, including major players such as the Asian Development Bank and the Asian Infrastructure Investment Bank. Prior to joining Devex, he covered Philippine and international business and economic news, sports and politics. Lean is based in Manila.

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