NR/2005-7
April 5, 2005 |
JBIC Signs Cooperation Agreement on the Kyoto Mechanisms with Corporación Andina de Fomento:
Partnership to Help Achieve Japan's GHG Emissions Reduction Target |
- Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed today a cooperation agreement for promoting the use of the Clean Development Mechanism (CDM)*1 in the Latin American and Caribbean region with Corporación Andina de Fomento (CAF; President and CEO: Enrique García).*2 The signing took place between President García of CAF, who is visiting Japan to attend the IDB Annual Meeting to be held in Okinawa from April 10 through April 12, 2005, and Governor Shinozawa of JBIC.
- The agreement is aimed at promoting CDM-related projects in the Latin American and Caribbean region through JBIC financing as well as supporting Japanese firms to acquire emissions credits (Certified Emissions Reductions (CERs)) generated from such projects. The agreement sets forth that JBIC and CAF: (1) exchange information on candidate CDM projects in the Latin American and Caribbean region and effectively explore their financing; and (2) cooperate in obtaining approval of host countries for the candidate CDM projects in which JBIC and CAF are involved.
- Under the Kyoto Protocol that came into effect in February 2005, Japan has an obligation to reduce greenhouse gas (GHG) emissions by 6 percent from the 1990 level. In order to achieve this target, the Japanese government has a policy of utilizing the Kyoto Mechanisms,*3 including the CDM, in addition to its domestic reduction efforts.
- Amid these developments, as the only official financial institution responsible for implementing Japan's external economic policy, JBIC has been making active efforts to advance the Kyoto Mechanisms by making maximum use of its long-cultivated ties with developing country governments through its loan and guarantee operations and its overseas network through the representative offices. JBIC has already taken steps to cooperate with multilateral institutions, including its contribution to the Prototype Carbon Fund (PCF) set up by the World Bank. In addition, JBIC set up the Japan GHG Reduction Fund (JGRF) with Japanese private firms in December 2004, which is the first fund in Asia to purchase emissions credits from overseas and which will help achieve Japan's GHG emissions reduction target in the Kyoto Protocol. The signing of this agreement represents part of these efforts.
- In the Latin American and Caribbean region, there are active efforts to promote the CDM, with a number of candidate CDM projects primarily in the renewable energy sector, including projects whose emissions credits are to be purchased by Japanese firms. CAF established the Programa Latinoamericano del Carbono (PLAC) in 1999 and has been active in identifying and formulating CDM projects in the region, acting as an intermediary for trading emissions credits, and providing support for the capacity building of designated national authorities (DNAs)*4 in the countries of this region. This agreement will allow JBIC to gain access to abundant CDM-related information that CAF has through PLAC in the Latin American and Caribbean region. It will be helpful in supporting Japanese firms to acquire emissions credits and thus contribute to the achievement of Japan's GHG emissions reduction target.
- JBIC has provided loans through CAF for those projects that promote economic development in the Latin American and Caribbean region and finance the procurement of equipment and services from Japan.
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*1 The Clean Development Mechanism (CDM) allows industrial countries to undertake joint projects with developing countries. The investing countries (industrial countries) may use the emissions reduction credits (called CERs) generated from those projects to fulfill their own emissions reduction target.
*2 CAF was established in 1970 as a regional development financial institution (head office: Caracas, capital of Venezuela) for promoting sustainable development and regional integration by efficiently attracting capital resources to provide a wide range of financial services, with high value added, to the public and private sectors of its shareholders countries. Currently its shareholder countries are Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Jamaica, México, Panama, Paraguay, Peru, Spain, Trinidad & Tobago, Uruguay and Venezuela, as well as 16 Andean region's banks.
*3 The Kyoto Mechanisms are economic arrangements set out in the Kyoto Protocol to achieve the target of reducing greenhouse gas (GHG) emissions among industrial countries and countries with economies in transition. The Mechanisms consist of the Clean Development Mechanism (CDM), Joint Implementation (JI) and Emissions Trading.
*4 DNA is an authority that approves CDM projects in the host country. DNA approval is one of the requirements for CDM projects.
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