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Africa Seen Missing out on Clean Energy Investment

Date: 31-Jan-07
Country: SOUTH AFRICA

The Kyoto Protocol obliges 35 rich nations to cut greenhouse gases by 5 percent below 1990 levels by 2008-12, mostly through curbing the release of heat-trapping carbon dioxide.

An element of the treaty is the Clean Development Mechanism (CDM) which helps nations meet their reduction targets by funding green energy development in poor countries in exchange for carbon credits.

But of the more than 1,510 projects recorded by the United Nations since Kyoto came into force two years ago, Africa has only a small share -- 1.6 percent -- and most of them are in either Egypt or South Africa, according to UN figures.

Meanwhile, the fast-growing economies of India, Brazil and China combined represent 80 percent of the total number.

"Africa is more or less being bypassed (in the CDM). The key trigger is the overall investment climate," said Sami Kamel, a senior economist with the United Nations Environment Program.

He made the comments at The Clean Development Mechanism Africa 2007 conference in Johannesburg, which brings together government, business and environment experts to discuss novel ways to boost CDM's profile in Africa.

Climate experts predict rising world temperatures will increasingly spell catastrophe for millions of poor and vulnerable people in Africa, causing extreme weather patterns, disease, famine and other environment-related disasters.

While the impoverished continent contributes the tiniest portion of harmful global emissions it may be the hardest hit by the effects of climate change, scientists say.

Analysts say a deterrent for investors is that many African countries have undeveloped industrial sectors so they have comparatively limited opportunities to reduce emissions.

But South African paper producer Sappi is optimistic about a plan to fire up a boiler in the next few weeks that was recently converted to biomass energy from coal under the CDM initiative.

It expects to recover its 27 million rand (US$3.7 million) start-up cost and sees revenue potential in trading pollution permits.

"This is a small scale project but we have more in the pipeline," said Grant Little, Sappi's corporate CDM leader.

"For us it was a business decision that made sense."

The booming CDM trade could reach US$100 billion annually by 2050, according to the United Nations Framework Convention on Climate Change. But much depends on whether governments can agree on a new emissions ceiling when Kyoto expires by 2012.

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