As initially established, the Umbrella Carbon Facility (UCF) was intended to manage the purchase of very large volumes of emission reductions (over 10 million tons CO2e) for varying groups of participants in multiple tranches. In 2006, the first tranche of the UCF (UCFT1) contracted to purchase 129.3 million tons of certified emission reductions (CERs) generated from two Chinese HFC-23 incinerators. That tranche included 16 participants, five of which were other Carbon Funds. Subsequently, in March 2008, the requirement that the Facility only purchase emission reductions from projects of over 10 million ton project minimum was eliminated.
Tranche 1 of the Umbrella Carbon Facility (UCFT1) – capitalized to €775 million and now closed – is purchasing very large quantities of certified emission reductions through 2013 from HFC-23 (Trifluoromethane) incineration projects located at two HCFC-22 (Chlorodifluoromethane) manufacturing facilities (Jiangsu Meilan Chemical Co. Ltd., and Changshu 3F Zhonghao New Chemicals Material Co. Ltd) in Jiangsu Province, China. The fund participants consist of five World Bank Carbon Funds and eleven outside entities. Quarterly payments for CERs are split between the owners of these projects (35 percent) and the Government of China (65 percent).
CDM revenue to the Government of China funds the Clean Development Fund (CDF) which is intended to support improvements of the legal and institutional framework for operations in carbon markets in China; provide financial support for the design and implementation of projects and activities in the areas of climate change mitigation and adaptation, with priority focus on energy efficiency and renewable energy; support institutional strengthening and capacity building; and promote public awareness on climate-related issues, and on mitigation and adaptation options.
Anticipated participant interest in such post-2012 CERs coincides with the World Bank’s interest in supporting projects and project entities which have encountered CDM regulatory delays; from commissioning delays in countries that have not benefited from CDM as much as was hoped; from lags in the introduction of methodologies supporting transport and building energy-efficiency; and in the late start for programmatic approaches to CDM.
Statement, September 12, 2013:
All of the Participants of the Umbrella Carbon Facility Tranche 1 (UCF T1) (both public and private sector) and the two Projects Owners, Changshu 3F Zhonghao New Chemical Materials Co. Ltd and Jiangsu Meilan Chemical CO. Ltd, have come to an amicable solution to terminate two Emission Reductions Purchase Agreements (ERPAs) for HFC 23 incineration in China. Under the terms of the agreement, it will remain a requirement that the Project Owners continue to incinerate the HFC 23 until the end of the first crediting period of these projects. This incineration requirement will be verified by an independent 3rd party auditor.