UNEP’s carbon facility to support 20 more projects in Africa

In a bid to boost Africa’s carbon market, the African Carbon Asset Development (ACAD) Facility – an incubator for developing carbon projects steered by the United Nations Environment Programme (UNEP) – has announced expansion plans.

Specifically, the carbon market initiative intends to support at least twenty more projects in Africa by the end of 2013, and to augment local financial capacity to invest in green projects, a statement issued Monday by UNEP in Nairobi, Kenya said.

UNEP said to this end, ACAD has launched a fresh call for projects as well as for new financial partners in addition to Standard Bank, which has re-enlisted in the public-private partnership, reaffirming a commitment to the sector by helping to channel seed capital to highly replicable projects and business models.

Commenting on the expansion plans, Sylvie Lemmet, Director of UNEP’s Division of Technology, Industry and Economics said, “UNEP is pleased to announce the expansion of ACAD, and recognises that much work still needs to be done to help African green entrepreneurs access carbon finance”.

“We are thrilled to have helped not only bring good projects to fruition, but also to have supported the African financial sector evaluate the potential of innovative carbon projects. These latest developments suggest a strong vote of confidence in ACAD and signal Africa’s emergence as a fully-fledged carbon market player”, Ms. Lemmet added.

The expansion plans of ACAD have been informed by provision by the German Government’s International Climate Initiative of further funding to ACAD for phase two of the facility, based on the resounding success of its first phase, under which 14 projects in 9 countries were provided with seed funding.

Further, at the time of the statement, the French Government was also finalising negotiations for a large contribution toward the facility’s scale-up through the French Global Environment Facility administered by the Agence Française de Développement.

Meanwhile, examples of ACAD project successes include the first large-scale wind power project in Africa to be registered under the U.N. carbon credit scheme, a programme allowing multiple individual small-scale hydropower projects in East Africa to access carbon revenues, and a microfinance-backed business franchise distributing kerosene-replacing LED lights to Rwandan households.

According to UNEP, ACAD’s model has proved so effective that it was cited as one of the best-practice precursors for a new revolving loan facility for CDM projects, which was adopted at the UN Climate Change Conference (COP-17) in Durban last year.

Also, John Christensen, head of UNEP’s Risoe Center, announced last month that the new CDM Loan Scheme will be co-administered by UNEP Risoe in partnership with the United Nations Office for Project Services (UNOPS), building upon its pivotal experience with ACAD, while the seed funding offered by both facilities comes at an opportune time when Africa’s share of the market is on the ascendancy.

Touching on the importance of ACAD to Africa, Margaret Mukahanana, an environmental policymaker from Zimbabwe and CDM Policy Dialogue panel member, said “Africa has not played a significant role in the CDM up until now” and that “Facilities such as ACAD are imperative to help the continent reach its potential.”

She stated further that “Governments also have a role to play. For example, in an effort to channel more carbon finance to some of the world’s poorest countries, the EU has ruled that new CDM projects from 2013 onwards must be hosted in a least developed country (LDC) in order to ensure that their credits are eligible for use in the EU scheme.”

Ms. Margaret Mukahanana added that “Of the 48 countries that now make up LDCs, some 33 are in Africa,” saying, “While this initiative is of merit in principle, one must not forget that the need and the opportunity for Africa’s green economy spans the entire continent,” and that “Projects like ACAD which recognise and support this, are the ideal.”

Given its focus on trade and infrastructure development, regional integration, and the sustainability of its natural resources, Africa is poised to be a highly attractive market for the global carbon sector and to play vital role in the burgeoning green economy, according to ACAD.

For his part, Guido Schmidt-Traub from CDC Climate Asset Management said, “ACAD is a tried and tested model for helping more projects in Africa get off the ground. Since these projects can then attract commercial funding, ACAD is poised to have a substantial multiplier effect for clean energy projects across the continent. As an investor focusing on Africa, we are therefore pleased to see ACAD expand.”

ACAD is Africa’s first project development support facility dedicated to increasing carbon project deal-flow, while the UNEP Risoe Centre on Energy, Climate and Sustainable Development is leading UNEP activities related to carbon finance and the Clean Development Mechanism (CDM).

By Edmund Smith-Asante

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