Nairobi, 9 June 2007 -
The carbon markets could supplement the
G8 aid package to Africa by billions of
dollars the Executive Director of the UN
Environment Programme (UNEP) said today.
Achim Steiner, speaking after the G8 Heads
of State meeting in Heiligendamm re-committed
themselves to the agreements made in Gleneagles,
Scotland two years ago, said: "Today's
affirmation on trade, aid, fighting poverty
and disease in Africa comes just 24 hours
after the G8 underlined its commitment to
global greenhouse gas emissions reductions
under the United Nations climate convention
process".
"The two agreements are mutually supportive
and are just the kind of joined thinking
we need. A commitment to climate change
ensures that the carbon markets will thrive
and develop over the coming years and decades.
This will assist in countering the climate
challenge. But it will also transfer funds
from the North to the South for climate
friendly offset projects such as clean and
renewable energy technologies. These will
reduce greenhouse gas emissions while also
delivering development on the African continent,"
he added.
The Clean Development Mechanism (CDM),
which allows developed countries to meet
part of their obligations in developing
countries, is expected to generate around
100 million carbon credits in Africa from
now until 2012, according to conservative
estimates from the UNEP Risoe Center.
This translates into a market value of
perhaps $1.6 billion of new foreign investment.
Experts claim Africa could get an even bigger
share of the global CDM market if the Continent
is assisted with streamlining project proposals
alongside the handling of issues such as
risks and more focused investment criteria.
They also note that the $1.6 billion (1.2
billion Euro) figure does not take into
account financial flows linked with voluntary
carbon schemes, projects under negotation
or ones that may emerge after 2012.
Mr Steiner's statement comes in the wake
of a carbon finance meeting held in Johannesburg,
South Africa, at the end of May billed as
Africa's first ever Carbon Finance Investment
Forum. IT was convened by UNEP, UNEP Risoe
Center, and the Development Bank of Southern
Africa (DBSA).
To date Africa has accounted for only 3%
of total market share for the carbon markets
which the meeting aimed to change.
The Investment Forum brought together over
150 delegates from Africa's financial community,
private sector, and carbon emission buyers
from overseas. While many banks were introduced
to business opportunities in the carbon
market for the first time, pioneers, such
as the DBSA and the National Bank of Egypt,
demonstrated how banks can play a pivotal
role to enlarge Africa's market share.
According to conference organizers, the
right institutions are in place in many
African countries, as well as a wealth of
real project opportunities. What is lacking
is the capital and unique know-how of the
region's financial sector, which has largely
been left untapped.
A number of other pledges were made at
the event. One of the oldest and leading
banks in Nigeria announced its intention
to develop a "Green Charter" to
introduce greater sustainability and climate
friendly principles into its operations.
The Investment Forum afforded entrepreneurs
from across Africa, including Ghana, Kenya,
Nigeria, Rwanda, South Africa, Uganda and
Tanzania, the chance to present some three
dozen concrete project proposals to carbon
buyers and financiers.
Husk Fuel for Climate Friendly Cement Making
They demonstrated the breadth of Africa's
potential and innovation by showcasing projects
ranging from using coffee husks to replace
fossil fuel in cement production in Kenya;
capturing and utilizing methane gas from
Lake Kivu in Rwanda for power generation;
piping West African natural gas to replace
coal-fired electricity in South Africa and
a host of reforestation and forest management
activities. Some financiers were so impressed
with the quality and diversity of the project
concepts on offer that a number of deals
were advanced or concluded at the forum.
The Forum also provided a platform for
the continued incubation of an industry
association for CDM project developers in
South Africa. Its objective is to promote
and facilitate local industry to reap the
advantages of entering into this new trading
market.
Cas Coovadia of the Banking Association
moderated a roundtable discussion among
banking CEOs, international aid agencies,
and high-level delegates to extract lessons
and shape an agenda for enlarging the scope
of opportunities in the region. Action points
included establishing new methodologies
which better suited the profile of African
CDM opportunities and infrastructure challenges;
for example, those for sequestering carbon
in agricultural soils, stimulating modal
shifts away from road transport, and capturing
emissions from extractive industries.
Sylvain Goupille, a carbon finance specialist
at investment bank BNP Paribas, was full
of praise: "This was a great conference
with high level officers allowing the creation
of a strong bridge between the African CDM
and European emission markets." Goupille
described carbon credits as second only
to cash in terms of its potential utility
to banks.
Nicola Steen, Senior Vice President of
Cantor CO2e, a leading emissions brokerage,
was similarly enthusiastic: "We've
just opened three offices in India and are
now focusing on building our business in
Africa. It has been great to have positive
discussions with so many interesting project
developers. I'm really looking forward to
help bring carbon finance to Africa."
Likewise, another global carbon credit
originator and project developer, EcoSecurities,
announced shortly after the Forum plans
to ramp up operations in Africa, noting
that in 2007 alone the company had firmed
up contracts for 12 million carbon credits.
"The investment conference enhanced
knowledge transfer and the workshops were
very engaging," remarked Warren Burns
of Nedbank Capital. "Nedbank gained
knowledge to broaden its base to include
African countries in our carbon finance
initiative. We hope to make carbon finance
a reality in Africa [having gained a new]
perspective on the need to move beyond traditional
risk/return analysis to include potential
carbon revenues. I feel encouraged."
