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Nairobi opens exchange for carbon credits

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A tree nursery. Forestation projects are among the ventures that willing investors could engage in to earn carbon credits which will earn dividends at the new exchange. Photo/IRENE KIMANI

A tree nursery. Forestation projects are among the ventures that willing investors could engage in to earn carbon credits which will earn dividends at the new exchange. Photo/IRENE KIMANI 

By STEVE MBOGO

Posted  Monday, March 28  2011 at  00:00
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It is now easier to trade carbon credits resulting from green energy projects and afforestation following the launch a carbon trading facility in Nairobi, the Africa Carbon Exchange.

The exchange is the stock market for environment assets, where buyers bid for and buy carbon credit certificates on offer.

“The exchange offers an opportunity for people to earn dividends for using cleaner energy and growing more trees,” said Mr Job Kihumba, the chairman of the exchange and a veteran of the Nairobi Stock Exchange.

The launch came as the Ministry of Finance gears up to open the Nairobi Climate Exchange to facilitate trading in carbon credits and open up financing for generation of renewable energy and afforestation.

“Kenya is better placed to emerge as a regional carbon emission trading hub,” said Treasury PS Joseph Kinyua.

Treasury officials said the formation of the exchange was being fast-tracked because of the high number of inquiries the country has received from foreign banks wanting to partner in trading in carbon credits.

“We have been flooded with inquiries from financial institutions like HSBC Bank and JPMorgan, but we cannot engage them now until we have set rules and regulations,” said Geoffrey Mwau, the Economic Secretary.

He said they had received inquiries in relation to Mau forest reforestation and generation of geothermal power. “There are many other proposed projects,” said Mr Mwau.

One carbon credit, also known as a Certified Emission Reduction (CER) is equivalent to one tonne of the carbon dioxide gas whose emission is prevented through use of clean energy like biogas or through planting of trees that use carbon dioxide to manufacture food.

Carbon dioxide is the principal cause of global warming, one of the greatest threats to humanity today.

The exchange has put Kenya on the global map of advance in the trading of carbon credits and will trigger more investments in development of clean, efficient energy and afforestation projects.

Kenya’s position as a carbon exchange hub of Africa is complemented by the favourable renewable energy policy that assures private investors of a ready market for wind or geothermal power that is added to the national grid.

Kenya’s feed-in-tariffs are being replicated in other African countries.

Kenya has already attracted several global carbon credits projects and trading consultants including the JPMorgan Climatecare and Bea International that will provide the required skills and knowledge to drive the exchange.

The exchange is modelled after the Chicago and Australia carbon exchanges but several aspects of the two have been domesticated, said Mr Kihumba.

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