In October 2009, UNEP launched an innovative public-private partnership to catalyze a robust carbon market in Africa. Through the Africa Carbon Asset Development (ACAD) Facility, UNEP will partner with African financial institutions and local entrepreneur project developers to enhance their awareness and expertise to identify and develop carbon finance opportunities.
While Africa is home to a wealth of untapped project opportunities with the potential to generate both significant commercial and social dividends, Africa has barely tapped its potential through Climate change instruments and the booming carbon trade.
Major factors that have stood in the way of narrowing the African carbon gap include high transactions costs, unfamiliarity with carbon projects, and lack of expertise. Together, these have stalled a number of otherwise technically viable projects, or left them in a position where they are developing too slowly to attract mainstream investors, so there have consequently been few project success stories that can be used as role models.
ACAD addresses a long-standing need to place the financial sector front and center in stimulating the Sub-Saharan African carbon market. The ACAD strategy draws upon three complementary Support Lines:
- risk and transaction cost sharing to ensure that projects not immediately commercially viable can complete critical steps like environmental impact assessments and project validation,
- project clinics and technical assistance for project developers, and
- targeted training and outreach for financial institutions to mainstream carbon finance into their day-to-day operations.
The ACAD Facility is generously supported by funding from Germany's International Climate Initiative (ICI) based on a decision of the German Federal Parliament.