The China Clean Development Mechanism Fund (CCDMF) is a national climate fund that supports low carbon growth and climate resilience in China. It is a revolving fund that receives regular capital injections from levies collected by the government on clean development mechanism projects in China.
Fast facts
- More than USD 81 million in grants committed to support over 200 projects;
- Direct reduction of over seven million tonnes of CO2 equivalent through funding enterprises, mobilizing market capital and achieving verified emission reduction effects;
- Government representatives from Brazil, Vietnam, and Cambodia have already visited CCDMF to learn more about this type of climate financing.
Installing equipment of a renewable energy combined heat
and power plant supported by CCDMF with a concessional loan
The problem
The CDM cooperation under Kyoto Protocol has generated additional income and advanced concept for some Chinese enterprises. However, without an effective financing mechanism, the income cannot be guaranteed to be used for tackling climate change, which is a problem for China, a country still with large climate financing gap. Managing the revenues collected from CDM projects through the CCDMF ensures that all collected levies are used to directly support projects that address climate change in China.
The solution
The revenues collected by the CCDMF are specifically earmarked to finance climate actions in China. The revenues are mainly used to finance investment programs to leverage additional resources from the private sector and to test innovative financial and economic instruments to support actions to address climate change.
Through investments, CCDMF provides enterprises with needed funding, mobilizes significant market capital, and achieves verified emission reduction effects (direct reduction of over 7 million tons of CO2 equivalent). CCDMF provides valuable experience to help address the enormous climate financing gap and support ambitious climate actions in China. CCDMF also partners with various international institutions, including the World Bank and Deutsche Bank, as well as domestic public and commercial entities to explore innovative ways to support low-carbon development in China.
Helping the planet
CCDMF provides grants for projects that support activities related to policy studies, research, capacity building and public awareness related to climate change. More importantly, the fund has implemented several investment projects to generate contributions from the private sector and to test financial and economic instruments to ensure cost-effective approaches to address climate change in China.
The CCDMF focuses particularly on leveraging private sector engagement to finance climate actions by bridging between the gap between the government and the market. This focus ensures the CCDMF will play a long-term role in China’s climate finance because national budget support cannot cover the entire cost of low-carbon development. Therefore various financial sources, especially private sector sources, are required.
Helping people
In order to be funded by CCDMF, a project’s social and environment impacts are evaluated. This is done by using the assessment standards of the World Bank, the Asian Development Bank as well as domestic financial institutions and NGOs that have social requirements and environmental safeguards. Project developers must ensure the whole process of project planning, implementation and assessment meets all social and environment safeguards requirements.
Spillover effect
While one concrete project can be replicated in different places, an innovative climate financing mechanism not only creates many replicable projects, but also introduces, innovates and reproduces many climate finance tools and sparks great ideas.
The CCDMF model is scalable and replicable as it provides a concrete mechanism to channel funds to climate smart activities originating from carbon markets. In the case of CCDMF, seed funding is associated with the CDM while in other countries, such funds may be raised from carbon taxes, national trading mechanisms or other nationally appropriate mechanisms. Government representatives from Brazil, Vietnam, and Cambodia have already visited CCDMF to learn more about this type of climate financing.
Farmer transporting and selling straw to
biomass power plant supported by CCDMF
Images owned by the activity partners, all rights reserved.
