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Africa May Become Next Big Carbon Market, Emissions Group Says
2010-08-26 06:28:51.400 GMT
By Dinakar Sethuraman
Aug. 26 (Bloomberg) -- Africa may be the next major market
for carbon-reduction ventures amid investigations into Chinese
certification and as the European Union imposes new regulations,
the International Emissions Trading Association said.
"Africa is turning into a major source of premium Clean
Development Mechanism projects," Henry Derwent, chief executive
officer and president of the Geneva-based group, said in an
interview before the Carbon Forum Asia conference in October.
The world's least developed region accounts for about 3
percent of the project pipeline under the United Nations CDM
mechanism designed to generate certified emission-reduction
units, or CERs, for eliminating emissions from greenhouse gases
such as methane, Derwent said in Singapore yesterday.
Asia accounts for 77 percent of registered CDM projects,
with China, India and South Korea accounting for 81 percent of
the credits issued, according to the UNFCCC website. That
compares with 1.9 percent for Africa, generating 1.5 percent of
CERs. The European Union, the world's biggest carbon market, is
reviewing rules relating to the type and geography of new CDM
projects to meet domestic obligations.
"European buyers are looking to diversify their portfolios
of CERs to manage their risks," Derwent said. "There are more
supplies coming from Africa partly because of emphasis on
agriculture and forestry."
Africa has attracted about 3 percent, or 139 projects
including new ones, from a "negligible" number a few years ago,
according to Derwent and data from Bloomberg. Demand for CERs
originating from African projects may prompt European utilities
and buyers to pay more compared to units sourced from other
regions, he said.
New Rules
Asian developers must be prepared to face competition from
other regions and meet national criteria as lawmakers in the
European Union, the U.S., Japan, Australia and South Korea draw
up rules on carbon reduction, Derwent said.
Regulators of the UN CDM, the second-biggest emissions
market, said on Aug. 18 they won't immediately issue tradable
emissions credits to the developer of a Chinese
hydrofluorocarbon-23 project as they seek more information. UN
regulators are stepping up scrutiny after allegations that some
developers are seeking excessive credits related to HFC-23, an
industrial gas whose warming potential is 11,700 times more
powerful than carbon dioxide.
Prices of carbon credits generated by developing countries
may rise as regulators review industrial gas projects and
Chinese wind energy facilities, fueling speculation that
supplies will slow.
United Nations emissions credits, or CERs, for December
delivery climbed 2.5 percent to 13.58 euros a metric ton
yesterday on the European Climate Exchange, the biggest gain
since Aug. 19. Prices have jumped 17 percent in the past month.
CERs, awarded to projects that lower emissions in
developing nations, can be used to comply with the EU emissions
trading system, the world's largest cap-and-trade program.
For Related News and Information:
Top environment stories: GREEN <GO>
Stories about U.S. and climate: TNI US CLIMATE <GO>
Global emissions data: EMIS <GO>
Northeast U.S. trading: RGGI <GO>
--Editors: Jane Lee, Ryan Woo.
To contact the reporter on this story:
Dinakar Sethuraman in Singapore at +65-6212-1590 or
dinakar@bloomberg.net.
To contact the editor responsible for this story:
Clyde Russell at +65-6311-2423 or crussell7@bloomberg.net.
