U.N. official sees Africa missing clean energy investment

Africa has missed out on booming investment in clean energy projects partly over worries that it is a tough destination to do business, a United Nations official says.

The U.N.-backed Kyoto Protocol obliges 35 rich nations to cut greenhouse gases by 5 percent below 1990 levels by 2008-2012, mostly through curbing the release of heat-trapping carbon dioxide. An element of the treaty is the Clean Development Mechanism (CDM) that helps nations meet their reduction targets by funding green energy development, including hydropower, 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 U.N. 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 January 30 at the Clean Development Mechanism Africa 2007 conference in Johannesburg, which brought together government, business, and environmental experts to discuss novel ways to boost CDM’s profile in Africa.

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.

As far as hydropower, West Nile Rural Electrification Co. has applied for CDM approval to sell carbon emissions credits from the 3.5-MW Paidha hydroelectric project being built on Uganda’s Nyagak River. (HNN 1/31/07)

In late 2006, U.N. Secretary General Kofi Annan launched the Nairobi Framework, a two-year plan to help poor countries, especially Africa, participate in the CDM initiatives. Addressing an international climate change conference in Nairobi, Annan announced the plan by six U.N. agencies to help developing nations obtain more funds to promote clean energies such as hydropower and wind. (HNN 11/16/06)

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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