No Profit for Africa in UN carbon-offset scheme

December 7th, 20115:31 pm @


No Profit for Africa in UN carbon-offset scheme

Africa accounts for only two percent, or 76 of the 3,612 projects registered
under the CDM programme, which lets firms in rich nations offset their
climate-warming emissions by investing in emissions-reduction projects in the
developing world.

“The balance sheet so far for Africa has not been a happy one with the CDM,
but we should not discount the fact that actually quite a lot of money and
projects have entered that pipeline but they have gone to other countries,” said
Achim Steiner, head of the U.N. Environmental Programme in Nairobi.

Under the 1997 Kyoto Protocol, industrialised nations were legally bound to
cut greenhouse gas emissions as the world faces rising sea levels and greater
weather extremes.

Delegates from over 190 nations are meeting in the South African port city of
Durban to discuss a new global deal to replace the Kyoto pact when the first
commitment period on tackling climate change expires at the end of 2012.

Critics say the process of registering CDM projects is arduous, expensive and
too complex for many African firms, though others argue the pipeline of projects
seeking registration is growing.

“In the last 18 months or so (we have seen) a significant growth in CDM
projects and a growth in capability of technical advisers and financial advisors
to assist in these projects,” said Karin Ireton, Director Sustainability at
Africa’s biggest banking group Standard Bank.

“We could see a much greater investment in cleaner technology projects in
Africa if we manage to get a second commitment period or a transitional
arrangement,” Ireton said.

Without a future commitment under Kyoto to cut emissions beyond the end of
2012 when the first phase expires, there will be no demand for carbon credits or

The meagre number of projects is also due to the fact that most poor African
countries do not have many polluting industries, putting the continent at a


Most profitable CDM projects have been those destroying industrial gases
HFC-23 and N20 at adipic acid plants and the only sub-Saharan country to list
such schemes is South Africa.

Africa’s largest registered project eliminates gas flaring at the Pan Ocean
oil field in Nigeria, effectively blocking more than 2.6 million metric tonnes
carbon dioxide being emitted annually. The second biggest is a similar project
at Nigeria’s Kwale field, hindering about 1.5 million tonnes of emissions.

Other projects in Africa are much smaller, mainly tapping gases at landfills
and using them to generate electricity.

“Due to an absence of heavy industry, it is hard to generate emission
reductions with classic types of CDM projects. For example, with a green grid
adding more hydroelectricity resource generates very few emission reductions,”
said Paul Soffe, associate director at project developer EcoSecurities.

Investors are concerned about the future of Kyoto, slowing global growth
prospects, record CDM credit issuance this year and stricter limits for using
credits in the European Union’s emissions trading scheme after 2012.

The uncertainty has already had a knock-on effect on the CDM market, pushing
primary investment down to $1.5 billion in 2010 from $2.7 billion in 2009 and
$6.5 billion in 2008.

Benchmark U.N. carbon credits have also been hit and were trading at 4.92
euros as of 1232 GMT, just shy of the 4.53 euros on Nov. 28.

But some critics say the scheme has never produced the gains that its
proponents claimed.

“It (CDM) is a failure. What has it done. It was actually a distraction to
delay action. Can you tell me what it has really achieved in Africa? Nothing,”
said Mithika Mwenda, coordinator for Pan African Climate Justice Alliance.

“Even if we turn the whole of Africa into forest, without addressing this
problem where emissions are being produced, then I don’t think we are going to
do anything. We need action which is not happening there.”

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