Africa seeks pathways into untapped carbon trade market

When African environmentalists, leading financiers, investors and company executives flew to Nairobi on Tuesday last week for a Continental carbon trading forum, they had only one mission.

To craft strategies to help them tap into the multi-billion dollar global carbon trade business which has for years now remained a preserve of only few African companies and a cash-cow for firms in developing nations.

And perhaps to show their dissatisfaction with the lag that has seen them miss out of billions of shillings in new revenues, local project developers, buyers, service providers, national Clean Development Mechanism (CDM) representatives and various other private and public sector players held a similar meeting a fortnight ago.

This is the reality facing most African nations and companies with an eye at benefiting from the trade created by the Kyoto protocol in 2005 meant to ensure the biggest polluters—mainly the most industrialised nations—shoulder the cost of implementing environment—friendly projects in developing nations.

This is in the form of carbon credits to offset their emissions.

Each carbon credit is equivalent to one tonne of carbon dioxide emitted.

The global carbon trading market, which rewards projects that help reduce emission of carbon dioxide into the atmosphere, is now estimated to be worth Sh12.5 trillion ($170 billion), according to industry data provider, Carbin Point, but only a very small fraction of this money, estimated at two per cent, is coming to Africa.

“Africa has benefited the least,” said Mr Lawrence Lenayapa, the permanent secretary in the Ministry of Environment.

“We must come up with fresh strategies to boost participation if Africa is to benefit.”

But despite the opportunity which has opened up a fresh income stream for many companies globally, a raft of challenges continue to dog African players from the benefits.

Experts say lack of expertise to develop projects that help reduce carbon dioxide emissions, poor project choice, political and currency risks and legal loopholes continue to frustrate African countries from the full benefits of the trade.

As such, UN agencies say Africa accounts for less than four per cent of about 2,000 green projects registered to date in 58 countries, with the lion’s share of the projects located in Asia Pacific, followed by Latin America and the Caribbean.

“As a continent, Africa bears the brunt of climate change in spite of accounting for a very small proportion of green house gas emissions, ” said President Kibaki during the opening of the conference.

“There is yet to be adequate political will to address the problem of climate change.”

According to President Kibaki, although forests reduce substantial carbon dioxide from the atmosphere, trading in forest carbon is only through voluntary markets.