22 October 2009 – Standard Bank and the United Nations Environment Programme (UNEP), have launched a new initiative to a boost to carbon offset projects in African countries.
So far Africa has seen little benefit from the United Nations Clean Development Mechanism (CDM), although it is the continent most vulnerable to climate change, and this facility is designed to help rectify that.
The announcement, made in Cape Town, coincides with a UNEP conference in Cape Town on finance initiatives for a low carbon economy.
“It’s a facility, not a fund, and we hope that this will be a catalyst for the market,” explained Glenn Hodes of UNEP’s energy, climate and sustainable development division. The facility will provide technical and financial assistance to projects in order for them to become bankable.
According to Hodes, the facility plans to sponsor ten projects by the end of next year, with further expansion in 2011 and 2012.
Africa attracts only about 3% of the available Clean Development Mechanism funding, according to UNEP. Once projects are registered with CDM, they then become eligible for carbon financing. So far, investors have preferred projects in China, which attracts 70% of CDM funds, and destinations such as India and Brazil.
Hodes said that only a few dozen projects in Africa were CDM registered, but that there were three or four times this number in development. “One of the reasons that projects get stalled is that they lack catalytic financial support and technical expertise.”
The facility aims to provide that catalytical support. Large parts of Africa are rapidly urbanising, which is likely to bring increased spending on infrastructure, and an opportunity to fund more sustainable development options.
“Carbon helps make projects more attractive,” said Geoff Sinclair, Standard Bank’s head of carbon trading. He said Africa had an opportunity to lock in emissions at a relatively low level through the use of clean energy.
“If sub-Saharan Africa achieves the same CDM penetration as India, we would generate about 400-million tons of emission reductions, which could generate revenue to the region of over 7bn.” Sinclair also expects that about 1,8 terawatts of renewable energy will be built in SA alone over the next few years.