- Region: Asia
- Environment
- Others
July 27, 2006
- Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) today signed a Memorandum of Understanding (MOU) with RHB Bank Berhad (RHB)*1, a Malaysian commercial bank, and Japan Carbon Finance, Ltd. (JCF)*2 to promote Clean Development Mechanism (CDM)*3 projects based on the Kyoto Mechanisms*4 in Malaysia.
- The MOU seeks to promote CDM projects through JBIC financing and to support acquisition by Japanese firms, including JCF, of emission credits (Certified Emission Reduction: CERs) generated from such projects. Since the Malaysian government has put an institutional structure in place for undertaking CDM projects, there are growing expectations among Japanese firms regarding participation in the country's CDM projects*5. Under these circumstances, JBIC signed the MOU with RHB and JCF to enhance cooperative arrangements with them, including information sharing and consideration of financial support, for private sector-driven undertaking of CDM projects.
- To achieve Japan's greenhouse gas (GHG) emissions reduction target (6% below the 1990 level) under the Kyoto Protocol, it is essential to resort to the Kyoto Mechanisms, including the CDM, in addition to making a range of domestic efforts to reduce GHG emissions. The Kyoto Protocol Target Achievement Plan drawn up by the Japanese government also emphasized the importance of acquiring carbon credits with a broad utilization of the Kyoto Mechanisms.
- Amid these developments, JBIC is making active efforts to promote the Kyoto Mechanisms by making maximum use of its long-cultivated ties with developing country governments through loan and guarantee operations and its overseas network of representative offices. The signing of this MOU represents a part of these efforts. In the Asian region where it is expected that many CDM projects will be undertaken in the coming years, JBIC will continue comprehensive support for acquiring carbon credits, including vigorous financial support, information collection and exchange of opinions.
- *1 RHB is the fifth largest commercial bank in Malaysia (based on total assets). In addition to lending to Malaysian companies, RHB has set up a Japan desk focusing on lending to local Japanese affiliates.
- *2 JCF was established in November 2004 by JBIC, the Development Bank of Japan (DBJ) and private-sector firms to purchase GHG emission credits from developing countries and economies in transition, and to conduct related consulting services.
- *3 The Clean Development Mechanism (CDM) allows industrialized countries to undertake joint projects that reduce GHG emissions with developing countries. The investor countries (industrial countries) may use GHG emission reduction credits generated from these projects to meet their own emissions reduction target.
- *4 The Kyoto Mechanisms are economic arrangements set out in the Kyoto Protocol to enable industrialized countries and countries with economies in transition (Annex I parties) to achieve their GHG emissions reduction targets. The Mechanisms consist of CDM, Joint Implementation (JI) and Emissions Trading.
- *5 Malaysia signed the Kyoto Protocol in March 1999, and the Conservation and Environment Management Division of the Ministry of Natural Resources and Environment was assigned the Designated National Authority (DNA) in March 2003. In August 2003, the National Committee on CDM approved the government's CDM criteria. Following this move, private firms have laid their eyes on effective utilization of palm oil effluents and renewable energy sources (including biomass and solid waste in urban areas) as promising CDM projects.