A New Financing Model for Carbon Emission Reduction Projects: The Use of Carbon Emission Reduction Purchase Agreements (ERPA) in the Private Pension System

Abstract

As a result of the awareness of global climate change, many studies have been carried out to avoidthis situation. These studies have been carried out intensely since the protocol signed in Kyoto in2005. Reduction of carbon dioxide emissions from engines operating on fossil fuels, the promotion ofusing the renewable natural sources such as wind, solar, etc. which are called clean energy, methanegas decompositions, and similar studies are some of these. As the studies increased, fundingdifficulties began to be seen in supporting the projects. In this context, especially project selectionhas started to gain importance. When the carbon emission reduction projects are examined, it isseen that forestry and especially forestation projects are very important. Especially, afforestationinvestments are very important in terms of increasing carbon sinks and many ecosystem services theyprovide are of great value. The aim of this study is to develop a new mechanism to create a sourceof financing for afforestation investments. In this context, the Private Pension System Funds wasused as a fund-raising tool for the financing of afforestation investments. in this new mechanism, itwas aimed that preventing climate change by making all actors gain income. With theimplementation of this system, it is thought that the problems in the existing carbon markets will beprevented, the investments on afforestation will increase and also the environmental funds willbecome widespread.