Why CDM is a dead-end for Africa : Payal Parekh


Africa and the CDM: a dead-end

Given the dismal state of carbon markets currently, it is baffling that there is a push to expand them to the African continent; yesterday the Africa Carbon Forum opened in Addis Ababa and next week there is a two day capacity building workshop in Lilongwe (Malawi) entitled Making carbon markets work for the poor.

Furthermore, as the case studies show in the newly released report, The CDM in Africa Cannot Deliver the Money, Africa’s experience with the CDM has been anything but positive. Rather than supporting innovative projects that provide clean energy to those with limited or no access to energy, poor communities are often displaced, exposed to harmful conditions and lose their livelihoods in the name of climate action and sustainable development. Project types highlighted in the report include a landfill, gas capture projects and large hydroelectric dams. Hardly the image that the UNFCCC likes to have the CDM associated with.

China and India are expected to account for 70% of carbon credits generated through the CDM by 2012, while Africa is only expected to account for 4% of credits ( UNEP Risoe CDM/JI Pipeline Analysis and Database, April 2012). Since the CDM is driven by the private sector, investors are inclined to support support projects that are low-risk, have a high-likelihood of returns, and result in a large number of credits to lower transaction costs and bureaucratic hurdles. Larger economies that have an established and fairly robust market and industrial sector are best suited to fulfil such conditions. Thus it is no surprise that Africa’s share is small and is likely to remain so.

There is also no need for carbon markets given that there are no targets in the second commitment period of the Kyoto Protocol; in fact CDM carbon credits (CERs) are currently trading at under Euro 4/tonne. It seems that despite no need for carbon markets due to lack of demand and lack of success, institutional lock-in is resulting in the continual pushing of a solution that just hasn’t worked. Carbon traders, auditors (DOEs in CDM parlance) and environmental ministries, among others, have invested quite a bit of energy in building up this industry.

They can’t admit that it hasn’t worked, even though the CDM hasn’t resulted in real emission reductions and has often harmed local communities that have contributed the least to global warming.

That’s why it is up to the rest of us to expose the problems of the CDM and advocate for solutions to the climate crisis that truly work for the poor.

Ms. Payal Parekh, Ph.D.
Climate & Energy Expert

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