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Africa source of growth for international emissions offset market, says UNFCCC

24 May 2010

Despite Africa accounting for just under two per cent of the 2,060-plus registered clean development mechanism (CDM) projects worldwide, the continent has seen a strong growth trend in the past few years, according to the United Nations Framework Convention on Climate Change (UNFCCC).

There are now 122 CDM projects in Africa that are either registered or in the pipeline for validation or registration, it said, up from 116 in 2009, 75 in 2008 and 42 in 2007.

The offset project landscape is also changing in the continent, said the UNFCCC. It said that whereas raising capacity and awareness about the potential for offset projects in Africa used to be a challenge, it now sees a higher level of understanding and eagerness to participate in the region.

‘It’s obvious the capacity-building is paying off and the message is getting out,’ said John Kilani of the UNFCCC secretariat, on behalf of Nairobi Framework.

Five UN organisations and two multilateral development banks make up the Nairobi Framework, an initiative aimed at extending the benefits of the CDM, especially in Africa.

Launched in November 2006 by then UN Secretary-General Kofi Annan, the Nairobi Framework’s partners now include the UN Development Programme, UN Environment Programme, the World Bank, UN Institute for Training and Research, UN Conference on Trade and Development, the African Development Bank and the UNFCCC secretariat.

The UNFCCC also said there are a growing number of renewable energy projects in Africa and a growing number of countries hosting projects.

‘Some project developers are even prepared to pay a premium for offset credits originating from Africa, no doubt because they are confident in the long-term growth prospects for CDM on the continent,’ said Mr Kilani, director of the secretariat’s sustainable development mechanism programme.

Under the CDM, projects that reduce greenhouse gas emissions and contribute to sustainable development can earn saleable certified emission reduction credits, which can be used for compliance under the Kyoto Protocol.

‘Africa’s slow start in the CDM business seems now to have been more about finding the right ways to structure projects in the sectors that are Africa’s national specialities than about a fundamental incompatibility,’ said Henry Derwent, president and CEO of the International Emissions Trading Association.

‘Investors in compliance and voluntary markets alike are seriously interested in good quality African emissions reduction projects, to balance their portfolios and meet their climate change strategies. Africa Carbon Forum has helped them and project promoters alike,’ he added.

One of the new developments under the CDM is the option to establish so-called programmes of CDM activities, which allows for many individual project activities to be put together under a single programme, to reduce transaction costs and increase efficiency of implementation.

‘Programmatic CDM is clearly seen as a very attractive option by African countries and several programmes are under development in a handful of countries; but, it is also clear from the discussions that to make it a success there is a need for targeted capacity-building, both for designated national authorities and project developers,’ said John Christensen from the UN Environment Programme.

The CDM Designated National Authorities (DNAs) are responsible for, among other things, laying the policy groundwork for CDM in their countries and for attesting to the sustainable development benefits of each project prior to registration.

There are currently more than 2,060 registered CDM projects in 63 developing countries, and about another 2,200 projects in the project validation and registration pipeline. The projects registered to date are expected to generate more than 1.7 billion certified emission reductions by the time the first commitment period of the Kyoto Protocol ends in 2012, said the UNFCCC, which are each equivalent to one tonne of carbon dioxide.

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