The Clean Development Mechanism of the Kyoto Protocol is set to channel $100 billion of funds to developing countries for clean and renewable energy projects as well as certain kinds of forestry. A conference in South Africa taking place 28-30 May and involving UNEP is aimed at boosting Africa's access to such funds.
Climate change can also be an opportunity for Africa as a new conference seeks to make clear. The African Bankers' Carbon Finance Investment Forum will build capacity and strengthen the engagement of the African financial community in the booming carbon market.
It is a little known fact that international carbon trading could bring millions of extra dollars of foreign investment to Africa. Last year alone, the world carbon market was worth an estimated $22 billion. However, Africa has yet to fully benefit from carbon trading.
How exactly can carbon trading help Africa? Under the Clean Development Mechanism (CDM) of the Kyoto Protocol, individuals or organisations in Africa can develop projects to reduce carbon emissions. Emissions reductions from such projects can then be sold to governments or companies in industrialised countries that are committed to reducing their carbon emissions.
In a double dividend for Africa, projects provide a valuable new income stream and they must also demonstrate how they contribute to sustainable development in local communities. For industrialised countries, they are able to reduce their emissions at a very low cost because emissions reductions from Africa are competitively priced.
Carbon trading in Africa has largely been stalled due to a lack of finance. The right institutions are in place in many African countries, as well as a wealth of real project opportunities. All that remains is for financing to become available so that these projects can get off the ground.
Achim Steiner, UN Under-Secretary General and United Nations Environment Programme Executive Director, said: 'The accelerating growth of carbon markets resulting from UN brokered climate change agreement represents a significant economic and development opportunity for Africa. UNEP's challenge, in partnership with the UNDP and other actors, is to ensure that these opportunities are accessible to all so that the big and small economies on the continent all benefit.'
Konrad von Ritter, the World Bank Institute's Manager for Sustainable Development, which implements Carbon Finance Assist, a global climate change capacity building program, and a co-sponsor of this Forum concurs. "Securing underlying finance is one of the most critical barriers in realising successful CDM projects and active capacity building for financial institutions is necessary to provide access to right information and create awareness regarding the benefits and enormous growth potential carbon finance can provide". African financial institutions can make significant returns by early entry into this market.
The African Bankers' Carbon Finance Investment Forum on May 28th-30th in Johannesburg, South Africa will make these issues crystal clear to financial institutions in Africa. Organised UNEP, the UNEP Risoe Centre, and the Development Bank of Southern Africa (DBSA), the conference will inform local banks and financial institutions about the potential of the carbon market in Africa and strengthen links between the financial community and local project developers.
Over the course of three days there will be: executive roundtables for CEOs to share insights on the carbon market; targeted training for financial stakeholders on the creation of carbon assets; a deal-making platform for local project developers to showcase their project plans to investors. Speakers from the World Bank and the UNFCCC Secretariat have been confirmed among many others.