Carbon Markets Africa, November 2009, Cape Town User:HolleLinneaWlokas
Around 200 buyer, seller, project developer, government representatives and other people working on carbon and energy met in Cape Towns Waterfront networking and listening to talks on the current situation around CDM in Africa.
The event started off with an “in-depth one day seminar will provide project developers with the expertise and knowledge to successfully enter the carbon market”. Throughout the workshop different people presented case studies and stressed certain issues. Laura Lahti from South Africa’s youngest carbon company called Carbon Stream Africa gave an introduction to the CDM. Her talk was followed by a very informative presentation on financial aspects of such projects by Muyi Kazim from Standard Bank. He particularly stressed the point that project developers have to have equity, but that banks like his are offering CDM specific financial advice. Standard Bank is currently developing a capacity building initiative together with UNEP RISOE Centre. The case study of the George Biomass to Electricity Project challenges a project developer might have to address were discussed. Andrew Gilder from the IMBEWU organization which consists of lowers specialist on environmental and sustainable matters spoke on legal issues impacting the CDM.
The actual conference started on the next day and had speakers presenting projects and related matters and panels debating issues like CDM activities in Africa, trading and pricing, business models for CDM projects, common challenges experienced by project developers. Towards the end of the second day, social and economical benefits were discussed as well.
Day one looked at the current developments on the CDM market in Africa, regional specific challenges and financial aspects. Similar to the constrains identified in last years conference, were policy and regulatory reasons along with financial shortcoming and lack of local expertise identified as the main hindering factors for project developer. A lot of emphasis was put on the point that credits from Africa are wanted very badly and are not enough available.
Day two started with case study examples from Botswana and South Africa and continued with talk about the voluntary market and social aspects of carbon projects. The voluntary marked was pushed forward as an opportunity especially for small African projects which have a strong focus on social benefits.
Some of the for me interesting point discusses during the two days shall be mentioned here only in brief.
• Andrew Gilder for example mentioned an online available template written from the seller perspective which can be used as an example or even start for negotiations with buyers (www.cerspa.org). • The carbon asset management company Tricorona introduced the Solvatten container which can purify contaminated water through a combination of built-in filters and directed UV-radiation from sunlight. • Having a clausal talking about carbon in TOR for project right from the beginning makes proof of additionalilty easier if decided to go CDM route at later stage. A clausal about the use of the carbon revenue for fostering sustainable development might also fast track future discussions around the CER’s or VER’s. • According to the Executive Board is the legal ownership of the credits a matter of decision by the project owner. • The Chairman of the EB identified badly written, low quality PDD’s, not ideal performance of DOE’s, understaffed Executive Board and Secretariat and people who are trying to play the rules as pressing issues for the success of the CDM in general. • The EB is taking a suggestion on the support of equal regional distribution of CDM projects to the COP 15. • The south african company carbon check has applied for accreditation to become a DOE, the answer is expected for the beginning of 2010. • The Gold Standard Foundation is reviewing their Micro Project Program and also looking into REDD in the coming year. • The ISO Standard 140001 has been discussed as possible alternative for projects in order walk around the high verification costs of voluntary projects through DOE’s. • The opinion of the buyers about prices for CER’s from african projects vary a lot. While GICA for example stated that a “ton is a ton” and it does not matters where its from, where the companies RWE and NEFCO more optimistic about financial premiums for such credits. • DNA’s are apparently allowed to publish standardized baselines; however none of the DNA’s has done that yet.
Conference Review: Carbon Markets Africa 2008 User:Wikus Kruger
20th November 2008
Cape Town, South Africa, played host to the second annual 'abbreviation-saturated' Carbon Markets Africa conference on the 18th and 19th of November 2008, which was attended by over 100 representatives from a wide range of sectors, industries and nationalities representing a wealth of knowledge, experience, funds and interest. Over the course of the conference, the state (and fate) of the African carbon market was investigated from the perspectives of project developers, traders, brokers, buyers, financiers and public institutions. A healthy exchange of pleasantries, business cards, ideas and project details took place, made easier by the fact that attendance had tripled since the 2007 conference, showing strong growth in interest around African carbon markets.
The conference was preceded on Monday the 17th by a project developer coaching seminar which focused primarily on developing successful CDM projects. The seminar addressed issues around market entry barriers, project finance, legal implications, trading, validation & verification as well as issues directly related to the South African Designated National Authority (DNA). An important theme to emerge from the seminar (and which was highlighted throughout the conference) is that more cooperation is needed in Africa around CDM to allow for mutual learning and lobbying, specifically when it comes to up-coming climate change negotiations.
Day 1 of the conference looked specifically at the current state of the African carbon market, new market developments on the continent as well as ways in which African CDM investment can be expanded. Bureaucratic, policy and regulatory reasons were most often cited as impeding CDM development in Africa, along with a serious lack of capacity, especially at DOE (Designated Operational Entity) level. A strong theme that emerged from both day 1 and 2 was however that the demand (and support) for African carbon projects/credits are very high. This not only translates into a premium for African carbon credits, but funding and support for these projects are also available from very early stages in the project cycle. From the discussion around programmatic CDM, which is seen as one of the main instruments that will increase the viability of small-scale projects (the dominant type in Africa), it became clear that this instrument has (as yet) been unable to deliver on this promise, leaving small-scale project developers with little choice but to enter the voluntary market.
This (voluntary) segment of the carbon market was also discussed in some detail on Day 2, with particular attention being paid to forestry projects. Forestry is seen as the sector with the highest potential for Africa in terms of carbon finance, yet it remains as yet largely untapped due to a number of uncertainties in market, coupled with negative buyer sentiment. Looking at the future of forestry in the CDM (especially post-2012), this is the sector that is most likely to have a significant impact on the rest of the carbon market.
The state of the carbon market post-2012 was discussed at length throughout the conference, with little clarity emerging on what market participants might expect from this period. However, it seems safe to assume that the Least Developed Countries (LDC’s) are likely to continue benefitting from a CDM-like mechanism, while developing countries such as South Africa, Brazil, India and China may quite possibly form a 3rd grouping of nations (in addition to the current Annex-I/Non-Annex-I categories), possibly with some compliance targets. What was also frequently emphasised is that Africa, as a negotiating bloc, needs to push for reforms (such as the scrapping of the Grid Emissions Factor as baseline for another, more equitable measure) that will enable to continent to realise its carbon market potential. It seems that Africa is only now waking up to the reality of the carbon market, with projects emerging from all parts of the continent; it however remains the continent with the highest potential and lowest market participation, clearly indicating the need for greater cooperation, capacity building and support.
User:Wikus Kruger
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