CDM in Africa - Finance and Support

CDM IN AFRICA

FINANCE AND SUPPORT

CDM in Africa

Finance and Support

INTRODUCTION

As early as 2006, Parties to the Kyoto Protocol recognized the importance of a balanced

regional distribution of CDM projects and welcomed the establishment of the Nairobi

Framework, which brings together UN and regional organizations to support access to the

mechanism. In light of the benefits that the CDM can bring to lesser developed regions, the

Nairobi Framework partners and others began funding technical support and capacity-

building programmes for the CDM, particularly in Africa.

The following pages provide a short description of the most important financing and

support opportunities available for CDM projects in Africa.

UNFCCC’S LOAN SCHEME FOR COUNTRIES WITH FEWER THAN 10

REGISTERED CDM PROJECTS

This loan scheme was established by the secretariat of the United Nations Framework

Convention on Climate Change at the request of the Parties to the Kyoto Protocol. It

provides zero per cent interest loans to cover the following expenses associated with CDM

projects:

• Development of project design document (PDD)

• Validation of the PDD by a Designated Operational Entity (DOE)

• Verification by a DOE of the first issuance of Certified Emission Reductions (CERs)

Projects applying for a loan must have a high probability of getting registered with the

UNFCCC and generating at least 7,500 CERs per year (projects in Least Developed

Countries (LDCs)), and 15,000 CERs per year (non-LDCs). Project documentation must be

developed by an experienced CDM consultant and the loan must not “crowd out” other

funding sources, such as donor funding or funding by an already identified buyer of CERs

from the project.

Further details on the application procedure and the selection requirements are available

here: <http://www.cdmloanscheme.org>

CDM in Africa

Finance and Support

UNFCCC’S REGIONAL COLLABORATION CENTRES (RCCs) IN LOMÉ AND

KAMPALA

In order to provide hands-on support to CDM projects, the UNFCCC secretariat, in

partnership with regional development banks, has helped to establish two regional

collaboration centres in Africa. They are located in Lomé, Togo, mainly to support

Francophone Africa, and in Kampala, Uganda, to reach out to more than 20 countries in

eastern and southern Africa. They focus on:

 Identifying opportunities for potential projects and programmes eligible under the

CDM

 Providing direct support to the design of CDM projects and programmes by addressing

technical and procedural issues in the project design and validation phase

 Clarifying problems identified by third-party validators

 Identifying priority areas for the development of standardized baselines based on the

emission profile of the country, in order to considerably simplify local CDM projects

 Identifying projects and programmes that would benefit from standardized baselines

and supporting the design of such projects and programmes

 Providing institutional capacity development to various institutions, including

universities, independent development organizations and government agencies

Further information is available at:

<http://cdm.unfccc.int/stakeholder/rcc/index.html>

CDM in Africa

Finance and Support

WORLD BANK CARBON FUNDS AND INITIATIVES

Of the 15 carbon funds and initiatives managed by the World Bank, three are open to

support the CDM or will be open after the conclusion of a fund raising process.

Further general information is available at: <www.carbonfinance.org>

CARBON PARTNERSHIP FACILITY (POA SUPPORT)

The Carbon Partnership Facility (CPF) supports CDM Programmes of Activities (PoA) by

developing large scale emission reduction programmes and purchasing the resulting CERs.

In order to scale up carbon finance, the CPF collaborates with governments and market

participants on investment efforts and sector-based interventions. These initiatives must

be consistent with low-carbon economic growth and the sustainable development

priorities of the host developing country. Further information is available at:

<http://cpf.wbcarbonfinance.org>

CARBON INITIATIVE FOR DEVELOPMENT (ACCESS TO ENERGY SUPPORT IN LOW-INCOME

COUNTRIES)

The Carbon Initiative for Development (Ci-Dev) was launched in December 2011. It will

build capacity and develop tools and methodologies to help the poorest countries of the

world access carbon finance, mainly in the area of energy access. It will also use

emission-reduction-based performance payments to support projects that use clean and

efficient technologies in low-income countries.

Further information is available at:

<http://wbcarbonfinance.org/CIDEV>

BIOCARBON FUND (AFFORESTATION AND REFORESTATION SUPPORT)

This fund, launched in December 2011, aims to increase the number of projects that

sequester or conserve carbon in forests and landscapes, such as REDD (reducing emissions

from deforestation and forest degradation) and afforestation and reforestation CDM

projects.

Further information is available at: <http://wbcarbonfinance.org/BioCF>

CDM in Africa

Finance and Support

FINANCIAL SUPPORT FOR PUBLIC SECTOR PROJECTS (NOT EXCLUSIVELY CDM RELATED)

The World Bank’s country offices provide support for public sector projects. Contact

details are available at: <www.worldbank.org/countries>

FINANCIAL SUPPORT FOR PRIVATE SECTOR PROJECTS (NOT EXCLUSIVELY CDM RELATED)

The International Finance Corporation provides support to private sector projects. An

overview of the various programmes, as well as contact details for IFC’s regional and

country offices, is available at: <http://www.ifc.org>

TRAINING SEMINARS ON THE CDM

World Bank Institute holds training seminars for identified stakeholders. It also offers

online seminars that are open to the public. Further information is available at:

<http://einstitute.worldbank.org/ei/CourseTheme>

An overview of financial options for climate action in developing countries in general is

available at: <http://www.climatefinanceoptions.org>

THE AFRICAN DEVELOPMENT BANK’S (AFDB) AFRICAN CARBON

SUPPORT PROGRAMME (ACSP)

ACSP was a two- year programme that provided direct technical assistance to project

developers and African designated national authorities on CDM processes. It also drove the

development and approval of a methodology for cross-border electricity transmission

projects. Going forward from the ACSP, the Bank will continue to support projects with

CDM potential.

Further information is available at: <http://www.afdb.org/en/topics-and-

sectors/initiatives-partnerships/african-carbon-support-program/>

CDM in Africa

Finance and Support

AFRICA CARBON ASSET DEVELOPMENT INITIATIVE (ACAD)

Launched in 2009 to kick-start the African carbon market, ACAD supports potential CDM

projects with:

• Targeted grants for early costs

• Technical assistance for local project developers

• Carbon finance training for local financial institutions

ACAD aims to support highly replicable demonstration projects by reducing the early-

stage investment risks associated with African carbon projects (excluding afforestation

and reforestation projects).

This is an initiative of the United Nations Environment Programme (UNEP) and Standard

Bank and is funded by the German government. Further information, including application

guidelines, is available at: <http://www.acadfacility.org>

THE INTRA-ACP CLIMATE SUPPORT FACILITY (CSF)

Being part of the Global Climate Change Alliance (GCCA), the CSF provides customized

short-term technical assistance to projects in African, Caribbean, and Pacific (ACP)

countries in any of the GCCA's five priority areas, one of them the CDM.

Once a clear vision of the required assistance is submitted, services can be implemented

within a month. They include:

 Project identification and formulation

 Feasibility studies

 Assistance in securing funding

 Training, workshops and capacity-building

 Policy development

Further information on the CSF is available at the following link, which also includes

information on supported projects:

<http://www.gcca.eu/intra-acp/climate-support-facility>

CDM in Africa

Finance and Support

AFRICAN BIOFUELS AND RENEWABLE ENERGY FUND (ABREF)

ABREF contributes to the development of the biofuel and renewable energy industry in

Africa, and was initially focussed on the member countries of the Economic Community of

West African States (ECOWAS).

The fund is managed by the African Biofuel and Renewable Energy Company (ABREC),

which also offers technical assistance by preparing feasibility studies and engaging in

capacity-building and technology transfer. It is open to all renewable energy projects in

Africa, including those eligible under the CDM.

The following project types are covered by the fund:

• Biofuels

• Fuel-switching to biomass energy

• Hydro power

• Wind power

• Methane leakage

• Capture of methane from landfills

• Forestry

Further information is available at: <http://www.faber-abref.org/index_english.php>

UNDP’S MILLENNIUM DEVELOPMENT GOALS (MDG) CARBON

The carbon facility of the United Nations Development Programme supports projects in

countries with few or no CDM projects. It focusses on projects that strongly contribute to

the MDGs in least developed countries, where it offers:

• Project development services

• Technical assistance for the approval process until CDM registration

Certain types of projects are excluded, such as geo-sequestration including enhanced oil

recovery, electric power load shifting and capture and destruction of industrial gases.

Further information is available at: <http://www.mdgcarbon.org/>

CDM in Africa

Finance and Support

In addition, there are national programmes for the purchase of CERs, some of which also

include early-stage support for CDM projects. For example:

GERMANY’S POA SUPPORT FACILITIES

POA SUPPORT CENTRE GERMANY

In order to support the development of programmes of activities (POA), the German

development bank KfW offers a variety of services. These include:

• Advisory, structuring and assessment services for programme proposals

• Financing and grants to cover the preparation of programme concepts, project design

documents and monitoring plans

• Support for programme implementation

• Assistance with marketing expected carbon credits

Further information is available at:

<https://www.kfw-entwicklungsbank.de/International-financing/KfW-

Entwicklungsbank/Environment-and-climate/Klima%C2%ADschutzfonds/PoA-

F%C3%B6rderzentrum-Deutschland/>

FUTURE OF THE CARBON MARKET FOUNDATION

Based on the belief that the principle underlying POAs is also of strategic importance for

future mechanisms of international climate finance, the foundation aims at funding

measures that:

• Support the dissemination of the programmatic project approach

• Use the market to exploit further emission reduction potentials

• Acquire knowledge and experience that might be valuable for future carbon market

mechanisms and enhance the ability of countries hosting POAs to develop more far-

reaching climate policies.

Further information is available at: <http://www.carbonmarket-foundation.org/home>

CDM in Africa

Finance and Support

The Nairobi Framework Partners are:

 United Nations Framework Convention on Climate Change

 United Nations Development Programme

 United Nations Environment Programme

 World Bank Group

 African Development Bank

 United Nations Conference on Trade and Development

 United Nations Institute for Training and Research

The first version of this publication was distributed at the Africa Carbon Forum in Addis

Ababa in April 2012. This third version was updated on 1 May 2013. Future editions will

include further finance and support opportunities available from multilateral and domestic

sources. If you know of a CDM finance or support programme not listed here, please

contact [email protected]

United Nations Framework Convention on Climate Change

This publication is issued for public information purposes and is not an official text of the Convention in any legal or technical sense. Unless

otherwise noted in captions or graphics all matter may be freely reproduced in part or in full, provided the source is acknowledged and

photographer is credited.

For further information contact

Climate Change Secretariat (UNFCCC), Martin-Luther-King-Strasse 8, 53175 Bonn, Germany

Telephone +49. 228. 815 10 00, Telefax +49. 228. 815 19 99, [email protected], unfccc.int

ISBN 92-9219-106-3

Photo credits, inside cover: Front – Evan Thomas, CDM Project 4799: Rwanda Natural Energy Project:

Water Treatment Systems for Rural Rwanda (Mugonero Esepan, Rwesero, Nyagasambu)

Back – Chris Zink, CDM Project 4302: SASSA Low Pressure Solar Water Heater Programme

Art direction and design: Heller & C GmbH, Cologne

CDM in Africa

Finance and Support

CDM in Africa

Finance and Support