Carbon trading could help Africa’s poor

MIDRAND – A growing market in carbon credits to cut greenhouse gas emissions may become a tool to help Africa’s poor, a World Bank official said on Tuesday.

Under the Kyoto Protocol’s Clean Development Mechanism (CDM), emissions by developed countries are capped, forcing them to fund cuts in poor countries through buying certified emission reduction permits to emit greenhouse gases. But the three-year-old market has so far failed to help Africa, with China and India dominating sales to rich nations.World Bank figures released earlier this month showed the global carbon trading market trebled to over US$30 billion (N$210 billion) in 2006 from US$11 billion the previous year.”For us this carbon resource is an additional tool to bring in to solve the (poverty) problems that people have on the ground,” said Karan Capoor, a senior financial specialist at the World Bank’s Africa region carbon finance team.”We are interested in this market simply because it can help create an additional resource to solve these problems that are very difficult to solve,” Kapoor told reporters at a carbon finance investment conference near Johannesburg.Carbon markets are seen as a cheap and possibly profitable measure to fight climate change.Africa accounted for three per cent of certified emission reduction (CER) permit sales last year, by volume, versus 61 per cent from China and 12 per cent from India, the World Bank says.One of the biggest obstacles to carbon trading in Africa is a lack of finance plus the complexity of carbon markets.The continent also does not have as much heavy industry as China or India from which to reduce greenhouse gas emissions.Conference organisers said African organisations or individuals could develop projects to reduce carbon emissions, selling the emission cuts to governments or companies in developed countries.”One of the biggest challenges for CDM in Africa is complexity…there are lots of risks that have to be thought out and have to be structured,” said Jan Kappen, programme manager at the United Nations Environment Programme (UNEP).But Kappen said the involvement of banks, drawing on their risk-management expertise, in the carbon trading process may mitigate perceived risks for carbon trading in Africa.Among the projects offered to financiers at the three-day conference were a natural biogas programme in Kenya, gas recoveries from landfills in Rwanda, solid waste management in Uganda and an organic produce initiative in South Africa.”CDM, certainly the voluntary market is a growing area and one could imagine that Africa would potentially have a stronger position in that market,” the World Bank’s Capoor said.Nampa-ReutersBut the three-year-old market has so far failed to help Africa, with China and India dominating sales to rich nations.World Bank figures released earlier this month showed the global carbon trading market trebled to over US$30 billion (N$210 billion) in 2006 from US$11 billion the previous year.”For us this carbon resource is an additional tool to bring in to solve the (poverty) problems that people have on the ground,” said Karan Capoor, a senior financial specialist at the World Bank’s Africa region carbon finance team.”We are interested in this market simply because it can help create an additional resource to solve these problems that are very difficult to solve,” Kapoor told reporters at a carbon finance investment conference near Johannesburg.Carbon markets are seen as a cheap and possibly profitable measure to fight climate change.Africa accounted for three per cent of certified emission reduction (CER) permit sales last year, by volume, versus 61 per cent from China and 12 per cent from India, the World Bank says.One of the biggest obstacles to carbon trading in Africa is a lack of finance plus the complexity of carbon markets.The continent also does not have as much heavy industry as China or India from which to reduce greenhouse gas emissions.Conference organisers said African organisations or individuals could develop projects to reduce carbon emissions, selling the emission cuts to governments or companies in developed countries.”One of the biggest challenges for CDM in Africa is complexity…there are lots of risks that have to be thought out and have to be structured,” said Jan Kappen, programme manager at the United Nations Environment Programme (UNEP).But Kappen said the involvement of banks, drawing on their risk-management expertise, in the carbon trading process may mitigate perceived risks for carbon trading in Africa.Among the projects offered to financiers at the three-day conference were a natural biogas programme in Kenya, gas recoveries from landfills in Rwanda, solid waste management in Uganda and an organic produce initiative in South Africa.”CDM, certainly the voluntary market is a growing area and one could imagine that Africa would potentially have a stronger position in that market,” the World Bank’s Capoor said.Nampa-Reuters