JBIC Signs Cooperation Agreement on the Kyoto Mechanisms with the Colombian Government

		Japanese

NR/2005-8
April 11, 2005

JBIC Signs Cooperation Agreement on the Kyoto Mechanisms with the Colombian Government:
Partnership to Help Achieve Japan's GHG Emissions Reduction Target

Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed on April 10, a cooperation agreement for promoting the use of the Clean Development Mechanism (CDM) *1 in the Republic of Colombia with the Ministry of the Environment, Housing and Territorial Development. Attending the signing was President Alvaro Uribe Velez of the Republic of Colombia, who is in Japan for the IDB (Inter-American Development Bank) Annual Meeting (from April 10 through April 12) in Okinawa.
The cooperation agreement aims at promoting CDM-related projects in the Republic of Colombia through JBIC finance as well as supporting Japanese firms to acquire emission credits (Certified Emission Reductions (CERs)) generated from such projects. Specifically, the cooperation agreement sets forth: (1) exchange of information on candidate CDM projects in the Republic of Colombia and cooperation in obtaining approval within the Republic of Colombia for the candidate CDM projects in which JBIC is involved; and (2) that JBIC will consider financial support for those candidate CDM projects and provide advice on their financing.
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 emission credits are to be purchased by Japanese firms. The Republic of Colombia is one of the countries in this region making active efforts to promote the CDM, and this agreement will allow JBIC to gain access to abundant CDM-related information collected by the Ministry of the Environment, Housing and Territorial Development, the country's Designated National Authority (DNA)*2 under the Kyoto Mechanisms*3, and at the same time, it will be helpful in supporting Japanese firms to acquire emission credits, thereby contributing to the achievement of Japan's greenhouse gas (GHG) emissions reduction target.
Under the Kyoto Protocol that came into effect in February 2005, Japan has an obligation to reduce its GHG emissions by 6 percent from its 1990 level. In order to achieve this target, the Japanese government has a policy of utilizing the Kyoto Mechanisms, including the CDM, in addition to its domestic reduction efforts.
As efforts to implement CDM projects will likely gain increasing momentum, JBIC as the only governmental financial institution responsible for implementing Japan's external economic policy 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 representative offices. JBIC has already taken steps to cooperate with multilateral institutions including 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 emission credits from overseas and which will help achieve Japan's GHG emissions reduction target in the Kyoto Protocol. The signing of this cooperation agreement, the 11th such cooperation agreement on the Kyoto Mechanisms that JBIC has signed, represents part of these efforts. Furthermore, the signing of this cooperation agreement will contribute to addressing the challenge of global warming, while further strengthening bilateral relations between Japan and the Republic of Colombia.

*1 The Clean Development Mechanism (CDM) is a technique under Kyoto Mechanisms. 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. 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 meet their own emissions reduction targets.

*2 DNA is the authority that approves CDM projects in the host country. DNA's approval is one of the requirements for CDM projects.

*3 The objective of JGRF is to purchase emissions reduction credits generated from the GHG emissions reduction projects implemented in developing countries and economies in transition and allocate them among the contributors. Under the mechanism adopted for purchasing emissions reduction credits, JCF purchases them first and sells them to JGRF.