Japan Bank for International Cooperation (JBIC) has signed a cooperation agreement for promoting the use of the Clean Development Mechanism (CDM) in Colombia with the ministry of the environment, housing and territorial development.
The cooperation agreement aims at promoting CDM-related projects in 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 Colombia and cooperation in obtaining approval within 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) under the Kyoto Mechanisms, 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% 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. It has also signed a cooperation agreement for promoting the use of the CDM in the Latin American and Caribbean region with Corporacin Andina de Fomento (CAF).
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 Colombia.