Japan Fund for
the Joint Crediting Mechanism
Webinar on the JCM Implementation for Sri Lanka- Contribution to GHG Emission Reductions in Sri Lanka
through the JCM -16 February 2024

ADB’s Climate Change Strategy
Strategy 2030 sets ADB’s course on how best to
respond to Asia and Pacific’s changing needs

7 Operational Priorities

Committed to mobilizing $100 billion inclimate finance cumulatively from 2019
to 2030; 75% of committed operations to
support climate change mitigation andadaptation by 2030 (October 2021)
Updated ADB’s Capital Adequacy
Framework (CAF) to expand the bank’s
annual new commitments capacity tomore than $36 billion to unlock $100
billion in new funding capacity over the
next decade (September 2023)

2

ADB’s Carbon Market Program
Mobilizing carbon finance for incentivizing investments in low-carbon technologies• Carbon finance• Technical support• Capacity building• Knowledge support

3

Japan Fund for the Joint Crediting Mechanism (JFJCM)➢ Established in June 2014 as one of ADB’s trust funds➢ Contribution by the Government of Japan: $118.77M (2014-2023)➢ Provides financial incentives (grant) for the adoption of advanced low-carbon technologies in
ADB-financed projects➢ JFJCM is one of financing programs to help develop and implement projects under
the Joint Crediting Mechanism (JCM), in accordance with Article 6 of the Paris Agreement

4

JFJCM Eligibility
Eligible Country➢ All ADB developing member countries that have signed bilateral agreements on the JCM
with the Government of Japan (18 out of 28 JCM partner countries).
➢ Azerbaijan, Bangladesh, Cambodia, Georgia, Indonesia, Kazakhstan, Kyrgyz Republic, Laos,
Maldives, Mongolia, Myanmar, Palau, Papua New Guinea, Philippines, Sri Lanka, Thailand,
Uzbekistan, and Viet Nam (as of Jan 2024).

Eligible Project

Eligible Technology➢ Investment project financed by ADB
or ADB administered funds.

➢ Advanced low-carbon technologies that
reduce greenhouse gas (GHG) emissions
including CO2 from energy sources.

➢ ADB technical assistance fordeveloping JFJCM pipeline projects.
* Can be used for additional financing
to ongoing ADB project.

➢ Must have a proven implementation andoperation record of its technicaleffectiveness.
5

JFJCM Support Schemes
For Sovereign Project➢ JFJCM provides grant for incremental cost ofadvanced low-carbon technologies➢ Maximum amount of grant:
i. 10% of total project cost (capped to $10
million)ii. $5 million if the project cost < $50 million

For Nonsovereign project➢ On top of the ADB loan, JFJCM provides grantby milestones to support deployment ofadvanced low-carbon technologies➢ Maximum amount of grant:
10% of total project cost (capped to $10 million)

ADB
Ordinary capital
resources

Partner Country(Gov’t, SOE, etc.)
loan/grant
Sovereign
projects
applying JCM

Asian Development Fund

JFJCM

grant

ADB

incremental cost

Project Owner(in partner country)

Private Sector
Operations
JFJCM

loan
Nonsovereign
projects
applying JCM

grant
6

Requirements for the JCM (after grant approval)➢After approval of the JFJCM funding, a borrower (grant recipient) is required tomeet JCM application requirements as follows.

JCM Requirements➢ Preparation and approval of JCM Methodology➢ Preparation of Project Design Documents (PDD)➢ Validation by Third Party Entities (TPEs), and registration of the project➢ Monitoring, reporting and verification of GHG emission reduction➢ Issuance of the JCM credits and delivery to government(s)Borrower needs to engage consultant
by using the JFJCM grant
JFJCM secretariat may help the process
Reference: Handbook for Developing JCM Projects
7

Roles of key entities in JCM projects
Partner Country

Japan
Government• Issuance ofcredits• Registry

Notifies
registration ofprojects
Reports
issuance ofcredits

Joint Committee• Development/revision ofrules, guidelines andmethodologies• Registration of projects

JCM Secretariat

Notifies
registration ofprojects
Reports
issuance ofcredits

Government• Issuance ofcredits• Registry

Request registration ofprojects
Request issuance of credits

Project
ParticipantsNote: JFJCM-supported projects may
not involve project participants on theJapan side

Project
Implementation
andMonitoring

Project
Participants

Third Party Entity• Validation and Verification

JCM Project

Provides financing
and other supports

ADB JFJCM
8

Approved JFJCM-funded Projects#

Project

Country

JFJCM grant($ million)

ADB
Approval

Technologies supported

1

Preparing Outer Islands for Sustainable
Energy Development Project (POISED)

Maldives

5

Mar 2015

Advanced battery and energy management system
(EMS)

2

Southwest Transmission Grid Expansion
Project

Bangladesh

7

Jul 2018

Energy efficient transmission lines

3

Upscaling Renewable Energy Sector Project

Mongolia6

Sep 2018

Solar PV with advanced battery system and EMS

4Improving Access to Health Services for
Disadvantaged Groups Investment Program

Mongolia

3.48

Oct 2019

Energy efficient HVAC, high insulation window,
rooftop solar PV and ground source heat pump

5

Greater Male Waste to Energy ProjectMaldives

10

Aug 2020

Waste-to-energy plant (incineration)

6

Geothermal Power Generation Project (Phase1)

Indonesia

10

Jun 2023

Geothermal power plant with advanced designs

7

Accelerating Sustainable System
Development Using Renewable Energy
Project (ASSURE)

Maldives

6.2

Sep 2023

Advanced flow battery system
Ocean renewable energy pilot

8

Disaster Resilient Clean Energy Financing
Project (DRCEF)

Palau

5

Dec 2023

Financial intermediation to support investment in
low-carbon technologies

Total

52.68
9

How to Access JFJCM?
Sovereign Projects➢ Project owners (= grant recipients) are usually public sector entities (governments, SOEs, etc)
➢ Procurement is made through a competitive bidding process➢ Projects are discussed periodically between the Government and ADB➢ For private sector entities:➢ Participate as a contractor or sub-contractor (EPC, technology provider, etc)
➢ Participate as a consultant (individual/firm)

Nonsovereign Projects➢ Project owners (= grant recipients) are usually private sector entities➢ The first step is to discuss ADB’s loan with the Private Sector Operations Department of ADB
10

Tatsuya Yanase
Environment and Climate Change Specialist
JFJCM Fund Manager
Climate Change and Disaster Risk Management Division
Sustainable Development and Climate Change Department
tyanase@adb.org

Takahiro Murayama
Low Carbon Project Development Specialist (Consultant)
Climate Change and Disaster Risk Management Division
Sustainable Development and Climate Change Department
tmurayama.consultant@adb.org

Thank you.

Overview of Asian Development Bank
➢Established in 1966
➢68 members, 49 regional members, 41 borrowing members➢3,000+ employees globally➢Triple-A credit ratings (Moody’s / S&P / Fitch)➢Commitments in 2022:($ million)
Total ADB Operations*
Sovereign
Loan
Guarantee
GrantsNonsovereign
Loan
Equity Investment
Guarantee
Others including Technical Assistance

Total ADB
20,473
16,34915,389
19
940
1,131
979
147
5
2,993

* Does not include co-financing including trust funds
Source: ADB Annual Report 2022.
12

Requirements for procurement (Sovereign)➢ All procurement for the JFJCM subcomponent will be carried out in accordance with ADB’s Procurement Policy (2017).
➢ International competitive bidding is required in principle.
➢ Technical specifications, evaluation and qualification criteria for procurement of the JFJCM subcomponents will be
included in the JFJCM proposal. After approval, the procurement shall be in line with what is approved in the JFJCM
proposal.
➢ For JFJCM subcomponents, price adjustment methodologies to account for the life cycle cost (LCC) shall be used infinancial evaluation of the bids.

Cumulative costs(initial, O&M, energy)($ M) 50

Conventional equipment

LCC

Energy efficient equpment

40

EnergyEfficient < Conventional
Equipment
Equipment

30

20

10

0
1

3

5

7

Year

9

11

13

15
13

JFJCM support for nonsovereign investment projects➢ The grant will be documented in a grant agreement between ADB and the borrower (as grant recipient).
➢ JFJCM can be used to finance project costs in relation to planning, design, financing, construction,commissioning and completion of projects that deploy advanced low carbon technologies for nonsovereign
investment projects, in accordance with ADB’s nonsovereign lending policies and procedures.
➢ The grant amount will be committed and disbursed in USD, regardless of the currency of the ADB loan.
➢ PSOD and the fund secretariat, in consultation with clients, will prepare a grant disbursement schedulewith milestones. For example:
1. achievement of critical phases during construction of the project;
2. completion of commissioning of the project;

3. the first JCM credit issuance; and4. continued operation of the project for three years after the first JCM credit issuance.

➢ PSOD, with support from the fund secretariat, will supervise the JFJCM-supported projects once the grant isapproved by the GoJ, including the implementation of the JCM Requirements (e.g. monitoring andreporting of GHG emission reductions to ADB at least once a year).
➢ The grant will be conditional, and may become repayable upon the recipient’s noncompliance with the JCM
Requirements.

14

Other Requirements of the JFJCM support➢Environment and Social Impact➢ The project should benefit recipient DMCs through:➢ a reduction of environmental pollution, including air or water pollution, solid waste treatment, orconservation of natural resources; and/or➢ other social economic benefits, including increased job creation opportunities, better access to basic
infrastructure, and gender equality.

➢Cost effectiveness*➢ Cost of reducing 1tCO2e ≤ $40* grant amount / (annual GHG emission reduction x project period)

This sets a ceiling of the grant amount.

➢Others➢ The JFJCM subcomponents cannot apply for other international carbon market mechanisms.

15

JFJCM Application Process (Sovereign)
Borrower

Project Process
Consultation and initialconcurrence of applying
for JFJCM support

Fund Process
Prepare ITD

Concept paper
clearance

Concurrence ofsubmitting JFJCM
application

TRTA for due
diligence

Review possibilityof new technologies

Prepare andsubmit proposal
Prepare draft RRP

Loan/Grant negotiation

SDPF

2

Submitto GOJ

3

5

Request of
project proposal

4

GOJ

Support preparation of
the project proposal• Technical specification• Evaluation andqualification criteria• GHG reduction
estimation• JCM application plan

MRM

Grant Agreement1• Possible technology• Estimated GHG
reduction• Anticipated co-benefit

Prepare project
proposal
Provision of informationand necessary
arrangements for the
project implementation

GOJ

CCSD

Project Officer

7
6

Initial screening
TAG

8

10

Review and draft
recommendation
CCSC
Endorserecommendation

9

SDPF
Submitto GOJ

Send RRP for Management / Board approval

Review andapprove grantamount*Yellow part will be done by the fund manager and secretariat.

CCSC = Climate Change Steering Committee; GHG = greenhouse gas; GOJ = Government of Japan; ITD = Initial Title and Description; JCM = Joint Crediting Mechanism; MRM = management review meeting;
RRP = report and recommendation of the President; SDCC = Sustainable Development and Climate Change Department; SDPF = Partner Funds Division, SDCC; TAG =Technical Advisory Group; TRTA =transaction technical assistance.

16

JFJCM Application Process (Nonsovereign)
Borrower

Project Process
Consultation and initialconcurrence of applying
for JFJCM support

Fund Process
Prepare ITD

Concept review
paper clearance

Provision of informationand necessary
arrangements for the
project implementation

Lenders’ due
diligence1• Possible technology• Estimated GHG• reduction• Anticipated co-benefit

Prepare project
proposal

SDPF

Review possibilityof new technologies

5

Prepare draft RRP

Laon/Grant negotiations

Request of
project proposal

Support preparation of
the project proposal

GOJ

7

6
Final BFC meeting

Review andendorse proposalIC

Submitto GOJ

4

Initial screening
Concurrence ofsubmitting JFJCM
application2

3• Technical specification• Evaluation andqualification criteria• GHG reduction
estimation• JCM application plan

Prepare andsubmit Proposal

GOJ

CCSD / Internal Review

Project Officer

9

8
SDPF
Submitto GOJ

Review andapprove grantamountSend RRP for Management /Board approval
Loan/Grant signing*Yellow part will be done by the fund manager and secretariat.

BFC = Blended Finance Committee; GHG = greenhouse gas; GOJ = Government of Japan; IC = investment committee; ITD = Initial Title and Description; JCM = Joint Crediting Mechanism; RRP = report andrecommendation of the President; SDCC = Sustainable Development and Climate Change Department; SDPF= Partner Funds Division, SDCC.

17

JCM project cycle and requirements (1)JCM steps

Borrower requirements

Consultant’s support*

Prepare a methodology for GHG
emission reduction calculation, andsubmit to Joint Committee (JC)

Draft a methodology, and facilitatecommunication with JCM secretariat

Develop a project design document(PDD) and hold a local stakeholder
consultation

Draft a PDD and help holding a local
stakeholder consultation

Validation

Hire TPE, and submit PDD to JC

Assist responding to queries from TPE,
and facilitate communication with TPE,
JC and JCM secretariat

Registration

Submit registration request to JC

Methodology Development

One-time

Approval of Methodology

PDD Development

Continued to next page

* JFJCM grant can be used to hire a
consultant to support the process

18

JCM project cycle and requirements (2)JCM steps

Borrower requirements

Monitoring

Monitor emission reductions, andprepare monitoring reports

Duringproject period[until end of project operation or expiry of
JCM bilateral document, whichever earlier]Verification

Consultant’s support*
Assist and train project participants inmonitoring and draft monitoring
reports

Hire TPE and have GHG emission
reductions (monitoring reports) verified
At least twice (1st: a year after operation
start, 2nd: 2031)#

Assist and train project participants inverification procedures

Request issuance of JCM credits

Assist and train project staff inrequesting issuance procedures

Issuance of JCM Credits[upon each verification]#

Cost for hiring TPE will be borne by Borrower for the verification to
be done if the timing is after the ADB project implementation period.

* JFJCM grant can be used to hire a
consultant to support the process19

Case study 1: advanced micro-grid technology in Maldives
Project namePreparing Outer Islands for Sustainable Energy
Development Project (POISED)JFJCM grant$5 million

Technology
supported

Advanced battery energy storage system (BESS) andenergy management system (EMS)

Description

On top of 1.6 MW of solar PV installed under the
POISED project, the advanced BESS and EMS aresupported by JFJCM. The systems enable:➢ Smoothing out the fluctuation of variable solar PV
generation➢ Optimizing diesel generator operation➢ Integrating large amounts of renewable energy to
the grid
The BESS and EMS have started operation sinceAugust 2021.

Location

Addu, Maldives

Emission
reductions

1.3 thousand tCO2/year (estimate)

BESS at the project site

Training local staff for EMS operation

Solar PV at the project site

20

Case study 2: Energy efficient transmission lines in Bangladesh
Project nameSouthwest Transmission Grid Expansion Project

JFJCM grant$7 million

Technology
supported

Energy efficient transmission lines

Description

Energy efficient transmission lines will increase highvoltage network capacity while reducing transmission
losses and emissions including carbon dioxide. The
key technology is high-temperature low-sag (HTLS)
conductors. HTLS conductors have less sag at hightemperatures and higher capacity compared toconventional aluminum conductor steel reinforced(ACSR) cables, which are currently widely used in
Bangladesh. HTLS utilize cores made of steel alloys,
composite-reinforced metal, or carbon fiber
composite material.

Location

Between Gopalganj and Barisal, Bangladesh

Emission
reductions

23.1 thousand tCO2/year (estimate)

Conventional
ACSR

HTLS to be
introduced

HTLS
ACSR
HTLS has lower sag compared to conventional ACSR

21

Case study 3: Upscaling renewable energy in Mongolia
Project nameUpscaling Renewable Energy Sector Project

JFJCM grant$6 million

Technology
supported

5MW solar PV system, advanced battery energy
storage system (BESS) of 3.6 MWh and energy
management system (EMS)

Description

This solar power plant with advanced BESS and EMS
can supply as much locally produced renewableenergy as possible to local consumers, reducing
carbon intensive domestic and imported gridelectricity, while strengthening the country’s power
self-sufficiency. This is the very first utility scalebattery system in Mongolia combined with a gridconnected renewable energy. The plant started
operation in Nov 2022.

LocationUliastai, Mongolia

Emission
reductions

6.4 thousand tCO2/year (estimate)

5MW solar power plant in Uliastai

NAS (Sodium-Sulfur) battery introduced
22

Case study 4: Green Hospital in Mongolia
Project name

Improving Access to Health Services for
Disadvantaged Groups Investment Program

JFJCM grant$3.48 million

Technology
supported

Energy efficient heating, ventilation and airconditioning (HVAC) system, high insulation window,
rooftop solar PV, and ground source heat pump
(GSHP)

Description

A new annex building as expansion of the existing
Khan Uul district hospital in Ulaanbaatar will be
constructed with adoption of advanced low carbon
technologies including HVAC system, high insulation
window and rooftop solar PV. New construction of
three family health centers is also planned with GSHP
installation, which replace the heat supply fromelectric heaters powered by coal fired power plants.

Location

Ulaanbaatar, Mongolia

Emission
reductions

2.9 thousand tCO2/year (estimate)

Project site for a family health center with GSHP

Test drilling for GSHP

23

Case study 5: Waste to Energy in Maldives
Project name Greater Male Waste to Energy Project
JFJCM grant$10 million

Technology
supported

Waste to energy plant (incineration)

Description

The project will establish an integrated regional solid
waste management system in Greater Male consistingof collection, transfer, treatment using advanced
waste-to-energy (WtE) technology, disposal, recycling,
and dumpsite closure and remediation. The WtE
facility can process 500 tons/day of municipal solid
waste, with up to 12 MW power generation.
Installation of MSW incinerators avoids emissions ofmethane associated with disposed organic waste in asolid waste disposal site.

Location

Thilafushi, Maldives

Emission
reductions

40.4 thousand tCO2e/year (estimate)

Original dump site

Planned WtE plant*Average of emission reductions for 20 years
Future24

Case study 6: Geothermal Energy in Indonesia
Project name Geothermal Power Generation Project
JFJCM grant$10 million

Technology
supported(i) Anomaly predictive diagnosis using Internet of Things (IoT)
and Artificial Intelligence (AI), (ii) steam turbine withadvanced design, (iii) direct drive motors for cooling towerfans, (iv) hybrid type cooling tower fill, and (v) optical fiber
monitoring for temperature distribution inside cooling tower

Description

PT Geo Dipa Energi (GDE), a state-owned geothermalcompany, will develop a single-flash geothermal power plantwith 55 MW at the Patuha geothermal field (Patuha Unit-2).
The project will introduce the first-of-its-kind technologies forlarge scale geothermal power plant in Indonesia, which leadto improving plant efficiency, minimizing degradation of plant
performance, and reducing unplanned shutdown periods ofthe geothermal power plant, and thereby increasing
renewable energy penetration into the existing grid system.

LocationWest Java, Indonesia

Emission
reductions

273.8 thousand tCO2e/year (estimate)*Average of emission reductions for 20 years

Planned Patuha Unit-2
Power plant location

Patuha project site

Geothermal steam pipes

25Case study 7: Flow BESS and Ocean Renewable Energy Pilot
Project
nameAccelerating Sustainable System Development Using
Renewable Energy Project

JFJCM grant$6.2 million

Technology
supported(i) Advanced flow battery energy storage (BESS)(ii) Ocean renewable energy pilot

Description(i) Flow BESS of 3 MWh each for two target outer islands
together with advanced EMS will be introduced to enablefurther integration of solar power generation by the private
sector. The flow BESS will be used for time-shifting to bring
the renewable energy penetration to 40-60% in energy
term.
(ii) Current and/or wave power generation with 100 kW
capacity will be deployed on a pilot basis in selected outerislands.

Location

Several outer islands, Maldives

Emission
reductions(i) 4.5 thousand tCO2e/year (estimate)(ii) 211 tCO2e/year (estimate)

Renewable Energy Installation in Maldives*Average of emission reductions for 20 years
26Case study 8: Low Carbon Financing Intermediation in Palau
Project name

Disaster Resilient Clean Energy Financing (DRCEF) - Additional
Financing

JFJCM grant$5 million

Technology
supported

Cycle 1: Roof-top solar photovoltaic (PV) with battery energy
storage systems (BESS)
Cycle 2: clean energy technologies to be identified at the timeof commencement of this cycle (e.g. wind, ocean energy andother renewable power generation, hydrogen, electric vehicle)
that can meet JCM requirements

Description

National Development Bank of Palau (NDBP) will establish a
new loan product with subsidized interest rate to promote
low-carbon technologies, which is also expected to improvedisaster resilience. The product is designed to support clean
energy investment by the private sector in Palau, withparticular focus on micro, small and medium enterprises(MSMEs) borrowers, including women-led businesses. The
funding will be managed as a revolving fund, where the repaid
principal will be used for multiple cycles by NDBP.

Location

MSMEs’ premises within Palau

Emission
reductions

3.1 thousand tCO2e/year (estimate)*Average of emission reductions by Cycle-1 for 20 years

Rooftop solar panels installed under Phase 1 of DRCEF Project.

27