The World Bank Carbon Finance Unit (CFU) uses money contributed by governments and companies in OECD countries to purchase project-based greenhouse gas emission reductions in developing countries and countries with economies in transition. The emission reductions are purchased through one of the CFU’s carbon funds on behalf of the contributor, and within the framework of the Kyoto Protocol’s Clean Development Mechanism (CDM) or Joint Implementation (JI).
The Clean Development Mechanism (CDM) proposed under article 12 of the Kyoto Protocol is an important potential instrument to promote foreign investment in GHG emission reduction options while simultaneously addressing the issue of sustainable development.
With the international framework for the CDM presently under development, many complex legal, financial and technical issues still require further discussion. Under these circumstances, most developing countries with limited institutional capacity will face a significant challenge in taking a pro-active approach to participate as equal and reliable partners in CDM when it becomes operational.
Reflecting the needs of developing countries, UNEP is implementing a 4-year project on Capacity Development for the CDM with funding from the government of the Netherlands.
Japan Carbon Finance
Japan Greenhouse Gas Reduction Fund (JGRF) is Japan’s first carbon fund established in 2004 by a total of 33 entities, and Japan Carbon Finance, Ltd. (JCF), established as of Nov. 25, 2004, is a company that uses the funds from JGRF to develop greenhouse gas reduction projects and to purchase CERs/ERUs credits for the first commitment period, between 2008 and 2012. 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.
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UNFCCC (United Nations Framework Convention on Climate Change)
Over a decade ago, most countries joined an international treaty — the United Nations Framework Convention on Climate Change (UNFCCC) — to begin to consider what can be done to reduce global warming and to cope with whatever temperature increases are inevitable. Recently, a number of nations have approved an addition to the treaty: the Kyoto Protocol, which has more powerful (and legally binding) measures. The UNFCCC secretariat supports all institutions involved in the climate change process, particularly the COP, the subsidiary bodies and their Bureau.
This section contains numerous resources — for beginners or experts — such as introductory and in-depth publications, the official UNFCCC and Kyoto Protocol texts and a search engine to the UNFCCC library.