London Profits While Africa Awaits Kyoto Benefit

Monday, August 13, 2007

Huge profits made by London-based brokers who arrange emissions-cutting projects in developing countries contrast with little benefit for the world’s poorest nations, company and United Nations data shows.

The Kyoto Protocol on global warming allows rich countries to meet greenhouse gas emissions targets by paying poor nations to cut emissions on their behalf, using the so-called clean development mechanism (CDM).

But evidence is emerging that while brokers stand to make enormous profits, least developed nations, especially in Africa, will get next to nothing — raising questions over whether Kyoto is fulfilling its social as well as environmental goals.

“We’re either going to have bend the rules and be softer with CDM in Africa or forget it and give them more aid,” said Mike Bess, an Africa specialist working for London-based project developer Camco.

The text of the Kyoto Protocol calls for its carbon trading scheme to assist poor countries in achieving sustainable development.

The text of Kyoto’s umbrella treaty, the United Nations Framework Convention on Climate Change, says that action to combat climate change should help economic development, too.

But action so far has seen the biggest potential profits going to London-based project developers, instead of projects on the ground, most of which are based in China and India.

Africa has seen just 21 out of a total of 751 CDM projects officially registered with the U.N. climate change secretariat.

A common argument is that Africa has a tiny fraction of the world’s carbon emissions, that these emissions are widely dispersed and so difficult to bundle into profitable projects, and that the continent has high investment risk.

But projects are slowly emerging.

The World Bank’s International Finance Corporation formally launches later this month an initiative called “Lighting the Bottom of the Pyramid”, which aims to supply low-carbon lighting to some of the 500 million Africans who have no electricity access.

It aims to apply for carbon finance through the CDM, because solar power would replace higher carbon kerosene lamps used now.

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Source: Reuters (link opens in a new window)