CHALLENGES 2005-2006: Kyoto’s Timetables, UN Red Tape Count Against Africa

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Stephan Hofstatter

JOHANNESBURG, Dec 21 2005 (IPS) - Africa stands to access hundreds of millions of dollars for clean energy projects and for adapting to adverse effects of climate change after this month’s pivotal talks on global warming in Montreal, Canada. But commentators warned this window of opportunity was closing fast.

The major breakthrough in Montreal after two weeks of tense negotiations was a commitment to hold formal talks on setting targets for greenhouse gas emission reductions after 2012, when the current compliance round set by the Kyoto Protocol expires. Montreal was the first conference of signatories since it came into force after Russia came on board in Feb. 2005.

This is of particular importance to Africa because it secures the ‘cap and trade’ system launched in Europe early 2005 that encourages dirty companies in rich countries to invest in renewable energy in poorer countries through the Clean Development Mechanism (CDM).

”This is a significant victory in the context of these highly contested negotiations,” said Richard Worthington of the South African Climate Action Network (SACAN). ”While overall progress to limit global greenhouse gas emissions is still unacceptably slow, these outcomes offer the possibility of multilateral actions, within the shrinking window of opportunity, sufficient to avert a climate chaos that would give rise to hundreds of millions of environmental refugees.”

Kyoto compels over 30 developed countries that ratified it to cut emissions to five percent below 1990 levels by 2012. Companies or countries not meeting targets are allowed to buy tradable pollution credits, generated by companies meeting targets or by investing in CDM.

The 2012 agreement is crucial because credits, measured in units of one tonne of carbon dioxide or its greenhouse gas equivalent trading at market value, would become worthless without long-term certainty on mandatory emissions cuts.

The United States pulled out of Kyoto meeting in Japan in 2001, arguing the targets would harm its economy and were unfair because they did not apply to developing countries, including economic giants such as China, which is likely to exceed U.S. emission levels in two decades. At Montreal the United States endorsed a non-binding ‘dialogue’ on future plans to curb emissions only after a clause was inserted specifically excluding negotiations leading to new commitments.

Most commentators believe the United States will sign up once the Bush administration vacates the White House.

Developing countries, who account for 80 percent of the world’s population but consume only 20 percent of its energy, agreed to begin talks on future commitments. These may include intensity targets, which is emissions per unit of economic activity. The move is considered a major concession and increases U.S. international isolation.

Environmentalists at Montreal were disappointed no fixed timeframe for implementing the agreement or new targets were set. But binding decisions include ensuring there is no continuity break in compliance periods. A task force on future commitments was established and will start work in May 2006.

New targets are likely to be substantially higher than the current 5 percent reduction. There is broad scientific consensus cuts of 60-80 percent will be needed just to stabilise greenhouse gas levels, and hence global climate.

”Now that we’ve sent a major signal to the carbon markets that these will continue to grow after 2012 it should unlock a significant and increasing quantity of CDM projects,” said Steve Sawyer of Greenpeace International.

The potential opportunities are staggering. The Paris-based International Energy Agency has estimated 16 trillion dollars will need to be invested in the world’s energy systems in next 25 years. At least two trillion dollars will go to renewables.

But right now Africa is poorly positioned to take advantage of this windfall, partly because the rules of the game are rigged against the continent.

Ken Newcombe, a senior World Bank official who pioneered carbon trading, says the EU has discriminated against Africa by prohibiting investment in forestry and agriculture projects for which Africa has the most potential – to count as pollution credits, as allowed by Kyoto. ”It’s effectively a trade barrier against the poor,” he said.

The EU has agreed to review this position and it is likely afforestation and carbon saving land use practices will be included in the post-2012 commitment period.

Kyoto’s timetables and UN red tape also count against Africa. Most CDM investments are in major energy projects with 3-5 year planning cycles. To count towards the 2008-2012 compliance periods, projects had to be registered between 2000 and 2005. But few African countries have national CDM certification authority yet, a prerequisite for registration with the UN board.

”This locks much of Africa out of the benefits of CDM,” said Lwazikazi Tyani, who heads South Africa’s CDM authority. She says it is imperative for all African countries to set up these authorities without delay or risk seeing the billions being invested in clean energy going elsewhere for the next compliance round.

The disparities so far are enormous. UN figures released in October show only two percent of the world’s share of validated CDM projects are in sub-Saharan Africa, compared with 26.5 percent for India alone (out of 43.3 percent for Asia and Pacific) and 51.7 percent for Latin America.

South Africa has Africa’s first fully registered project, a low-cost housing settlement near Cape Town powered by renewable energy, and many more in the pipeline. The project sold its first 10,000 credits to the British government at the Group of Eight (G8) summit in Gleneagles, Scotland, in July.

The G8 comprises Britain, Japan, Italy, Germany, the United States, Canada, France and Russia.

South Africa is now looking at exporting its CDM expertise to the 14-nation Southern African Development Community (SADC).

”We are planning to hold workshops next year to build CDM capacity in the region,” explained Tyani. She warned African projects risk being locked into unfavourable deals, with buyers wanting to make future investments dependant on being offered cheap pollution credits. ”Some buyers will try to trick project developers and we need to train them to guard against this,” she said.

Project developers must also ensure there is real technology and skills transfer from investors, Tyani said.

CDM is expected to grow rapidly in SADC, which has good potential for energy efficiency projects in mining centres Botswana, Namibia and Zambia. Landfill, transport and renewable energy projects will also feature strongly.

South Africa’s electricity utility Eskom, a major power exporter in the region, has already indicated the Montreal decision gives it the market certainty needed to go ahead with many of its CDM projects waiting in the wings, but declined to put a price tag on investments. This year Eskom posted almost seven billion dollars in revenue from Jan. 2004 to Mar. 2005, generating 247 million tonnes of carbon dioxide emissions.

In the end, the lack of political stability and enforceable regulations, especially in the financial and electricity regulation sectors, scares many potential CDM investors away from Africa.

”Africa’s investment climate has been making strong improvements over the last 15 years or so, as has the political climate following the establishment of Nepad (New Partnership for Africa’s Development),” argues environmental consultant William Greene. ”Unfortunately many countries in Africa remain prone to long-term political and economic uncertainties, which can act as a disincentive for investment.”

Another breakthrough at Montreal was the recognition that climate change is inevitable and people living in the world’s poorest region, Africa, need more resources to adapt it.

The Intergovernmental panel on ‘Climate Change’ has described Africa as ”the continent most vulnerable to the impacts of projected change because widespread poverty limits adaptation capabilities”. Up to 70 percent of the continent’s population depends on agriculture, the sector most vulnerable to climate shifts, for employment and subsistence.

Southern Africa will be particularly hard hit. The Hadley Centre in Britain, one of the world’s top climate prediction institutes, projects surface temperature increases for the subcontinent of 3.8 degrees centigrade in summer and 4.1 degrees centigrade in winter by 2080. The world average is 3.4 degrees centigrade. The centre expects more droughts in Angola, Namibia and South Africa, and more flooding in Tanzania, Zambia, Zimbabwe, Mozambique and the Democratic Republic of Congo (DRC).

The World Bank’s Newcombe estimated four billion people worldwide are affected by natural disasters today, up from two billion in 1990. ”The funds available for adaptation are symbolic in relation to the challenge,” he said.

Environmentalists welcomed the Montreal decision to launch a five-year work programme for adaptation. This includes the first financing framework to fund adaptation research and disaster management.

“This outcome was very positive for us,” said Lester Malgas of the NGO South North that operates in Brazil, Indonesia, Bangladesh and South Africa. ”There will now be more funds available to help poor communities in Africa adapt to climate change whether they are small-scale farmers or subsistence fishermen,” he said.

But, once more, time is running out. The deadline for submissions on how the adaptation fund should be run expires in mid Feb. 2006.

”Africa will have to move on this if it wants to have a voice,” said SACAN’s Worthington. ”We can’t miss another opportunity.”