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Africa partnership uses carbon credits to fund 14 development projects
14 November 2011

Standard Bank Group is facilitating grants to numerous projects across Africa. Projects range from providing poor women in Burkina Faso with non-fossil fuelled cooking stoves, setting up urban composting in Mozambique, rolling out solar heaters in Mauritius to financing a small hydro-electric scheme and a wind energy facility in Kenya. 

Standard Bank Group and the German government are funding the African Carbon Asset Development (ACAD) facility. This public private partnership led by the United Nations Environment Programme (UNEP), has completed the first phase of grants to 14 low carbon projects in several African countries. 

Standard Bank Group's head of carbon trading, Geoff Sinclair, believes the ACAD facility is beginning to prove its potential to accelerate the use of carbon credits in African countries in a manner that spurs overall development and creates opportunities for disadvantaged people. 

"In addition to contributing to building green economies by providing people with access to energy, the 14 projects will create jobs, transfer skills and technologies, and drive new revenue streams for existing businesses," says Mr Sinclair. 

The ACAD facility is supported by the German government's International Climate Initiative, with grants in the first round set to come to about US$1million. 

"Africa lags other emerging markets in registering projects under the Clean Development Mechanism (CDM) of the United Nations Framework Convention on Climate Change (UNFCCC), under the Kyoto Protocol," says Mr Sinclair. 

The reason is that the use of carbon credits to fund sustainable projects is not fully understood in Africa. Also, the cost of registering a CDM project is high. So, Africa accounts for only about 3% of registered CDM projects. 

"However, the success of CDM projects that have undertaken in Africa is spurring interest in green energy within the continent. We believe that this could result in Africa being an important future source of carbon credits. This potential has further encouraged us to focus on helping to develop African carbon markets by collaborating with local companies and investors as well as through our involvement in the ACAD facility," adds Mr Sinclair. 

Launched in 2009 and administered jointly by Standard Bank Group and the United Nations Environment Programme, ACAD is designed to be a catalytic platform that helps carbon projects reach financial close and generate credits. It makes available grant funding to assist project developers with CDM costs such as validation or registration. It builds carbon trading capacity in local financial institutions. It also funds technical studies or papers to identify and make recommendations regarding apparently intractable issues in the African market. 

Some 72 projects are to be considered in ACAD's next round of grants. 

"A facility with as broad a scope as ACAD must inevitably deal with regional, language, and cultural challenges," Mr Sinclair says. "And, of course, climate finance in general is highly technical and burdened with an immense amount of complex documentation and information requirements. 

"People wanting to benefit from activities focused around the mitigation of climate change do need a guide through the maze. So, ACAD's role as such a guide is essential. 

"Over and above that, ACAD incorporates the skill, insight and experience of people who have successfully negotiated the maze many times. ACAD is therefore in an ideal position to provide realistic input into the standardising of the processes and mechanisms of climate finance to make them affordable and accessible for those who need it most. ACAD's role in process management is key to Africa's ability to exploit climate finance as a development tool." 

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