allAfrica.com: Africa: Climate Change - Green Investors Bypass Continent (Page 1 of 2)

In 1997 the negotiators of the Kyoto Protocol, which regulates emissions of the industrial gases that contribute to climate change; adopted an interesting way to pay for clean development projects. It is called the Clean Development Mechanism (CDM).

The CDM is intended to reduce the cost of cutting emissions in the North while helping developing countries finance their own clean development projects.

It allows businesses in developed countries to meet part of their domestic emissions reduction targets by financing emissions-cutting projects in developing countries, where costs are often lower.

Projects are awarded one Carbon Emissions Reduction credit for each tonne of greenhouse gas they prevent from being released. These credits can be bought and sold like corporate stocks and used to lower the cost of green development projects.

After the first CDM project was approved in 2005, the world trade in emissions credits has grown rapidly, topping $64 billion in 2007. Industry analysts predict that the trade will exceed $100 billion by the time the Kyoto Protocol expires in 2012.

Great potential, few projects

For Africa and other poor regions struggling to adapt to climate change, access to carbon trade financing could be vital.

Scientists argue that global warming is damaging Earth's climate faster than expected, and a severe shortfall in funds is hampering African efforts to cope. Although Africa generates only a tiny percentage of global greenhouse gases, it is expected to be among the regions hit hardest.

"The accelerating growth of carbon markets resulting from the UN-brokered (Kyoto) climate change agreement," the head of the UN Environment Programme, Achim Steiner, told a meeting of African bankers in May 2007, "represents a significant economic and development opportunity for Africa."

However, according to the UN Framework Convention on Climate Change Secretariat, the UN agency that oversees the CDM, Africa accounts for only about 3 per cent of the more than 1,000 CDM-approved projects globally - and half those are in South Africa, whose sophisticated industrial and financial infrastructure lends itself to the complex CDM approval process.

Africa's difficulties in attracting CDM projects are similar to those that have hampered the continent's efforts to land purely commercial investments.

Those include a lack of infrastructure, higher poverty rates, limited financial resources, a shortage of the management and technical skills, weak government institutions, corruption and political instability.

African governments and environmentalists also note that the CDM's rules favour pollution-reducing projects rather than those that could help Africa cope with climate change, such as irrigation schemes and flood-control programmes.

Such projects are instead to be financed by the Kyoto Protocol's Adaptation Fund, financed in part by a 2 percent levy on CDM credits.

Marshall Plan needed

In view of some of Africa's leading climate scientists and environmental officials, far more is needed to match the continent's needs with resources.

Richard Muyungi, deputy director for the environment in the office of the Tanzanian vice-president, told Africa Renewal that the cost of climate change in that East African country, among the world's poorest, is already running into the billions of dollars and slowing economic growth.

"Our energy sector has been most affected," Mr. Muyungi said, noting that drought has sharply reduced reservoir levels for hydroelectric power.

"Many of our islands are threatened by rising sea levels" because of melting polar icecaps, he continued, while higher temperatures are making costly new demands on health systems.

"We now have malaria around Mt. Kilimanjaro. We never had that before."

The severity of the drought, and mounting concerns about the impact of climate change on food production, Mr. Muyungi said; have already forced the government to shift spending from long-term sustainable development programmes to emergency relief.

It has also downgraded its earlier target of 6-7 per cent economic growth for 2008. "We cannot estimate the total cost, as we don't know how severe the impact will be. It is already not possible to grow cotton and maize in some areas. How much the losses will be is harder to say."

web allafrica.com	Enter your search terms	Submit search form
OR subscribers use AllAfrica's premium search engine

Relevant Links

Relevant Links

Africa

at a Glance

Today's Most Active Stories