PROPERTY ARTICLES

Mixed feelings have welcomed Africa’s fledgling carbon market, which observers believe is stuttering in the face of a massive potential

According to the United Nations Environment Programmes (UNEP), the continent has over 120 carbon market projects up and running or in the pipeline, in areas ranging from wind power to forestry schemes.

However, in comparison to the rest of the world, Africa is widely believed to be lagging behind, with the potential for clean and green energy largely under-exploited.

Similarly, the growth in Clean Development Mechanism (CDM) projects under the Kyoto Protocol appears uneven among countries.

For instance, larger economies such as Egypt and South Africa are claiming the lion’s share, with 32 and 13 projects respectively.

But Nigeria, which has three CDM projects currently operational " two gas utilisation schemes and the third designed to reduce use of fuel wood " claims that the Certified Emission Reductions (CERs) earned from just one of the gas gathering schemes are more than that from the entire 13 projects in South Africa.

Nigeria has four more CDM projects in the pipeline.

However, Kenya and Uganda seem to have taken impressive strides. The number of ongoing and proposed projects has jumped from two in 2007, to 15 and 12 respectively today.

In comparison, noted UNEP, countries such as Zambia, Madagascar, Cameroon and Mali only have one or two. Equatorial Guinea is among several countries which has none.

These are among the findings compiled by UNEP’s Centre on Energy, Climate and Development and unveiled at the 2nd Africa Carbon Forum, which held recently in Nairobi, Kenya.

Achim Steiner, UN Under-Secretary General and UNEP Executive Director, said: "The growth of the carbon markets in Africa are both cause for optimism, and cause for concern. On the one hand, the work of UNEP and a myriad of other partners on capacity building, catalysing finance and other barrier-breaking initiatives have been bearing fruit among an ever wider range of countries."

"But in order to realise only a few percentage points more of the massive potential for wind, solar, biomass and waste into energy schemes, action across a range of challenges needs to be stepped up," he added.

Steiner said this was in part the responsibility of the UN, regional development banks and international funding and donor bodies.

"However, there is also a great deal private national and trans-national banks and individual governments can do to make clean energy investments more attractive through innovative loans and forward-looking policies and smart market mechanisms," he added.

The UNEP chief cited the case of Kenya where the introduction of a feed-in tariff (a policy mechanism designed to encourage the adoption of renewable energy sources) rapidly triggered interest by a consortium in establishing Africa’s largest wind farm'a 300MW scheme in the Turkana region in the north of the country.

"The groundwork has been laid for Africa to boost its participation in the carbon market, which is growing as an important commodity market worldwide," said John Kilani of the Bonn-based United Nations Framework Convention on Climate Change (UNFCCC) secretariat on behalf of the organizers of the Africa Carbon Forum.

Under the Kyoto Protocol’s CDM, developed economies can offset some of their emissions at home, by investing in developing country projects in areas such as renewable energy and forestry schemes.

The projects can earn valuable, saleable credits called Certified Emission Reductions (CERs) whose value is linked to the traded price of carbon.

"You are bound to do business when you bring all of the key market players together: the investors, buyers and sellers. This forum is therefore bound to boost the number of carbon offset projects in Africa," said Kilani.

The new Africa-wide assessment estimates that, world-wide, close to 4,900 CDM projects are up and running or in the pipeline - with the lion’s share in the big developing economies such as Brazil, China and India.

In Africa, CDM projects entail those that harvest methane gas from landfills to fuel electricity generation. These are close to 20 per cent of all projects on the continent and the most popular.

These are followed by projects in biomass energy, 15 per cent; hydro-electric including run of river schemes, 10 per cent; reforestation, 14 per cent; fossil fuel switching, eight per cent and wind power, seven per cent.

It is estimated that, based on the current pipeline, the number of CDM projects in Africa could total around 245 by the end of 2012.

It is also estimated that by 2012, and with the price of carbon at just over $13 a tonne, these could be worth over $475 million.

The forum brought together about 1,000 delegates from countries, the private sector, NGOs and international and intergovernmental bodies.

Both gas utilisation projects in Nigeria " the Kwale Gas Project and the Pan Ocean Gas Utilisation Project " are designed to reduce green house gas (GHG) emission. The Pan Ocean scheme is estimated to cut emission by more than two million tons of carbon dioxide (CO2) annually.

The CDM allows for GHG reduction from projects in developing countries to be registered and monitored under the UN so that these reductions can be sold to developed countries that have emission limits.

Chairman of Pan Ocean Oil Corporation, an indigenous oil and gas company and operators of the project, Chief Festus Fadeyi, stated that it was the largest CDM project in Africa and when at full capacity would provide 135 million standard cubic feet per day for electricity.

He said that this gas which otherwise would have been flared would be sold to developed countries to generate revenue for the country.

"The CDM registration has taken more than four years of efforts that were led by Carbon Limits of Norway. The credits will be sold to NUON, the Dutch state utility, so that the carbon emissions reductions that occur in Nigeria will help the Netherlands meet its obligation under the Kyoto Protocol," he said.

The third Nigerian CDM project " the Safe 80 Fuel Efficient Wood Stoves " ensures that less fuel wood is used for cooking hence reducing the rate of deforestation, particularly in the dry, desertification-threatened north.

The system (a stove and a heat-retaining box) needs around 80 per cent less wood than traditional stoves and expected to save 2.72 tonnes of CO2-equivalent per household each year. The whole project is expected to prevent the emission of 300,000 tonnes of CO2 by 2019.

Environment Minister, John Odey, disclosed that the projects placed Nigeria ahead of every other African nation in the number of CERs.

Head, Special Climate Change Unit (SCCU) in the Environment Ministry, Dr. Victor Fodeke, submitted that Nigerian CDM projects accounted for 40 percent of the total in Africa as a whole.

He said, "Total credits generated in Nigeria have wiped out that of South Africa as a whole even though South Africa has more projects than we do. In fact Nigeria accounts for less that 50 percent of the total CERs generated in Africa."

Nigeria’s proposed CDM projects are the Platform New Cross and Adad (both gas utilisation schemes), the World Bank Kainji Hydro-electric Upgrade and the Adscan Methane Avoidance Project.

While the first two will cut emission by processing hitherto flared associated gas for use, the third will cut emission from hydro-electric plant while the fourth will probably utilise methane gas produced or emitted from a waste dumpsite in Lagos.