Industrialised countries can earn greenhouse gas
emission reduction credits by investing in projects that lower emission
levels in developing countries, but little of this money has found its
way into Africa.
This could be about to change. On December 6 at the climate change
conference in Bali, Indonesia, the United Nations Framework Convention
on Climate Change (UNFCCC) announced that efforts were being made to
direct more money into Africa.
Industrialised countries can earn the credits under the Clean
Development Mechanism (CDM), one of three options offered by the Kyoto
Protocol to meet their emission reduction targets. They are required to
reduce greenhouse gas emissions by at least five percent against a 1990
baseline in the Protocol''s first commitment phase, which expires in
2012. The US is the only country that has not signed the Kyoto Protocol
and therefore does not participate in the welfare scheme.
"There are 850 Clean Development Mechanism projects in 49 developing
countries, but only 23 of those projects are in Africa," said Yvo de
Boer, Executive Secretary of the UNFCCC. "It''s time that the benefits
of this important Kyoto Protocol mechanism were expanded in Africa."
The problem with the CDM is that it is a market-based mechanism, said
Antonio Hill, climate change policy advisor at Oxfam, the UK-based
development agency. Most environmentalists opposed inclusion of the CDM
in the Protocol.
The idea behind the CDM was that it would allow industrialised
countries to reduce greenhouse gas emissions more cheaply by financing
emission reduction projects in developing countries, where costs are
lower. Countries like China and India, which have organised themselves
so as to attract carbon markets, have benefited.
"Africa has not created a market; besides, it is accountable for a
small amount of greenhouse gas emissions, so it is a bit perverse to
try to expand CDM in the Least Developed Countries, particularly in
Africa," Hill pointed out.
Moreover, finance flows have been heavily skewed towards greenhouse
gases like hydrofluorocarbons (HFCs), rather than carbon dioxide,
especially in countries such as China and India, said the UN
Development Programme (UNDP) Human Development Report 2007/2008.
"Because the cost of destroying these gases, which account for over
one-third of all emission credits, is much lower than the price that
credits can make on the open market, carbon trading has generated large
profits for chemical companies and carbon brokers. Benefits for the
world''s poor have been less evident."
By setting up CDM projects, the developed world can help steer
developing countries towards sustainable development while helping them
reduce emissions.
In 2006, a round of negotiations on implementing the UNFCCC established
the Nairobi Framework, assembled by six UN agencies to help developing
nations, particularly in Africa, obtain increased funding to promote
clean energy technology, such as wind and hydropower, and manage the
climate threat.
The agencies attempted to spread the benefits of CDM and several more
projects were launched in Africa, but the continent still accounts for
just 2.6 percent of all CDM projects, according to the UNFCCC.
The way of the market
"It is unfortunate that the CDM has chosen to operate like foreign
direct investment, driven by the market," said Daniel Violetti,
coordinator of the Nairobi Framework.
The UN agencies are attempting to change that with a comprehensive
project proposal, for which they are seeking donor support. "It is a
two-year project which will attempt to build capacity in African
government to build markets to attract CDM projects," he said.
The six-country CDM capacity development project - in Ethiopia, Kenya,
Mauritius, Mozambique, Tanzania and Zambia - was launched in October
2007 and is jointly run by the UNDP and UN Environment Programme, and
managed by a UNDP Regional Project Coordinator based in Addis Ababa,
Ethiopia.
No flexibility
Market barriers are just one of the problems limiting developing
country participation said the UNDP report, citing current rules for
the flexibility mechanisms in the Kyoto Protocol that restrict the
scope of carbon financing linked to land use.
The more "serious structural problem is that groups such as small-scale
farmers and forest dwellers do not have opportunities to engage in
carbon markets, partly because the markets themselves are remote, and
partly because they lack marketable rights in land and environmental
resources," the UNDP report pointed out.
"Marginal women farmers in Burkina Faso or Ethiopia are not well placed
to negotiate with carbon brokers in the City of London, and carbon
brokers seeking to minimise transaction costs have an inbuilt
preference for large suppliers of mitigation credits."
Social organisation is one of the keys to tapping the potential of
carbon markets for sustainable development, the UNDP report noted. "We
are looking at trying to make it [CDM] more flexible - it is something
that the post-2012 mechanism could look at - but we are looking at
afforestation, waste management, land degradation; sectors which could
work for Africa," said Violetti.
The UNDP said social organisation had helped in the instance of Kenya:
in 2006, Greenbelt Movement, an environmental NGO, successfully
marketed a programme to reforest two mountain areas as part of an
emissions reduction agreement, so women''s groups will be planting
thousands of trees with the money coming from a carbon trade for
removing 350,000 tonnes of carbon dioxide from the climate system.
Konrad von Ritter, Sector Manager for Sustainable Development at the
World Bank Institute, said capacity building had resulted in a pipeline
of 30 CDM projects already in Africa in the past year.
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