Japan Fund for the Joint
Crediting Mechanism (JFJCM)
for Private Sector
Webinar on JCM Implementationin Indonesia, 30 Sep 2020

ADB’s commitment to tackling climate change, building climate and disaster
resilience, and enhancing environmental sustainability: Strategy 2030

Addressing remaining
poverty and reducing
inequalities

Making cities morelivableAccelerating progress ingender equality

Tackling climate change, building climate
and disaster resilience, and enhancing
environmental sustainability

At least 75% of number ofADB committed operations
by 2030

At least 75% of number of ADB committed
operations by 2030, total of $80 billion from
ADB’s own resources from 2019 to 2030

Promoting rural development
and food security

Strengthening governanceand institutional capacity

Fostering regional cooperationand integration

Key Approaches
Expanding private
sector operations
1/3 of number of ADB
committed operations by 2024

Catalyzing and mobilizing financial
resources for development

Strengthening
knowledge services$1 in private sector operations financing matchedby $2.50 of cofinancing

2

ADB’s Carbon Market Program

Mobilizing carbon finance for incentivizing investments in low-carbon technologies
Future Carbon Fund• Provides financial andtechnical support for
CDM projects bypurchasing post-2012
CERs• $115 million contributedby 4 governments and 2
private sector entities
from Europe and Asia
• Contracted 10.45 million
CERs with an investmentof $59.5 million• Supporting 36 CDM
projects in 12 DMCs
• Providing carbon financesupport to 1.2 GW
renewable energy
projects

Japan Fund for theJoint Crediting Mechanism

Article 6 Support Facility

Climate Action
Catalyst Fund

• Provides grants foradvanced low-carbon
technologies in ADBfinanced andadministered projects
utilizing the JointCrediting Mechanism
initiated by Japan• Provides technical,
capacity building, andpolicy development
support to enhance
DMC’s preparedness toparticipate in new carbon
markets envisaged under
the framework of Article
6• New carbon fund tomobilize carbon financethrough post-2020
carbon markets under
Article 6 of the ParisAgreement• $79.29 million
contributed by theGovernment of Japan• Supports six
mitigation activities
in Maldives, Cambodia,
Bangladesh andMongolia• $5 million facility fundedby ADB and thegovernments of Germanyand Sweden• Supports Bhutan,
Indonesia, Mongolia,Pakistan, Philippines,
Thailand and Viet Nam.

CDM: Clean Development Mechanism; CER: certified emission reduction• $100–150 million to
support DMCs inachieving NDC
commitments costeffectively and raisingambition over time
• Swedish Energy Agency
and the Foundation for
Climate Protection andCarbon Offset (KliK),
Switzerland havecommitted to be initialfinancing partners

3

Japan Fund for the Joint Crediting Mechanism
Established in June 2014 as one of ADB’s trust funds
Contribution by Government of Japan: $79.3M (2014-2020)
Provides financial incentives (grant) for adoption of advanced lowcarbon technologies in ADB-financed projects that use the Joint
Crediting Mechanism (JCM)
Both sovereign and nonsovereign projects are eligible

4

Concept of the JCM

Credits

Project-based bilateral offset crediting mechanism managed by Japan and a partnercountry
Facilitates the diffusion of low-carbon technologies that lead to GHG emission
reductions that are measurable, reportable & verifiable
Contributes to sustainable development of partner countries
Carbon credits from JCM projects will be shared among the countries and used toachieve their emission reduction targets
JFJCM provides support for ADB-financed projects to be JCM projects
5Roles of key entities in JCM projects
Partner Country

JapanGovernment• Issuance ofcredits• Registry

Notifies registrationof projects

Reports issuanceof credits

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

JCM Secretariat

Notifies registrationof projects

Reports issuanceof credits

Request registrationof projects

Issues credits• Issuance ofcredits• Registry

Issues credits

Request issuance ofcredits
ProjectGovernment

Project Implementation ProjectandParticipantsParticipants

JCM ProjectMonitoring

Note: Project participant on Japan side is
not expected for the JFJCM subcomponent

Third Party Entity• Validation and Verification

6Provides financing
and other supports

ADB JFJCMJFJCM eligible countries
Mongolia
Bangladesh
Maldives
Viet Nam
Lao PDR
PalauIndonesia Cambodia

2013
Ethiopia
Kenya
Costa Rica

7

2014
Mexico11 out of 17 JCM partner countries are
ADB Developing Members
MyanmarThailand

2015
Saudi Arabia
Chile

Philippines

2016

2017

Eligible projects and technologies
Eligible Project
Project co-financed with an ADB or ADB administered funds.
* Can be used for additional financing to ongoing ADB project.

Eligible Technology
Advanced low carbon technologies that reduce greenhousegas (GHG) emission including CO2 from energy source.
The technologies must have a proven implementation andoperation record of its technical effectiveness.

8JFJCM support to ADB projects (sovereign)
ADB

Host Country

Ordinary capital
resources(Gov’t, SOE, etc.)

loan/grant

Asian Development Fund

EE/RE projects
applying JCM

JFJCM

incremental costgrant

JFJCM provides grant for incremental cost of advanced low-carbontechnologies
Maximum amount of grant:
i. 10% of total project cost (capped to $10 million)ii. $5 million if the project cost < $50 million
9JFJCM support to ADB projects (nonsovereign)
ADB
PrivateSectorOperations
JFJCM

Project Ownerloan(in partner country)
EE/RE projects
applying JCM

interest subsidy

JFJCM provides grant as an interest subsidy to ADB’s loan to energy
efficiency / renewable energy projects applying the JCM
The borrower will repay the loan with reduced interest, instead ofreceiving the grant itself.
Maximum amount of interest subsidy:
10% of total project cost (capped to $10 million)
10Requirements for JCM application
JCM Application
Preparation and approval of JCM Methodology
Preparation of Project Design Documents (PDD)
Validation by Third Party Entities (TPEs), and registration ofthe project
Monitoring, reporting and verification of GHG emission
reduction
Issuance of the JCM credits and delivery to government(s)Borrower needs to hire consultant
by using the JFJCM grant
JFJCM secretariat may help the process
Reference: Handbook for Developing JCM Projects11

Other Requirements of the JFJCM support
Procurement for nonsovereign projectsProcurement shall be carried out following established private
sector or commercial practices acceptable to ADB.

Environment and Social Impact
The project should benefit recipient DMCCs through:a reduction of environmental pollution, including air or water pollution,solid waste treatment, or conservation of natural resources; and/or
other social economic benefits, including increased job creation
opportunities and better access to basic infrastructure.

Cost effectiveness*
Cost of reducing 1tCO2e ≤ $40* grant amount / (annual GHG emission reduction x project period)
12Other Requirements of the JFJCM support
Minimum concessionality for nonsovereign projects
To justify the amount and degree of concessionality created by the JFJCM
support, ADB will use the principle of minimum concessionality and will
document how concessional financing makes the project viable oracceptable from a risk–reward perspective.

OthersThe JFJCM subcomponents cannot apply for other international carbon
market mechanisms (e.g. Clean Development Mechanism)
The JFJCM cannot be used together with Financing Program for
JCM Model Project under the Ministry of the Environment Japan.

13JFJCM approved projects (All are sovereign projects)#Project

1

CountryJFJCM
grantApprovalTechnologies supported

Preparing Outer Islands forMaldives
Sustainable Energy
Development Project (POISED)$5 million

Mar 2015

Advanced battery systemand energy management
system (EMS)

2

Provincial Water Supply andSanitation Project

Cambodia$10 million Dec 2017

Energy efficientwastewater treatment
system3

Southwest Transmission Grid
Expansion Project

Bangladesh$7 million

Jul 2018

Energy efficienttransmission lines

4

Upscaling Renewable Energy
Sector Project

Mongolia$6 million

Sep 2018

Solar PV with advanced
battery system and EMS

5Improving Access to HealthServices for Disadvantaged
Groups Investment Program

Mongolia$3.48
millionOct 2019

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

6

Greater Male Waste to Energy
ProjectMaldives$10 million Aug 2020
$41.48 million

Waste to energy plant(incineration)

Green Recovery from COVID-19 Pandemic
New business opportunities for “build back better”
Renewable energy and energy efficiency projects will be the key
for recovering from the pandemic, with possible support by green
recovery stimulus packages by governments and international
supportPossible areas to explore
Net zero energy buildings (ZEB) with renewable energy andenergy efficient technologies together with preventive measuresfor communicable diseases, such as cooling systems with effective
ventilation design to reduce the risk of transmission of the viruses
within the building
Development of energy efficient cold chain backed by reliable andsustainable electricity supply for delivering vaccines to those inneed
Waste management systems to address infectious waste andimprove public sanitation, including waste to energy
15

Shintaro Fujii
Environment and Climate Change Specialist
JFJCM Fund manager+63 2 8632 4287 | sfujii@adb.org

Takahiro Murayama
Low Carbon Project Development Specialist (Consultant)+63 2 8632 4444 | tmurayama.consultant@adb.org

Thank you.

Reference17

Overview of Asian Development Bank
Established in 1966
68 members, 49 regional members, 41 borrowing members
3,000+ employees globally
32 offices
Triple-A credit ratings (Moody’s / S&P / Fitch)Commitments in 2019:($ million)

Loans, Grants and others*
Sovereign
Loan
Guarantee
GrantsNonsovereign
Loan
Equity Investment
Guarantee

Total ADB
21,64318,643
17,799
844
3,000
2,670
155175* Does not include technical assistance and co-financing
18

JCM project cycle and requirements (1)JCM steps

Borrower requirements

Methodology Development

Prepare a methodology for GHG
emission reduction calculation,and submit to JC

Draft methodology, andfacilitate communication
with JCM secretariat

Develop a project design
document (PDD)

Draft a PDD

Consultant’s support*

One-time

Approval of Methodology

PDD Development

Validation

Registration

Hire TPE, and submit project to JC Assist responding to queries
from TPE, and facilitatecommunication with TPE, JC
and JCM secretariat

Continued to next page19* Support to be provided byconsultants hired under thegrantJCM project cycle and requirements (2)Borrower requirements

JCM steps

Duringproject period

Monitoring

Consultant’s support*

Monitor emission reductions, and Assist and train project staff
in monitoring and draft
prepare monitoring reports[until end of project operation ormonitoring reports
expiry of JCM bilateral document,
whichever earlier]Verification

Issuance of JCM Credits

Hire TPE and have GHG emission
reductions (monitoring reports)
verified

Assist and train project staff
in verification procedures

Request issuance

Assist and train project staff
in issuance procedures#* Support to be provided byconsultants hired under thegrant or loan

[At least twice (1st: a year after
operation start, 2nd: 2030)]#[upon each verification]

Cost for TPE will be borne by
Borrower for the verification tobe done after implementation
period.
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Comparison: JFJCM and MOEJ’s JCM Financing
JFJCM Nonsovereign

JCM Financing Programfor Model Projects (MOEJ)

Eligible Project Country

11 JCM Partner Countries in Asia and thePacific

All 17 JCM Partner Countries

Maximum GrantAmount

10% of total project cost (Capped to $10million) as an interest subsidy to ADB loans

Up to 50% of eligible project cost but
depends on the number of technologies
supported in the same country, capped to 2billion JPY (around $19 million)

Eligible Applicant

Entity in developing member countries of
ADB to borrow from ADB (JFJCM application
documents will be prepared by ADB)Japanese entity as a representative to apply
for the financing support

Procurement

Shall be carried out following establishedprivate sector or commercial practices
acceptable to ADB

Depends on projects

Evaluation for Financing

Loan: ADBJFJCM: ADB and MOEJ

Implementing organisation (GEC in FY2014FY2020) and MOEJ

Cost Effectiveness≤ $40/tCO2≤ 4,000JPY/tCO2

Application Period

AnytimeBudget is associated with Japan’s fiscal year.
For FY2020, call for proposal is open from Apr
to OctConstruction Period

No requirement per JFJCM

Within 3 Japanese fiscal years including theyear the proposal is acceptedComparison: JFJCM and MOEJ’s JCM Financing
JFJCM Nonsovereign

JCM Financing Programfor Model Projects (MOEJ)

JCM Methodology andPDD Development

The grant recipient can hire a consultant
from the JFJCM grant proceeds

MOEJ has a budget to hire a consultant

Monitoring Period

Until the end of the project operation or theexpiry of the JCM bilateral document
between the Partner Country and Japan,
whichever is earlier

Until the end of legal durable years of thefacilities/equipment as
stipulated by the Japanese law

Verification

Verifications are to be conducted at least twice: (i) after one year of operation, and (ii) after
December 2030 or end of project operation, whichever is earlier.

Cost for TPE (Validationand Verification)

The cost for validation and 1st verification
can be covered by the JFJCM grant proceeds

The cost for validation and 1st verification
can be supported by MOEJ

Credit Sharing

To be discussed among project participants
and the governments of Japan and thePartner Country.

At least 50% shall be delivered to the accountof Japanese government*For Indonesia, at least 10% are allocated to the Indonesian side

Case study 1: micro-grid technology in Maldives
Project namePreparing Outer Islands for Sustainable Energy Development
ProjectJFJCM grant$5 million

Technology supported Advanced battery system and energy management system
Description

On top of 1.6 MW of solar PV installed under the project,battery storage and EMS supported by JFJCM will:
Smooth out the fluctuation of solar PV generation
Optimize diesel generator operation
Integrate large amounts of renewables to the gridLocation

Addu, Maldives

Emission reductions

1.3 thousand tCO2/yr (estimate)

Signing ceremony for the contract
on battery system and EMS

Project Site / Source: Ministry of Environment and Energy, Maldives23

Case study 2: wastewater treatment in Cambodia
Project name

Provincial Water Supply and Sanitation Project

JFJCM grant$10 million

Technology supported Energy efficient wastewater treatment
Description

Existing lagoon system will be replaced by a system consistingof high-rate trickling filter combined with filters and clarifiers,
requiring a small area of land and less than 0.1 kWh/m3 ofpower for treatment

Location

Battambang, Cambodia

Emission reductions

6.4 thousand tCO2/yr (estimate)filterHigh-rate TF

clarifier

Grit chamber

Signing ceremony for ADB
financing agreement

24

Disinfection tank

Case study 3: Advanced transmission lines in Bangladesh
Project nameSouthwest Transmission Grid Expansion ProjectJFJCM grant$7 million

Technology supported Energy efficient transmission lines
Description

Energy efficient transmission lines will increase high-voltage
network capacity while reducing transmission losses andemissions including carbon dioxide. The key technology ishigh-temperature low-sag (HTLS) conductors.

Location

Between Gopalganj and Barisal, Bangladesh

Emission reductions

23.1 thousand tCO2/yr (estimate)

HTLS

25

Traditional
ACSR

Proposed
HTLS

ACSR
Sag characteristics

Case study 4: Upscaling renewables in Mongolia
Project nameUpscaling Renewable Energy Sector Project

JFJCM grant$6 million

Technology supported 5MW solar PV system, advanced battery system of 3.6 MWhand energy management system
Description

This solar power plant with battery and EMS can supply as
much locally produced renewable energy as possible to local
consumers, reducing carbon intensive domestic and imported
grid electricity, while strengthening the country’s power selfsufficiency.

LocationUliastai, Mongolia

Emission reductions

6.4 thousand tCO2/yr (estimate)

Configurations of the Uliastai project site26

Case study 5: 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 HVAC system, high insulation window,
rooftop solar PV and ground source heat pump (GSHP)
Description

New building as expansion of existing hospital in UB will be
constructed with adoption of low carbon technologies
including HVAC system, high insulation windows and rooftop
solar PV. New construction of three family health centers isalso planned with GSHP installation, which replace the heat
supply from electric heaters powered by coal fired power
plants.

Location

Ulaanbaatar, Mongolia

Emission reductions

2.9 thousand tCO2/yr (estimate)27

Case study 6: Waste to Energy in Maldives
Project nameGreater 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 consisting of collection, transfer, treatment using
advanced waste-to-energy (WtE) technology, disposal, recycling, anddumpsite closure and remediation. The WtE facility can process 500
tons/day with up to 12 MW power generation.

Location

Thilafushi, the Maldives

Emission reductions

40.4 thousand tCO2/yr (estimate)*Average of emission reductions for 20 years
Planned WtE plant

28

Current dump siteFuture