Africa beginning to access CDM

With more than 1,100 registered participants, the Africa Carbon Forum, the leading regional trade fair and knowledge sharing platform for carbon investments, has demonstrated that Africa is an increasingly attractive destination for Clean Development Mechanism (CDM) projects, as investors seek new opportunities for growth in the voluntary market as well as the CDM.

The annual event, which was held in Marrakesh from 4-6 July, marked the 10th anniversary of the Marrakesh Accords – the adoption of the rules that govern the CDM. It brought together project developers, buyers, service providers, national CDM representatives and various other private and public sector stakeholders, all hoping to tap the potential of carbon offset projects on the continent.

Highlighting the prospects for the continent, Christiana Figueres, UNFCCC Executive Secretary, noted that there is an increasing number of CDM projects in several countries in Africa. “The opportunities in Africa are increasing. I am convinced that the growing interest in CDM projects will help turn the tide and contribute to firmly positioning Africa for the carbon market beyond 2012. This shows that the efforts of the Nairobi Framework partners on capacity building and the steps taken by the CDM Executive Board to streamline the regulatory processes are bearing fruit,” she said at the Forum.

Africa still accounts for only two percent of the 3,220-plus registered CDM projects worldwide. However, there is a great deal of untapped potential for CDM on the continent, which has experienced a strong growth in the past few years, as well as increasing private sector interest.

There are now 190 CDM projects at different stages of development in Africa. This is up from 170 projects at the end of 2010, 130 in 2009, 90 in 2008 and just 53 in 2007. Recent data from the UNEP Risoe Centre show that in the last three years there has been a relatively higher number of projects initiated in Africa thanin other regions.

"The offset project landscape in Africa is changing. The increased appreciation of and interest in the CDM here is starting to transform access to markets, as the PoA statistics indicate. It is obvious that the capacity-building efforts are paying off and the message is getting out. Now, more than ever, we need the long-term market signals for Africa clarified,” said Neeraj Prasad, Manager for the Climate Change Practice at the World Bank Institute.

According to the organizers of the Forum, the most promising development, one that holds particular benefits for Africa, is the growth in the CDM Programme of Activities (PoA) approach. Of the nine programmes so far registered globally, three are in Africa. More are in the works.

Under PoA, an unlimited number of similar projects, over a wide geographical area, can be included under a single administrative umbrella. This means that many smaller projects that would not have been feasible under CDM before can now be bundled together reducing transaction costs, while becoming more attractive for CDM finance.

“Programmatic CDM is clearly seen as a very attractive option by African countries and project developers. The number of PoAs in Africa is now almost a quarter of the total PoAs. This is a much higher share than Africa countries have for regular CDM projects. The increasing knowledge and interest of regional participants is very evident at this Forum. Since 2010, when the Africa Carbon Forum was hosted by UNEP in Nairobi, our focus has been on engaging the private sector and finance institutions in the region through targeted capacity building and piloting partnerships between the public and the private sector, The Forum shows that thes efforts are clearly bearing fruit," said John Christensen, Head of the UNEP Risoe Centre.

The African Carbon Forum is held under the Nairobi Framework, an initiative launched to help developing countries, particularly those in sub-Saharan Africa, to increase their participation in the CDM.

Launched in November 2006 by then Secretary-General Kofi Annan, the Nairobi Framework’s partners now include the United Nations Environment Programme (UNEP) and its Risoe Centre, the United Nations Development Programme (UNDP), the World Bank and its World Bank Institute, the United Nations Institute for Training and Research (UNITAR), the United Nations Conference on Trade and Development (UNCTAD), the African Development Bank, the United Nations Framework Convention on Climate Change secretariat and the International Emissions Trading Association (IETA).

The CDM allows emission-reduction projects in developing countries to earn certified

emission reductions (CERs), each equivalent to one tonne of CO2. CERs can be traded and sold, and used by industrialized countries to meet a part of their emission reduction targets under the Kyoto Protocol. The CDM assists countries in achieving sustainable development and emission reductions, in addition to reducing their emissions, while giving industrialized countries some flexibility in how they meet their emission targets.

The UNEP Risoe Centre on Energy, Climate and Sustainable Development (URC) supports the United Nations Environment Programme (UNEP) in its aim to incorporate environmental and development aspects into energy planning and policy worldwide, with special emphasis on assisting developing countries.

URC operates under a tripartite agreement between the Ministry of Foreign Affairs of Denmark, Risoe National Laboratory for Sustainable Energy at the Technical University of Denmark (Risoe DTU), and the United Nations Environment Programme.