The African Development Bank (AfDB) might create a new facility for rich nations to fund emission cuts on the world’s poorest continent under the Kyoto Protocol, a United Nations climate change conference heard November 14.
The Kyoto treaty sets limits on emissions by industrialized countries, but lets them meet those limits by funding clean energy projects in the developing world. This trade, called the Clean Development Mechanism (CDM), was worth about US$5 billion in the past 20 months, but has mostly gone to China, Brazil, and India for hydropower developments and other emissions-avoiding projects. (HNN 11/14/06)
“AfDB is concerned about the lack of CDM projects in Africa, but we do have funding for baseline CDM projects,” said Wim Klunne, coordinator of the bank’s Finesse project, which is developing clean and renewable energy policy for the Tunis-based AfDB.
Abyd Karmali, European managing director for ICF International consultants working for the AfDB, said the proposed new facility would highlight opportunities for reducing emissions, help countries build capacity to develop projects, and establish the necessary institutions.
“We are not trying to duplicate activities already ongoing,” Karmali said. “We are all very aware of the role of private sector investment (in the CDM)… We are looking at some kind of sign-posting system so the AfDB can identify opportunities.”
The U.N. says the global CDM trade could reach US$100 billion annually by 2050.
World Bank’s IFC calls on banks to play greater role
The World Bank’s International Finance Corp. (IFC) called on banks in developing countries to increase their lending to companies wanting to invest in climate-friendly technologies.
�Private companies in developing countries can play a significant role in combating climate change, but they still face a number of obstacles, including access to finance for investing in clean technologies,� IFC Executive Vice President Lars Thunell told the Nairobi conference November 14.
Although many banks still perceive investments in clean technologies to be high risk, IFC has been able to develop business models that allow climate-friendly investment at reasonable cost.
In 2006, IFC leveraged more than US$1.5 billion in sustainable energy investment through 21 projects ranging from biomass cogeneration to waste heat recovery to run-of-river hydropower projects. The IFC official noted the agency has worked with the World Bank’s Global Environment Facility and local banks in eight countries to support sustainable energy programs with commitments of more than US$351 million in IFC funds.
�We have been able to establish a business case for clean energy investment, and we are now hoping that private banks will follow our lead and accelerate the effort,� Thunell said.