africapractice comments on CDM in Copenhagen on Point Carbon

Africa needs further CDM reform: analysts
UN guidance to reforming the CDM may boost development in Africa, but more is needed.

Published: 06 Jan 2010 16:17 CET
(c) Point Carbon, http://www.pointcarbon.com/news/1.1364360 (subscription only)

At last month’s UN-led climate summit in Copenhagen, countries agreed to further guidance to the clean development mechanism (CDM), including measures to increase investment in countries that currently host fewer than 10 schemes.

While the CDM has raised billions of dollars for carbon-cutting projects in developing countries, 68 per cent of projects is dominated by China, India and Brazil.

To help foster development in poorer countries most vulnerable to climate change, the guidance suggests to defer payments and to provide loans to support in countries that lack projects.

“It certainly won’t hurt but it won’t turn things around overnight,” said Miles Austin with Ecosecurities, a developer of projects aimed at cutting greenhouse gas emissions.

“More reforms will be needed,” Austin said, pointing out that CDM development in Africa still suffers from a lack of demand for projects and a shortage of specialists, such as project auditors and consultants.

For instance, the CDM executive board could help improve demand by standardising a tool to calculate the emission factors for African electricity systems, he said.

The African continent accounts for less than 2 per cent of all registered CDM projects, with the bulk of the projects located in South Africa.

Eligibility criteria

Gregor Pfeifer, senior consultant at Africapractice, said that many African countries could benefit from the measures, particularly since they get around the more difficult criteria of regarding the general development status of host countries.

“While Africa is the continent with the highest number of least developed countries, the definition based on the number of registered projects (less than 10) includes countries such as Ghana and Nigeria, which are not LDCs,” he said.

Another measure calls for the CDM executive board to develop top-down methodologies for countries that lack investment, while requiring more transparency from auditors or so-called designated operational entities (DOEs).

The top-down development of methodologies should benefit the African continent given the relatively high costs and risks in developing a CDM methodology, according to Pfeifer.

However, it remains to be seen how suitable the methodologies will actually be for CDM developers in Africa.

Meanwhile, the requirement of reporting the amount of work done by DOEs may not be enough to remove the bottleneck in Africa, Pfeifer said, noting that some calls for the promotion of African auditors appears to have been excluded from the measures.

He welcomed the move for loans to cover the costs of the development of project design documents, validation and the first verification of projects which only need to be repaid starting from the first issuance of carbon credits.

“(But) if there was a genuine interest in promoting CDM in Africa in particular, grants and not only loans should also be provided,” he added.

By Jeff Coelho – jc@pointcarbon.com, London