Tuesday, November 24, 2009

Carbon trading schemes hold promise for Africa but have potential for abuse

Sources:

AllAfrica.Com: Africa: Continent in the Global Carbon Trade

AllAfrica.Com: Africa: Continent Told 'Stop Playing the Victim'

The Times: SA Missing the Carbon Bandwagon

African leaders met recently at the Carbon Markets Africa Conference to discuss how to position the continent to take advantage of the Kyoto Protocol's Clean Development Mechanism (CDM). While few people expected the CDM to lead to wide-scale investment and development on the continent, many there are now seeing it as another means for Western corporations to continue polluting while providing public relations “greenwashing.”

The stated purpose of the CDM was to allow industries in one country to make direct investments in the developing world that would reduce their carbon emissions. The theory was that since climate change is a global problem, perhaps international development solutions could be effective. The hope was that these carbon offsets would slash not only current emissions, but would prevent future emissions increases as major industry begins to come online in less developed countries. However, Africa has such a low number of existing industries that it is finding it difficult to market itself for CDM dollars against more aggressive countries such as China, Brazil, or India.

World Bank numbers agree with the claims of African leaders. Of the 140 million carbon credits issued by the United Nations since 2005, only 1.6 million have been for development in Africa. This represents slightly more than 1% of the total, a shockingly low number considering the hype that preceded the program. In comparison, China accounts for 73% of CDM trades.

There is disagreement about solutions. Some believe Africa needs to redouble its efforts and copy existing programs. CDM Executive Board chair Lex de Jonge had sobering words for the leaders: “stop playing the victims here in Africa.” De Jonge told participants at the conference that Africa must pursue a low carbon development strategy different than the west did. Some African business leaders agree, suggesting that it must go after development projects instead of waiting for the United Nations to deliver them.

Others, including many African leaders, claim that changes to the CDM are required. They want to make agricultural and land-use projects eligible for investment. They say that while Africa may have few potential industrial projects, it is brimming with opportunity that takes advantage of its abundant farm land. Nikolaus Schulze, director of project finance for the German company First Climate, says that African countries need to become more business savvy, “The first question has to be: where is the demand for buying the credits (a project earns)?” However, voices for reform and organization are in the minority and the CDM executive board has not been receptive.

One issue that both sides can agree on is that the CDM regulatory paperwork can be onerous. One South African project took over a year to be approved. De Jonge says that attempts are being made to stream-line the process as much as possible, and South African developers say they understand the need to maintain strict rules to provide maximum legitimacy to the program.

While global leaders meet in Copenhagen to delay action on more aggressive mitigation strategies for climate change, there are many who are still trying to implement basic programs from the Kyoto round. Western countries that emit the majority of the world’s carbon can begin to look for viable offset programs, and they can start with some of the lowest hanging fruit—basic economic development in Africa. The next Carbon Forum will be held in Nairobi, Kenya on March 3rd – 5th 2010.

Discussion:

1) Should companies have quotas to invest a certain percent of their CDM trades in Africa?

2) How can companies reach out to African nations to help them develop CDM deals?

2 comments:

Highest CD Rates said...

I think this is the high time for African government to work on globalization of businesses. I think there are many business prospects in the country and just need to be explored properly.

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