Nairobi, Kenya — ESI-AFRICA.COM — 25 March 2011 – The government of Kenya has opened Africa’s first climate exchange platform, which is expected to unlock trade in carbon credits on the continent and to benefit small-scale projects.
Reuters reports that carbon markets are intended to cut the cost of fighting climate change by giving companies the flexibility either to reduce their own greenhouse gases or to buy emissions permits. The Africa Carbon Exchange in east Africa’s biggest economy will provide holders of carbon credits with easier access to global markets and information, which in turn is expected to increase foreign investor interest in the region.
“The exchange will pull a lot of foreign direct investments through development of more carbon projects. We will start with a futures market in May and progress to ‘spot’ once more projects are registered,” said Africa Carbon Exchange (ACX) CEO Tsuma Charo.
Kenya has 17 projects awaiting registration by the executive board of the CDM, while three have already received approval, Charo said.
“In the next five years, Kenya will have attracted about US$1 billion in foreign direct investments in the energy sector alone,” he told Reuters.
Schemes, like those under the U.N. Kyoto Protocol’s Clean Development Mechanism (CDM), promote investments in emission-reducing projects in the developing world by companies and governments in rich nations.
In return for building wind farms or other projects, such investments can earn valuable carbon offsets called certified emission reductions (CERs) that can be sold for profit or used to meet mandatory targets to cut emissions.
The ACX said it had received several enquiries from other African countries interested in trading their credits. “We have received very strong interest from Uganda, Zambia and Rwanda, and after the launch we expect more African interest,” ACX chairman John Kihumba told a news conference during the exchange’s launch.