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ENVIRONMENT: ‘‘Climate Change Does Not Wait For Recessions’’

Wambi Michael

KAMPALA, Mar 3 2009 (IPS) - Lack of money and technical know-how makes it difficult for poor farmers to participate in the Kyoto Protocol’s carbon trading mechanism aimed at reversing global warming. Meanwhile, the global economic crisis may further undermine investment in carbon trade in African countries.

Protesters at the United Nations' climate change conference in Poznan, Poland, in December 2008. Credit:  Wambi Michael/IPS

Protesters at the United Nations' climate change conference in Poznan, Poland, in December 2008. Credit: Wambi Michael/IPS

The Kyoto Protocol, signed in 1997, allows for carbon trade which involves industrialised countries lowering their greenhouse gas emissions by financing emission reduction projects in developing countries where investment is cheaper. This is called the clean development mechanism (CDM).

The protocol requires that industrialised countries reduce their greenhouse gas emissions between the years 2008 and 2012 to levels that are 5.2 percent lower than those of 1990.

The global carbon market was worth around 116 billion dollars at the end 2008, rising 84 percent from the previous year due to higher trading volumes and prices.

Research by New Carbon Finance predicted that the market's value could rise to 150 billion dollars in 2009, in spite of the gloomy backdrop of a global recession, and to 550 billion dollars by 2012. New Carbon Finance is a company providing services for investors in the renewable energy and low-carbon sectors.

Carbon markets are regarded as a cheap and possibly profitable measure to fight climate change while helping poor communities with tools to solve poverty without destroying forests.

The Ugandan Forestry Authority’s forest management specialist, Xavier Mugumya, told IPS in an interview that the CDM is hampered by lack of capital and farmers’ technical limitations.

There are 850 clean development mechanism projects in 49 developing countries but only 23 of those projects are in Africa. In Africa, farmers do not have the technical support and knowledge of how the carbon trade market works and how it can be accessed.

‘‘It is a challenge to get the investment required to build a project into one that sells. It is also a challenge to obtain a good price for the credits that you have obtained. And the other challenge is the rules of the game,’’ Mugumya explained.

‘‘Carbon projects take several steps. Step one is to prove that the project would not have taken place if you did not have carbon money. But in Africa it is common that many people are poor and cannot afford environmental projects,’’ Mugumya told IPS.

‘‘The other challenge is associated with the amount of carbon you are able to sell into the European markets. For example, in one of the European markets forestry projects are not accepted and yet 90 percent of the market is in Europe. So you are eliminated before you actually enter the game. A small percentage of our carbon enters the market.’’

Mugumya emphasised that ‘‘the rules of the game that we are talking about were prepared almost 10 years ago. Because we did not know how to prepare the rules, they now favour those who wrote them. So we now need to overhaul those rules if a country like Uganda is to compete in the carbon market.’’

Uganda’s environment minister, Jessica Eriyo, told IPS that the tree planting projects in Uganda are not attracting buyers under the voluntary mechanism in the carbon markets. ‘‘For tree planting the rules of the game leave out most farmers because of the magnitude of the projects.

‘‘The memorandum of understanding should show how much carbon the trees are to absorb. This must be verifiable, yet we lack capacity to measure and verify the amount of carbon stored.’’ Eriyo said scientific verification methods are difficult to apply for an average tree farmer.

Other projects have also suffered from the dearth of knowledge. ‘‘Some projects, like the Nyagak hydro-power dam, have been paid less because we lacked technical capacity to quantify and negotiate a better deal,’’ she complained. The construction of Nyagak was done for 3.5 million dollars.

Uganda, like other developing countries, calls for fairness in the carbon markets negotiation.

Eriyo wants ‘‘transparent, collaborative, balanced and inclusive international arrangements in the carbon credit market. These will require substantive financial flows for supporting capacity building if people are to understand how the market works.’’

Uganda National Forestry Authority board chairperson Baguma Isoke regards the forest projects are disadvantaged as the financial sector does not lend money for tree planting.

At the United Nations’ (UN) climate change conference in Poznan, Poland, in December 2008, delegates from poorer countries expressed fear that industrialised countries could use the current global financial crisis to withhold investments in carbon markets in developing countries, particularly in Africa.

Oxfam’s country director in Uganda, Savio Carvalho, cautioned that developed countries were shifting goal posts on emission targets and the extension of funding to developing countries under the CDM. He said the global crisis should not be used as an excuse to withhold funding for climate change.

‘‘If certain developed countries could put down billion of dollars in 15 days to rescue banks and financial institutions, then I think they should put money into climate change. Climate change is not waiting for recessions. Floods will come and people will die,’’ he warned.

At that meeting, chief executive of the Food, Agriculture and Natural Resources Policy Analysis Network (FANRPAN), Dr. Lindiwe Majele Sibanda, believes that regardless of the current global financial crisis, sub-Saharan Africa has had a smaller share of global carbon trading schemes. FANRPAN is a southern African policy research organisation.

Carbon credit projects also tend to go to large developing countries with strong industrial base. There is little demand for forest projects such as Uganda’s. The situation will be worse now that developed countries focus on resolving the financial crisis, she indicated.

She told IPS that, ‘‘carbon finance has not reached most of Africa because of incompatibility between traditional carbon finance modalities, aimed at maximising returns for carbon buyers, and the needs of rural communities.’’

But the UN Framework Convention on Climate Change’s executive secretary Yvo de Boer was optimistic that the financial rescue packages in developed countries would include funding for carbon markets in Africa.

‘‘What I find encouraging is that at the heart of the rescue packages of Europe, the U.S. and China there are significant financial resources for the energy sector. And significant parts of the Chinese recovery package are investments to move towards more sustainable economies.’’

De Boer however agreed that the financial crisis puts constraints on the amount of money available to fund adaptation and mitigation measures in developing countries. ‘‘It makes more it difficult to go to finance minister at this time and say, ‘could you please give me some money for climate’.

‘‘The challenge we face is to try and generate resources without going to the finance minister. If you can auction emission rights and use part of the proceeds for international cooperation, if you can build on the experience that we have with the clean development mechanism to generate resources, then you move to a regime that is generating its own resources for international cooperation.’’

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