Poor Nations Lose
Monday, August 27, 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 to 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.
“Ten years ago you’d say there was no market for mobile phones in Africa, that people couldn’t afford it,” said Fabio Nehme, IFC team leader for the project, who estimated that there were now over 100 million mobile phone users on the continent.
UN Secretary General Kofi Annan launched last November in Kenya an initiative called the “Nairobi Framework” to try and increase the number of CDM projects in Africa.
Since then just 10 new projects have been registered in Africa, versus 348 extra elsewhere, UN data show, but the UN official leading the project defended progress so far.
“Let’s give it some time,” said Daniele Violetti.
UN agencies, the World Bank and the African Development Bank will pool resources for a joint CDM project, with details likely in October following a meeting in Ethiopia, he said.
Western project developers are under no obligation to show that their projects contribute to sustainable development.
“The investors should be proud,” said Michael Wara, research fellow at Stanford University.
“You want the market to work and find the low-hanging fruit, but you want to be able to modify the system when people start extracting these kinds of profits.”
In one of the biggest money-spinning projects yet, 10 investors including London-based Climate Change Capital and New York-based Natsource bought 129 million tonnes of carbon credits for 6.2 euros ($8.49) per tonne from two projects in China.
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