Explosive growth in a US$2 billion U.N carbon market where rich countries pay developing nations to cut their greenhouse gas emissions is largely bypassing Africa, delegates told a Nairobi climate change conference on Tuesday. The UN-backed Clean Development Mechanism (CDM) allows rich countries which are busting their emissions limits under the Kyoto Protocol to fund emissions cuts in developing nations. But buyers want confidence in projects, driving them to countries like China and India, and away from Africa.

"(The problem is) how to promote a more balanced distribution of projects," said Outi Berghall, an official at the environment ministry of Finland, which holds the rotating EU presidency. "There s been a revolution over the past 24 months in CDM," said the European Commissions Artur Runge-Metzger, of rapidly mounting investor interest. A pipeline of 1,200 projects will generate emissions cuts through 2012 exceeding the annual greenhouse gas emissions of Japan, if they all get approval.

"The pipeline is growing exponentially," said Jose Miguez, chair of the panel which judges projects, speaking at a side event at the conference of the 189 countries which have signed the UNs climate change convention. But of the US$2.3 billion worth of pledged emissions cuts to September this year, 75 percent came from China and India, and just seven percent from the whole of Africa, a World Bank carbon market report shows.

Many African countries have not got the basic institutions for setting up projects, leaving African businesses with nowhere to submit their project proposals. Beside that, local companies do not have the up-front cash to invest in projects, facing the problem that investors only pay once projects are up and running.

"Even if you ve got the capacity problem solved the bigger question is where you get the money to implement CDM projects as a company in Africa," said Philip Gwage, another member of the UN project judging panel, who is from Uganda. "All the investors are interested in is the (carbon) credits - You go ahead and implement the project. Once the credits are ready well buy them."

"You have to find some kind of financing initially to stimulate CDM projects in Africa, and once some of the private sector see that they can make money they will put money there." Such help could include debt financing, he said. So far highly profitable, industrial-scale projects in China and India have dominated the U.N market, drawing fire from green groups which want CDM money to go to poor communities.

"There are (other) projects out there that shift the way people live, the way they consume," said Lester Malgas from a South African member of the "green" umbrella group Climate Action Network.
(Por Gerard Wynn, Planet Ark, 08/11/2006)