Good Practice
CDM Financing Schemes
This CDM Financing Schemes Page [1] provides an overview of possible investment schemes that support CDM climate activities, both with regard to direct project finance as well as trading schemes that aims at purchasing CERs generated from CDM projects. Please click on the links below to see a short introduction to the objective and coverage of each investment scheme and to obtain further information on specific financing possibilities.
- Multilateral Carbon Funds under the World Bank
- Country Programmes
- Private Carbon Funds
- European Investment Bank (EIB)
Objective: The mission of the Prototype Carbon Fund (PCF) is to pioneer the market for project-based greenhouse gas emission reductions within the framework of the Kyoto Protocol and to contribute to sustainable development.
Coverage: Six governments and 17 companies, all from industrialized countries, have contributed $180 million in funds to the PCF, which currently have approximately 30 projects under preparation. The project portfolio covers a variety of technologies including renewable energy, energy efficiency, solid waste management and industrial gas emissions abatement.
Objective: The Community Development Carbon Fund (CDCF) provides carbon finance to small-scale projects in the poorer areas of the developing world. The CDCF will purchase greenhouse gas emission reductions from projects that contribute to poverty reduction and help improve the quality of life of local communities in the least developed countries as well as poor areas of developing countries.
With the capacity of $128.6 million, the CDCF was closed to further subscription in January 2005.
Coverage: Contributors to the CDCF support projects that measurably benefit poor communities and their local environment. In return these will receive verified emission reductions from the projects developed under the fund. Resources from donors are mobilized to support technical assistance and CDCF project preparation.
Objective: The Danish Carbon Fund (DCF) was established in January 2005, and involves the participation of Danish public and private sector entities. The fund is created to purchase greenhouse gas emission reductions derived from the use of the project based flexible mechanisms. The DCF will purchase emission reductions from renewable energy projects, combined heat and power projects and landfill projects, among others, that are implemented in developing countries and in countries with economies in transition.
Coverage: The DCF is open to considering CDM projects throughout the developing world, and as such treats all regions equally. The DCF has also adopted a pragmatic and flexible approach with respect to the technologies that is considered as part of the project portfolio. However, a preference for projects in the area of wind power, combined heat and power, hydropower, biomass and landfills.
Objective: The Italian Carbon Fund (ICF) was established in 2004. The aim of the fund is to support and purchase carbon credits from the use of the project based flexible mechanisms. The Fund is open to the participation of Italian private and public sector entities.
Coverage: The ICF supports a wide range of technologies and activities in China, India, Central and South America, the Balkans, East Asia, the Mediterranean and the Middle East.
Objective: The Dutch Government supports projects in developing countries and in countries with economies in transition that generate greenhouse gas emission reductions through the Netherlands Clean Development Mechanism Facility (NCDMF) and the Netherlands European Carbon Facility (NECF).
Coverage: The fund purchases emission reductions from projects in the following categories:
- Renewable energy technology, such as geothermal, wind, solar, and small-scale hydro-power;
- Clean, sustainable grown biomass (no waste);
- Energy efficiency improvement;
- Fossil fuel switch and methane recovery;
- Sequestration.
Objective: The Spanish Carbon Fund (SCF) was established in 2004 to purchase greenhouse gas emission reductions from projects developed under the Kyoto Protocol to mitigate climate change.
Coverage: The SCF aims at promoting the use of cleaner technologies and sustainable development in developing countries and countries with economies in transition. The SCF is also looking for technological diversity in its portfolio including projects with a strong sustainable development component.
Objective: The CDM Facility at the Asian Development Bank (ADB) provides opportunities to developing member countries (DMCs) to access additional financial resources through efficient emissions reduction to promote sustainable development. Established in August 2003, the CDM Facility at ADB will have a pilot phase of 3 years.
The CDM Facility will assist DMCs in:
- addressing global climate change issues and sustainable development goals by sourcing funds for emissions reductions
- processing the CDM requirements for identified projects.
Coverage: The main objectives of ADB’s CDM Facility are to:
- promote projects that contribute to poverty reduction, sustainable development, and greenhouse gas (GHG) mitigation
- lower CDM transaction costs by supporting CDM project identification, development, registration, and implementation
- help find competitive prices for Emission Reductions, or carbon credits, arising from projects
- facilitate access to underlying-finance by improving project viability.
Objective: The Austrian JI/CDM Programme aims at buying emission reductions for the Austrian government to achieve its commitment under the Kyoto Protocol. The programme focuses on project-related Flexible mechanisms. The programme involves activities including:
- The purchase of emission reduction credits from JI or CDM projects and investment in funds and facilities.
- The financing of particular immaterial services, such as Baseline Studies etc., which are necessary in respect to JI or CDM projects
Objective: The EcoSecurities & Standard Bank Carbon Facility is an initiative created to assist governments and industry to source JI and CDM emission reductions for compliance with the Kyoto Protocol and other emission reduction programs - such as the EU Emissions Trading System. Managed by EcoSecurities and Standard Bank, the Facility seeks to buy high quality emission reduction credits from Joint Implementation projects in Central and Eastern Europe and from Clean Development Mechanism projects in Central Asia.
Coverage: The Facility is most interested in projects that already have clear implementation plans, that already have secured financing (or will shortly), and that have a defined operational start date. It will consider all types of emission reduction projects. Anyone can submit projects to the Facility, as long as projects are credible and financially sound. Projects should be able to offer a minimum annual volume of 50,000 tCO 2e.
Objective: The purpose of the ECF is to finance the carbon component of environmentally friendly projects and provide liquidity to the new European carbon market. The ECF purchases, mainly project-based, carbon assets on a forward basis from developing or transition countries, and therefore contributes to the successful financing of such projects.
Coverage: The ECF management team identifies potential carbon credits in developing or transition countries - Latin America, Asia, Eastern Europe, Middle East and Africa. Various technologies can be applied, e.g. renewable energy, energy efficiency, waste management, and sustainable industrial process.
Objective: ICECAP welcomes enquiries from sellers who hold actual or potential carbon assets. Information should be presented in the form of a Project Initiation Note or Project Design Document using any of the standard templates available.
Objective: The objective of the Japan Carbon Finance (JCF) is t o purchase carbon credits from CDM and JI projects, issued for the crediting period until 2012.
Coverage: In order to construct a well-balanced portfolio, JCF will purchase credits from a various sectors, such as renewable energy, energy savings, fuel switching, waste management, chemical industries, fugitives, etc. and various countries/regions. JCF will advise on how to develop and implement CDM/JI projects and offer financial support for the developing stages, such as to bear the cost for PDD preparation, validation, etc.
To learn more about how to submit a project idea to the Japan Carbon Finance please click here
Objective: Its primary objective is to mitigate global climate change and initiate sustainable development through the application of the Kyoto Protocol financial mechanisms in particular the Clean Development Mechanism CDM as well as Joint Implementation (JI) and finally, Emissions Trading.
Coverage: The geographical coverage of the Asia Carbon Fund is:
- Primary focus on India and China – 50% allocation.
- Other countries to be covered include Malaysia, Thailand, Vietnam, Indonesia, Bangladesh, Bhutan, Sri Lanka & Mauritius.
Eligible project types to be supported under the fund:
- Renewable Energy: Biomass fuel projects, Hydro project that qualify to generate Carbon Credits, Waste water treatment projects that result in the capture of Methane for the generation of power, micro-turbines, wave & tidal power systems, off-shore wind, co-generation, biomass conversion, CHP systems, small hydro schemes & technologies, CNG & LPG systems and platforms, momentum devices, reciprocating engines, coal bed & coal mine methane, geo-thermal systems etc. There is a special thrust on investing in projects that benefit from the Methane kick namely wastewater treatment cum power projects.
- Energy and Power Conservation: monitoring equipment, combustion improvement equipment and systems (to include particularly NOX / SOX reduction), electrical current & distribution management systems, heat storage systems; improved gear, power train systems & products; insulation products and services.
- Chemical industry: HFC23 + PFC incineration projects.
Objective: The objective of the Endesa Climate Initiative is to select projects eligible under the CDM and JI to buy the carbon credits derived from these projects.
Coverage: Endesa does not have any preference for specific project types or geographical regions, as long as the carbon credits generated qualify for compliance under the EU Emission Trading Scheme. Preference is given to large projects (1 million tons of reductions up to 2012), but Endesa will also consider smaller projects.
Objective: The Climate Cent Foundation is a voluntary initiative of four major Swiss business associations. Until 2012 the foundation will significantly contribute to Switzerland's fulfilment of its climate policy target as part of the Kyoto Protocol.
Coverage: All project types complying with CDM and JI rules, except afforestation/reforestation, nuclear, HFC-23 and large-scale hydropower projects.
The European Bank for Reconstruction and Development (EBRD) and the EIB have established a joint Multilateral Carbon Credit Fund (MCCF). The MCCF is designed to develop the carbon market in countries in transition. The bank is also co-managing The Carbon Fund for Europe (CFE) together with the World Bank. This fund places an emphasis on CDM projects. A key aspect of the Fund is that it would primarily purchase verified emission rights (VERs), prior to CDM Board approval.
1. The information provided in this section is, with the exception of minor editorial changes, reproduced from the Carbon Finance Annual Report 2005 as well as from the specific websites as listed in the text, in the same form as it is represented in the information sources. Thus this page is only conveying information and does not take any responsibility for the information contained.
