Magazine article New African

How Africa Can Earn Billions from Carbon Trading

Magazine article New African

How Africa Can Earn Billions from Carbon Trading

Article excerpt

China, India, Brazil and a host of developed countries are earning billions of dollars a year from trading carbon credits. Africa is earning hardly anything at all, athough, by rights, it should be getting the most. The problem is that few on the continent understand how this complex system works. This special report sets out to explain the dynamics of the trade, the potential for Africa and how a project in Mozambique has proved a spectacular success. Anver Versi talks to Robin Birley, founder of Envirotrade, which has already shown that Africa is ripe for full engagement in the carbon credit exchange system.

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One of the phrases that slips in and out of discussions about climate change is "carbon trading". We have all heard about it but few of us really understand what it means. One man who does know all about it is Robin Birley, the colourful, sometimes controversial British millionaire. He and his partner Philip Powell run Envirotrade, whose core business it is to help rural African communities generate carbon credits by changing the way they use their land, and then assist with the sale of those credits in the world carbon markets.

Although that is essentially what the carbon trade is about, it is of course much more complicated in the real world. Africa, which is the region that has caused the least amount of climate damage, is hardly earning anything from carbon trading while Asia, Latin America and the developed world are raking in billions of dollars every year.

"The global carbon offsetting market is probably worth $100bn a year," says Birley. Is Africa getting any of this? "Very, very little--a miniscule amount," he says, "but we want to change that. We want Africa to get its fair share of the market and we want to do this in a way that sustains and develops communities. Our projects in Mozambique have convinced us that similar programmes can be rolled out across Africa."

Essentially, the way the system works is that if you change the way you produce things, including agricultural products, such that you generate less carbon than you would have done without making the changes, you can gain carbon credits under one of several different third-party standards currently recognised by buyers. These buyers fall into two general categories. There are industrial companies covered by the Kyoto Protocol, which are required to limit their emissions to regulated levels. This first category of buyers is usually referred to as the "compliance" market, and the credits they buy from developing countries must generally be certified under the UN Clean Development Mechanism (CDM). The second category comprises companies and individuals not regulated under the Kyoto Protocol. These are buyers who simply want to offset their carbon emissions for social responsibility reasons. This second category of buyers is usually referred to as the "voluntary" market, and several third-party standards additional to the CDM are available to these buyers. Depending upon the standard used, pricing of credits can vary from less than $5 to over $20 per tonne of carbon sequestered.

But while this is a very lucrative business for those who know how to generate and evaluate their carbon credits and also know how and when and where to find buyers, it is far too complex for the rest of us. This is where specialised companies like Envirotrade come into their own.

While this is all well and good in largely industrialised countries where factories can adopt greener practices, or even where you have large plantations, how do you bring most of rural Africa into the picture? If, for example, you can persuade people to stop using the traditional slash and burn technique of clearing the land, can you find a method of working out how many carbon credits this would be worth? Or if a community sets out to plant trees to replenish forest cover, thus strengthening the world's "lungs", does it not deserve carbon credits that it can sell? …

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