This Week in V-Carbon: This Time for Africa
One year ago, the World Bank posed the question, "Why so few carbon projects in Africa?" and called on the market for solutions to low project uptake by the time of the 2011 Africa Carbon Forum. This week’s V-Carbon news takes a look at how the market responded. And as always, it is complete with the latest news from around the world of voluntary carbon.
NOTE: This article has been reprinted from Ecosystem Marketplace’s Voluntary Carbon newsletter. You can receive this summary of global news and views from the world of voluntary carbon automatically in your inbox by clicking here.
12 July 2011 | One year ago, the World Bank posed the question, “Why so few carbon projects in Africa?” and called on the market for solutions to low project uptake by the time of the 2011 Africa Carbon Forum.
Over the last year, recognized challenges – from prohibitive transaction costs to community capacity building – have spawned new Programmes of Activities, micro scale schemes, REDD+ activities and regional market tools.
For voluntary carbon market players, has this push been enough to jump the double hump of supply and demand for African carbon credits?
Attendees of the Marrakech event said the report is mixed. “I always see an oversupply of credits in the voluntary carbon markets but I also see a shortage of credits from Africa,” points out EcoAct CEO Gerald Maradan.
In fact, this year’s State of the Voluntary Carbon Markets report found an increased volume of credits transacted from Africa-based projects – particularly as a result of forward sold emissions reductions from REDD activities and credits utilizing project aggregation tools.
However, the continent’s activities still represented a mere 4% of all credits transacted voluntarily, and only 8% of those credits were supplied by companies headquartered in Africa. Gold Standard CEO Adrian Rimmer foresees this dynamic changing quickly in the voluntary carbon markets as the third-party standard rolls out additional tools for scaling up Africa-based projects in its pipeline.
Rimmer hopes that the Gold Standard’s new tools for micro-scale projects and addressing “suppressed demand” – could help the region overcome what he says are the “two challenges that have held it back generally: transaction costs and low baselines.”
Of course, for Africa-based suppliers, accessing project finance and the broader marketplace is also a challenge. As Wildlife Works’ Business Development Director Gerald Prolman points out, “Deals happen because someone makes them happen, which means that project developers have to be a lot of things.” For African project developers, being a “lot of things” means accessing distant investors and responding to buyer motivations that – at least in the case of REDD – are unclear to most suppliers but especially those in isolated markets.
EcoAct’s Maradan sees hope in fund-based mechanisms, not only at the country level but also extending from the private sector. “I think the market will still be very difficult in 2011 but I can see it growing in the future from carbon funds, particularly those focusing on LDCs,” he says.
“We have seen some trends with companies creating funds and they are increasingly willing to invest in projects and social aspects. All of that should bring more volume and activity to the voluntary market.”
—The Editors
For comments or questions, please email: [email protected].
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Voluntary Carbon Trees grow on Gold
The Gold Standard shook the status quo this month at the Africa Carbon Forum, where CEO Adrian Rimmer announced that the Gold Standard Foundation Board recently prioritized an examination of land-use and forestry as an eligible project type under the traditionally clean energy-facing program. “The Gold Standard’s strategy is to expand its scope beyond renewables and end-use energy efficiency,” Rimmer explained to Ecosystem Marketplace. “Our approach is not to reinvent the wheel,” he added, “but to work with stakeholders to look at the best approaches – not just on the carbon side but on the co-benefits side, which is really where we can take a very different approach to this market.” Rimmer says the program has begun engaging stakeholders but has not yet identified project type priority areas.
The carbon cycle
CityRyde will have patrons pedaling offsets in no time, now that its bike-sharing methodology has been validated under the VCS. Using its Inspire software, bike-sharing programs can track, quantify and certify the carbon offsets associated with modal shifts in transportation. “This is a game changer – the entire bike-sharing industry is poised to take a major leap forward with the approval of the Inspire methodology,” said Jason Meinzer, COO and co-founder of CityRyde. The company has also received US$345,000 in investments to help roll out the program, which aims to make bike share programs more economically viable for cash-strapped municipalities.
Covering the uninsured
No, we’re not dredging up the US health care debate – we’re talking about Terra Global Capital’s new agreement with the Overseas Private Investment Corporation (OPIC) that provides Terra Global with political risk insurance covering its investment in an Asian REDD project – representing OPIC’s first political risk insurance contract for a carbon project, and believed to be the first REDD insurance contract executed globally. “The value of having political risk insurance as a mechanism to reduce investor’s risk cannot be overstated in this emerging sector,” said Leslie Durschinger, Founder and Managing Director of Terra Global Capital. The company intends to use similar risk-insurance contracts across the investments to be made by the Terra Bella Fund, a private investment fund specializing in carbon offsets from land-use projects.
The suppressed demand answers
“Suppressed demand” – if you (mistakenly) think this phrase refers to offset buyer burnout, this blurb is for you. Suppressed demand, simply put, describes the concept of crediting projects that leapfrog emitting activities in favor of clean development. It’s also one of many activities being explored by the Gold Standard as a way to scale up volumes from projects in LDCs, where already low baselines potentially require that activities must become dirtier before they can reduce emissions and receive carbon credit volumes of any significance.
This approach has already been used by the headlining –
Livelihoods program second da-none
Yogurt manufacturing mogul Danone is set to launch a multi-million dollar carbon offset fund designed to give partners access to credits with “strong social impact.” Known as Livelihoods, the investment fund will help poor rural communities by providing resources for projects with high social and environmental value – including a 7,000 ha mangrove reforestation project in Senegal expected to generate 900,000 tCO2 over 20 years. The fund – anticipated to raise up to US$50 million and generate 11 million carbon credits – will focus on three main programs: restoration and preservation of natural ecosystems; agroforestry and soil restoration; and rural energy projects that prevent deforestation. Fund partners – including Crédit Agricole, Schneider Electric and CDC Climat – will receive certified carbon credits in proportion to their investment. –
No dams, no flooding, no resettlement – no problem?
The latest SOCIALCARBON project is not your run-of-the-mill hydropower project (it’s run-of-river hydro, actually) – it’s the source of the first ever SOCIALCARBON credits issued from a project in southeast Asia. Developed by South Pole Carbon in collaboration with a local NGO, the project consists of two new reservoir hydropower plants located on the island of Sumatra, Indonesia. The project utilized both the VCS and SOCIALCARBON Standard and issued credits on the Markit Environmental Registry. “No dams, no flooding of land, no resettlement – and yet as much as 80 megawatts of clean electricity are installed, creating additional jobs and income for the local population,” commented South Pole CEO Renat Heuberger. –
More anti-market EU-phemisms
The Forest Stewardship Council (FSC) is caught in the middle of a rift between NGOs over valuing forest carbon after passing a motion acknowledging that the inclusion of carbon stocks “is vital to ensure that the carbon value of forests is adequately recognized and sustained”. Although the motion was proposed and endorsed by Greenpeace International, not all NGOs are happy about the involvement of FSC in the certification of carbon forestry practices. Last month, FERN – a leading European NGO focused on forests and forest peoples’ rights – quit the FSC. FERN climate campaigner Jutta Kill told Environmental Finance that carbon offset trading jeopardizes the FSC’s core mission to protect forests. “Carbon offsets don’t help reduce emissions,” she said. –
Google VP stacks ODS in his favor
Ozone-depleting substance (ODS) destruction project pioneer EOS Climate announced yesterday the appointment of Google VP and Treasurer Brent Callinicos to its Board of Directors. With a long history of involvement in the financial aspects of Google’s renewable energy investments – and commitment to environmental stewardship – Callinicos has a wealth of knowledge and experience to bring to EOS. “I have deep personal and professional interest in clean technology and an interest in helping bring innovative solutions to scale,” said Callinicos. “As someone heavily involved in Google’s own renewable energy investments, I am delighted to bring my knowledge to help EOS Climate scale in its mission to address the harmful climate impact of refrigerants.” In 2009, Callinicos was named one of the “100 Most Influential People in Finance” by Treasury and Risk Magazine – for the 4th time.
SIPP on this Carbon Advice
Carbon Advice Group is targeting what it calls a growing number of “ethical investors” by providing a way to purchase carbon credits through a self-invested personal pension (SIPP). The Pointon York SIPP allows investors to hold carbon credits within its SIPP wrapper, providing funding for a range of projects in developing nations – including wind, biomass and other renewable energy schemes. The focus will be on credits verified to the highest standards, including the CDM, VCS and Gold Standard. “We’re enabling people to gain access to the global carbon credit markets and be specific about the carbon credit projects they want to invest in by sector or country,” said founder and chief executive Matthew Sullivan, “which gives them the chance to make a good financial investment and follow the progress of their chosen carbon project.”
He’s here for a good time, not a long time
Following the recent resignation of Dr. Robert Falls, ERA Carbon Offsets Ltd. has announced the appointment of Duncan Manson as Interim CEO. Manson – a senior counsel with a leading Vancouver law firm and an independent director of ERA since 2008 – has a long-standing interest in law relating to ecosystem carbon and the use of forestry based carbon offsets to mitigate the effects of global climate change. “Mr. Manson has been actively involved with the Company’s business from the outset, providing his business and legal acumen and strategic guidance as ERA developed into a recognized leader in the international forest carbon space,” commented Falls. Manson is expected to focus on increasing shareholder value as the company’s business develops, and will play an active role in recruiting a permanent CEO for the Vancouver-based company.
Keep your Offset Options open
Barcelona-based Offset Options has joined forces with travel and tourism company Greenearth.travel to bring easy offsetting options to climate-savvy travelers. A flexible web-services platform will allow travel providers to quickly integrate carbon offsetting into the booking process – using social media tools such as Twitter and Facebook to let travelers to share their actions. Coming soon to both the –
Reduce & Retire: The Latest on Carbon Neutral Real green real estate
Commercial real estate firm CB Richard Ellis has become the first in Australia to be certified under the government’s carbon neutral initiative – offsetting the GHG emissions for its entire Australian operations. Over 50,000 Low Carbon Australia-certified offsets were purchased for 2010 from JP Morgan ClimateCare and 3Degrees. The credits were generated by various initiatives, including a forest management project in Califonia, efficient cookstove program in Uganda and Cambodia and a project in India replacing naphtha – a high-emissions fuel used to make fertilizer – with natural gas. “Ultimately we want low carbon behavior to become business as usual at CBRE and inherent in the way we work and the services we provide,” said Rebecca Pearce, CBRE’s head of sustainability for the Pacific region. –
Carbon-free BC
BC’s public sector anyway – which officially achieved its goal of becoming carbon neutral at the end of June, the first jurisdiction in North America to do so. The government spent CA$18.2 million to purchase 730,000 made-in-BC offsets from the Pacific Carbon Trust in 2010 – equivalent to the annual energy use of 62,000 homes. A CA$75 million energy conservation capital fund was also launched in 2008, which has funded 247 energy projects in schools, hospitals, universities and other government buildings across BC – expected to reduce public sector emissions by 35,500 tCO2. “By providing capital funding for clean-energy and conservation projects up front, organizations are realizing savings that can be reinvested in front-line services,” said Environment Minister Terry Lake. The public-sector initiative is part of the province’s commitment to reduce GHG emissions by 33 percent by 2020 –
Austin’s formula for green racing
Following heated debate over sustainability, the Austin City Council has voted to approve a deal with Formula 1 endorsing the Grand Prix – while ensuring that the event will be an environmentally friendly as possible. Council Member Chris Riley announced the agreement on June 28, stating, “This project shouldn’t just be about fast cars. The project offers opportunities to bring our local sustainability efforts to a worldwide stage.” F1 will purchase carbon credits to offset all the fuel and energy use related to the race – at least 50 percent of which will be locally sourced and include extensive tree planting. Beyond carbon neutrality, the local F1 sponsors will also raise or invest US$5 million in green technology research and development, create an event recycling and composting program and provide other community benefits. –
Climate North America Hold on, for one more year
Compliance trading under California’s cap-and-trade market has officially been delayed – but not abandoned, according to Air Resources Board (ARB) Chair Mary Nichols. Nichols announced the news at a –
Allons-y cap-and-trade!
Following in the footsteps of its Western Climate Initiative (WCI) Partner California, the province of Quebec is getting ready to roll out its own cap-and-trade program – but delaying regulation until 2013. Quebec Environment Minister Pierre Arcand announced last Wednesday the release of the province’s draft regulation, available for a 60-day public consultation. Like California, Quebec’s proposed system would involve a one-year trial period in which companies can buy and sell credits, with compliance beginning in 2013. Arcand rejected suggestions that the program would damage the economy, arguing instead that all Quebecers will benefit from the initiative. “Because Quebec is acting as a pioneer, Quebec companies will be among the first to profit from the advantages of a system of capping and trading of greenhouse gas emission credits. They will be the first to adapt to the realities of the new carbon-free economy,” he said. –
View from the RGGI front lines
Last week, New Hampshire Governor John Lynch vetoed a bill that would pull the state out of the Regional Greenhouse Gas Initiative (RGGI) – citing jobs and economic growths as reasons to stick it out. “RGGI continues to have bipartisan support today because it is helping to reduce our dependence on foreign oil, creating jobs, and helping our businesses save money and become more competitive. I believe that we should continue that progress,” he said in a –
It’s my party and I’ll deny if I want to
Former Minnesota governor Tim Pawlenty has joined the ranks of the skeptical – becoming the latest of several Republican presidential candidates to question the role of humans in the climate change process. “So there is climate change, but the reality is the science of it indicates that most of it, if not all of it, is caused by natural causes,” Pawlenty told Fox News. Although Pawlenty is not alone – both former Pennsylvania Senator Rick Santorum and Minnesota Republican Michele Bachmann have expressed similar views – there appears to be a growing divide among Republicans on the issue. In fact, both Republican front-runner Mitt Romney and former Utah governor Jon Huntsman have accepted the science. “This is an issue that ought to be answered by the scientific community; I’m not a meteorologist. All I know is 90 percent of the scientists say climate change is occurring,” Huntsman told Time magazine. –
Kyoto & Beyond Battle for the skies
The EU is locked in a battle with US airlines determined to bring down its plan to regulate carbon emissions beyond its borders. From January 2012, airlines flying to or from the EU will have to buy permits from the EU ETS for 15 percent of emissions they produce during the flight – a policy the Air Transport Association of America (ATA) argues breaches US sovereignty and breaks international trade laws. The ATA challenged the EU in its highest court on July 5. “The EU does not have competence to regulate third country airlines in third country airspace,” Derrick Wyatt, a lawyer for ATA, told the European Court of Justice. EU lawyers countered that the bloc had only chosen to include airlines in the ETS after they themselves chose the scheme over other tools, such as eco-taxes or charges on jet fuel. –
Global Policy Update The carbon price is right
On Sunday, Julia Gillard’s Labor Government finally revealed details of Australia’s much-anticipated carbon-pricing scheme – set to be an A$23/tCO2e tax applying directly to 500 big emitters from July 2012, transitioning to an ETS from mid-2015. “It’s time to get on with this; we are going to get this done,” said Gillard. The package is expected to pass through Parliament before the end of the year, despite growing unpopularity among the public. Although the scheme won’t cover agriculture, forestry and other land-based activity will be eligible under the Carbon Farming Initiative (CFI) offsets scheme – a separate piece of legislation expected to pass through the Senate in the coming weeks. Early estimates indicate that the carbon tax rules provide potential demand for more than 50 Mt of forestry and farming offsets over its first three years. –
UK’s simple kind of plan
In response to criticism from business groups, the British government is seeking to simplify its corporate Carbon Reduction Commitment (CRC) – accused of being complex, costly and inefficient. Since its launch in April, many businesses have objected to what some call a “stealth tax” with onerous reporting requirements and overlap with the EU Emissions Trading Scheme (ETS). The government in now proposing to introduce two sales of fixed price allowances a year from 2014 – instead of annual auctions – while reducing the number of fuels covered by the scheme, simplifying the organizational rules and making qualification processes easier. “We’ve got to help business reduce their emissions, not strangle them in red tape,” climate change minister Greg Barker said in a statement. –
What’s all the carbon hub-bub?
As Australia grapples with its own carbon-pricing scheme, New Zealand has been busy promoting itself as a potential carbon trading hub for the region – recently hosting a meeting of officials from several countries currently working on climate change schemes, including Japan, China, South Korea, Australia and the US. The island nation has been successfully running its own carbon scheme for over a year, and could offer valuable lessons and practical experience to its larger neighbor. Australian bank Westpac – which has spent the last year trading on the New Zealand market – agrees. “New Zealand moved ahead of Australia and as such we now see companies trading out of New Zealand first, getting practical experience, building relationships and becoming more familiar with international carbon credits and counterparties,” said Emma Herd, Director of Emissions and Environment at Westpac Bank.
Carbon Finance REDD-y or not
The rate of REDD movement may significantly pick up soon, thanks to a recent investment deal that will see US$25 million in financing flow to forest carbon projects in developing countries. Macquarie Group firm BioCarbon group, the International Finance Corp (IFC) and US-based Global Forest Partners LP will use the equity financing to invest in REDD projects, likely beginning with a 40,000 ha project in West Kalimantan, Indonesia. “We are very confident we have raised sufficient capital here for us to succeed to have a significant footprint of forest carbon projects,” Macquarie Global Investments associate director, Brer Adams, told Reuters. Macquarie is already developing three REDD projects in partnership with global conservation group Fauna & Flora International and is now seeking other opportunities in Southeast Asia, South America and Africa. –
Domo arigato, CO2 subsidies
Japan is moving ahead with its push to generate “bilateral offsets,” last week awarding subsidies of almost US$24 million to dozens of feasibility studies abroad. The UN carbon offset scheme has long been criticized for being slow and ineffectual, leading Japan to pursue bilateral agreements to reach its pledged emissions cuts. Twenty-six projects were selected last week, of which seven will be carried out in India and six each in Vietnam and Indonesia. Japan has already reached agreements with India and Vietnam to hold meetings on a bilateral offset scheme, and is expected begin talks with Indonesia later this month. Should the subsidized studies actually be implemented, potential emission cuts would be well over 20 MtCO2/year, according to Keisuke Murakami, director at the trade ministry’s global environmental affairs office.
Science & Technology Hot town, summer in the city
Anyone spending a sweltering summer in the city is likely aware that urban areas are heat islands – but carbon sinks? Although it may seem counterintuitive, a study carried out by British scientists on the city of Leicester found that the carbon-absorbing capacity of its parks, gardens, abandoned industrial land, golf courses, school playing fields, roadsides and river banks is in fact significant – locking away 231,000 tonnes of carbon, ten times more than expected. “Currently, once land in the UK is considered to be urban, its biological carbon density is assumed to be zero,” said researcher Zoe Davies of the University of Kent. “Our study illustrates this is not the case and that there is a substantial pool of carbon locked away in the vegetation within a city.”
Fueling the low-carbon future
A Melbourne-based company claims to have just the thing to help the newly carbon-conscious Australia reduce household emissions. Ceramic Fuel Cells Limited’s (CFCL) BlueGen fuel cell unit converts natural gas and renewable fuels into high-quality power and heat, potentially reducing power bills by up to 75 percent. Because the technology is not currently eligible for feed-in-tariffs, the residential market in Australia has been difficult to crack. But CFCL Group General Manager Andrew Neilson thinks that Australia’s new carbon pricing mechanism will be a boon for the company. “It will become more economically attractive to make the switch away from grid power towards other sources,” he said. According to the CSIRO, a two-kilowatt BlueGen unit can save up to 33 tCO2 per year when replacing power derived from brown coal.
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