Jump to Navigation

Africa May Become Next Big Market for Carbon Projects, Emission Group Says

Aug 26, 2010 8:28 AM GMT+0200

Africa may be the next major market for carbon-reduction ventures amid investigations into Chinese certification and as the European Union imposes new regulations, the International Emissions Trading Association said.

“Africa is turning into a major source of premium Clean Development Mechanism projects,” Henry Derwent, chief executive officer and president of the Geneva-based group, said in an interview before the Carbon Forum Asia conference in October.

The world’s least developed region accounts for about 3 percent of the project pipeline under the United Nations CDM mechanism designed to generate certified emission-reduction units, or CERs, for eliminating emissions from greenhouse gases such as methane, Derwent said in Singapore yesterday.

Asia accounts for 77 percent of registered CDM projects, with China, India and South Korea accounting for 81 percent of the credits issued, according to the UNFCCC website. That compares with 1.9 percent for Africa, generating 1.5 percent of CERs. The European Union, the world’s biggest carbon market, is reviewing rules relating to the type and geography of new CDM projects to meet domestic obligations.

“European buyers are looking to diversify their portfolios of CERs to manage their risks,” Derwent said. “There are more supplies coming from Africa partly because of emphasis on agriculture and forestry.”

Africa has attracted about 3 percent, or 139 projects including new ones, from a “negligible” number a few years ago, according to Derwent and data from Bloomberg. Demand for CERs originating from African projects may prompt European utilities and buyers to pay more compared to units sourced from other regions, he said.

New Rules

Asian developers must be prepared to face competition from other regions and meet national criteria as lawmakers in the European Union, the U.S., Japan, Australia and South Korea draw up rules on carbon reduction, Derwent said.

Regulators of the UN CDM, the second-biggest emissions market, said on Aug. 18 they won’t immediately issue tradable emissions credits to the developer of a Chinese hydrofluorocarbon-23 project as they seek more information. UN regulators are stepping up scrutiny after allegations that some developers are seeking excessive credits related to HFC-23, an industrial gas whose warming potential is 11,700 times more powerful than carbon dioxide.

Prices of carbon credits generated by developing countries may rise as regulators review industrial gas projects and Chinese wind energy facilities, fueling speculation that supplies will slow.

United Nations emissions credits, or CERs, for December delivery climbed 2.5 percent to 13.58 euros a metric ton yesterday on the European Climate Exchange, the biggest gain since Aug. 19. Prices have jumped 17 percent in the past month.

CERs, awarded to projects that lower emissions in developing nations, can be used to comply with the EU emissions trading system, the world’s largest cap-and-trade program.

To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net.

Carbon trade plan backed

Monday, 23 August 2010 23:25, by Al-amani Mutarubukwa

The Common Market for Eastern and Southern Africa (Comesa) will roll out a $50 million (Sh70 billion) initiative to support carbon trade projects.
Governments, the private sector and farmers wishing to involve themselves in carbon trade investments in forestry and other related land uses will get grants.

Comesa climate change coordinator Chikakula Miti told The Citizen on Friday in Dar es Salaam that the bloc’s member states had decided to increase anti-pollution campaigns.
“In line with response to climate change impacts in the region, we will start with $50 million, but we hope to have $1 billion in the next three years. We are establishing an organisation that will guide the initiative, which should be operational before the end of this year,” said Mr Miti.

Carbon trading is an administrative approach used to control pollution by providing economic incentives for achieving reductions in pollutant emissions.
There are many similar projects by African countries, but they are not well developed partly due to lack of funding.

Certification and verification processes usually need technical experts from abroad that most indigenous farmers wishing to invest in carbon trade cannot hire.
According to Mr Miti, the initiative will assist investors aspiring to enter into the lucrative carbon trade projects by developing them, provide them with technical assistance and later on link them to the carbon market.

Farmers have been complaining about unsuitable mitigation programmes such as the carbon financing schemes that include the Clean Development Mechanism and the voluntary carbon markets for being for failing to support smallholder farming and pastoral systems.
“This is mainly because these programmes entail complex qualification requirements, ” Eastern Africa Farmers Federation president Philip Kiriro told journalists recently in Dar es Salaam.
“In the second commitment period, we call for their reform to be responsive to African realities and to have a business sense for smallholder farmers.”


Extpub | by Dr. Radut