Japan Bank for International Cooperation (JBIC) has signed a cooperation agreement for promoting the Clean Development Mechanism (CDM) with the International Cooperation Department (ICD), Ministry of Natural Resources and Environment of Vietnam, the country’s designated national authority (DNA) under the Kyoto Mechanisms.
The cooperation agreement aims to promote CDM projects in Vietnam and support acquisition by Japanese firms of emissions credits (certified emissions reductions: CERs) generated from CDM projects. Specifically, the agreement sets forth that (1) ICD supplies information to JBIC on candidate CDM projects in Vietnam; (2) JBIC supplies that information to Japan Carbon Finance Ltd (JCF), which will purchase emissions credits, and other Japanese firms; and (3) JBIC considers financial support for those candidate CDM projects and provide advice on their financing.
In achieving its greenhouse gas (GHG) emissions reduction target, it is important for Japan to make use of the Kyoto Mechanisms, including the CDM, in addition to domestic efforts to reduce GHG emissions. CDM projects require approval by the DNA in the host country. In March 2003, ICD was assigned as the DNA in Vietnam, and it is primarily considering energy-related projects as candidate CDM projects in an effort to promote the CDM.
As the Kyoto Protocol entered into force in February, efforts to implement CDM projects will likely gain increasing momentum. As the only official financial institution with a mandate to advance Japan’s external economic policy and economic cooperation, JBIC has been making vigorous efforts to promote the Kyoto Mechanisms by making the most use of the ties it has developed over the years with developing country governments through loan and guarantee operations as well as its overseas network of representative offices.
JBIC has already participated in the Prototype Carbon Fund (PCF) set up by the World Bank, and also in the Japan GHG Reduction Fund (JGRF) and JCF, both set up by JBIC and domestic firms. The signing of this cooperation agreement represents part of these efforts and will contribute to addressing the challenge of global warming, while further strengthening bilateral relations between Japan and Vietnam.