UNFCCC Partners With Yet Another African Bank

By Jaya Ramachandran | IDN-InDepth NewsReport

BONN (IDN) – The United Nations Framework Convention on Climate Change (UNFCCC) secretariat is joining hands with the East African Development Bank (EADB) to establish a regional collaboration centre in Ugandan capital Kampala, to increase African countries’ participation in clean development mechanism (CDM) projects.

An agreement for the purpose was signed by UNFCCC Executive Secretary, Christiana Figueres, and the EADB Director General, Vivienne Yeda, on February 12.

CDM allows emission-reduction projects in developing countries to earn certified emission reductions (CERs), each equivalent to one tonne of CO2. CERs can be traded and sold, and used by industrialized countries to meet a part of their emission reduction targets under the 1997 Kyoto Protocol. More than 6,000 such projects are registered in 83 developing countries. This, according to the UNFCCC secretariat, underlines that the CDM has proven to be a powerful mechanism to deliver finance for emission-reduction projects and contribute to sustainable development.

The office in Kampala will be the second regional collaboration centre established by the UNFCCC and a regional development bank in Africa with the aim to bring the benefits of the CDM to currently under-represented regions. The first centre, which was established in October 2012 in Lomé, Togo in collaboration with the Banque Ouest Africaine de Développement (BOAD), provides assistance in the development of CDM projects in Francophone Africa.

“The two regional collaboration centres in Lomé and Kampala are designed to help Africa increase its attractiveness and potential for CDM. Our goal is to build capacity, reduce the risk for investors in such projects and help make the continent an increasingly attractive destination for CDM projects,” said UNFCCC Executive Secretary, Christiana Figueres.

The office in Kampala will be operational as of May 1, 2013. Besides hosting the office, the EADB is also expected to provide personnel, as well as administrative and logistical support. Commenting on the collaboration, EADB Director General Vivienne Yeda lauded the partnership between the two organizations, saying it will help bring sustainable development in the region.

“This partnership with UNFCCC is key for us at EADB as we invest in sustainable development and seek to ensure sustainability in all our operations. We hope that the new office will help increase the regional distribution of CDM projects in East Africa where there is an acute need for sustainable development,” said Yeda.

The Kampala office is expected to enhance capacity-building and provide hands-on support to governments, non-governmental organizations and businesses interested in developing CDM projects in more than 20 countries in the region. Among the countries that can seek support from the new office are Kenya, Uganda, Tanzania, Rwanda, Burundi, Angola, Botswana, Comoros, Egypt, Equatorial Guinea, Eritrea, Ethiopia, Lesotho, Libya, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Sudan, Swaziland, Zambia and Zimbabwe.

“There is a great deal of untapped potential for CDM in Africa. The regional collaboration centres aim to tap the potential of carbon offset projects on the continent,” said Peer Stiansen, Chair of the CDM Executive Board.

Uganda, where the new office will be established, is one of the Least Developed Countries that is leading by example as it has already reaped sustainable development and other benefits from the CDM. There are currently 12 projects and four programmes of activities (PoAs) registered under the CDM in the country.

The regional collaboration centres are intended to support the identification of CDM projects, provide assistance for the design of such projects, address issues identified by validators, and offer opportunities to reduce transaction costs.

CDM in Africa

The importance of a balanced regional distribution of CDM projects was recognized by Parties to the Kyoto Protocol, who welcomed the establishment of the Nairobi Framework, which brings together UN and regional organizations to support equitable access to the mechanism. In light of the benefits that the CDM can bring to lesser developed regions, the Nairobi Framework partners and others began funding technical support and capacity-building programmes for the CDM, particularly in Africa.

Launched in 2009 to kick-start the African carbon market, Africa Carbon Asset Development Initiative (ACAD) supports potential CDM projects with: targeted grants for early stage costs; technical assistance for local project developers; and carbon finance training for local financial institutions.

ACAD – an initiative of the United Nations Environment Programme (UNEP) and Standard Bank, funded by the German government – aims to support highly replicable demonstration projects by reducing the early-stage investment risks associated with African carbon projects. Afforestation and reforestation projects are excluded.

While the mechanism has been criticised for helping the industrialized countries that produce the lion’s share of perilous emissions to undertake reductions at home, the UNFCCC avers that the CDM stimulates sustainable development and emission reductions, while giving industrialized countries some flexibility in how they meet their emission reduction limitation targets.

The central feature of the Kyoto Protocol is its requirement that countries limit or reduce their greenhouse gas emissions. By setting such targets, emission reductions took on economic value. To help countries meet their emission targets, and to encourage the private sector and developing countries to contribute to emission reduction efforts, negotiators of the Protocol included three market-based mechanisms: Emissions Trading, the Clean Development Mechanism and Joint Implementation.

Adaptation Fund

The CDM is the main source of income for the UNFCCC Adaptation Fund, which was established to finance adaptation projects and programmes in developing country Parties to the Kyoto Protocol that are particularly vulnerable to the adverse effects of climate change. The Adaptation Fund is financed by a 2% levy on CERs issued by the CDM.

The Adaptation Fund is supervised and managed by the Adaptation Fund Board (AFB). The AFB is composed of 16 members and 16 alternates and meets at least twice a year. Upon invitation from Parties, the Global Environment Facility (GEF) provides secretariat services to the AFB and the World Bank serves as trustee of the Adaptation Fund, both on an interim basis. Much to the chagrin of civil society organisations, a review of these interim institutional arrangements has been pending since 2011.

The GEF, according to its website, unites 182 countries in partnership with international institutions, civil society organizations (CSOs), and the private sector to address global environmental issues while supporting national sustainable development initiatives.

The GEF claims to be the largest public funder of projects to improve the global environment. It provides grants for projects related to biodiversity, climate change, international waters, land degradation, the ozone layer, and persistent organic pollutants.

Since 1991, the GEF has on its own account achieved a strong track record with developing countries and countries with economies in transition, providing $10.5 billion in grants and leveraging $51 billion in co-financing for over 2,700 projects in over 165 countries. Through its Small Grants Programme (SGP), the GEF has also made more than 14,000 small grants directly to civil society and community based organizations, totalling $634 million. [IDN-InDepthNews – February 13, 2013]

2013 IDN-InDepthNews | Analysis That Matters

Image credit: cdm.unfccc.int

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