U.N. panel smoothes path for African CO2 reduction schemes

by Marton Kruppa | Reuters
Monday, 3 June 2013 19:15 GMT

An artwork entitled "Between Earth and Clouds" by Nigerian artist Bright Ugochukwu Eke is displayed at the Durban Art Gallery, Nov. 24, 2011. The work is made up of hundreds of small packets of water, some filled with carbon. REUTERS/Rogan Ward

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LONDON, June 3 (Reuters Point Carbon) – Developers of emission reduction projects in ten African nations face less red tape to earn carbon credits after a U.N. panel last week agreed rule changes it hopes will re-invigorate its ailing carbon market.

The Executive Board of the Clean Development Mechanism (CDM) on Friday agreed the first two areas for which developers could share greenhouse gas data, simplifying rules that previously forced them to estimate emission figures for every project.
“This is an important event in the evolution of the CDM, vital in preparing the mechanism for increased use in the future,” said Board Chair Peer Stiansen said in a statement, referring to the so-called standardised baselines.
Since 2005, the CDM has leveraged more than $200 billion in carbon finance for the developing world but has seen investment dry up due to collapsing carbon prices and complaints of cumbersome rules.
The U.N. has been considering ways to breathe new life into the scheme and standardised baselines agreed in principle in 2010 are one of several reform options on the table.
One of the two standardised baselines the U.N. panel approved applies to projects that aim to cut emissions in Uganda through replacing burning fossil fuels with charcoal.
The other baseline can be used for renewable projects in the power sector across coal-reliant Botswana, Democratic Republic of the Congo, Lesotho, Mozambique, Namibia, South Africa, Swaziland, Zambia and Zimbabwe.
South Africa and Zambia are the only two of the countries to have generated any CDM credits to date, with 7.1 million and 41,000 units issued respectively, according to Thomson Reuters Point Carbon data.
Point Carbon analyst Maria Kolos was sceptical about whether the new rules will have a significant impact on project development in the countries. 

“It now remains to be seen whether the benefits of the new baselines can actually be harnessed by project developers in the current market crisis,” she said. 

Flat demand for the ballooning supply of 1.3 billion CDM credits issued to date pushed prices for CDM credits below 50 euro cents, well below their 20-euro value in 2008, slashing profit-making potential for developers. 

Kolos said any impact was likely to be limited to countries classified as least developed (Democratic Republic of Congo, Lesotho, Mozambique and Zambia), because new schemes in other nations are barred from the EU market from this year. 

By Marton Kruppa

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