After five fruitful years, the African Carbon Asset Development facility (ACAD) has wrapped up operations, and UNEP-DTU is evaluating the program’s achievements and lessons learnt. ACAD’s goal was to catalyze the growth of the African carbon market, a goal that proved to be quite a challenge, given the collapse of the global carbon market just after the end of the programme’s first phase. Yet through targeted financial and technical support, ACAD succeeded in providing essential tools that can be used to tap into both carbon finance opportunities and market growth. Funded by Germany’s International Climate Initiative, ACAD supported local projects and financial institutions in about half of all countries on the African continent, pursuing its goals through training, seed funding and developing methodologies that stimulate market development.
When ACAD was launched in 2009, Africa accounted for only 2 percent of projects registered under the Clean Development Mechanism (CDM) as emissions reduction projects. ACAD, an innovative public-private platform, was designed to address this imbalance by helping countries develop and fine-tune their low-carbon growth blueprints and business models on the ground, and consequently, help Africa realize its carbon-finance potential. ACAD offered three complementary strategies: targeted grants to cover development costs; technical assistance and training for African bankers and project developers; and developing tools and methodologies, most significantly, standardised baselines.
The facility supported a wide range of projects, from the Nafa Naana programme in Burkina Faso that makes improved cookstoves and solar lights available to poor rural families, to a government sponsored solar water heater project in Mauritius. In Mozambique, ACAD helped the Terra Nova compost project with the costs of environmental impact analysis and carbon documentation, while in South Africa the facility supported a PoA for the energy-efficient Vertical Shaft Brick Kiln, a technology that saves brick-makers time and money, and reduces emissions as well. ACAD’s contribution to these ventures was always aimed at reducing the perceived risk for potential financiers and laying the groundwork for replication.
The linkage between CDM Programmes of Activity (PoAs) and NAMAs have been emphasized by many and as PoAs have shown to be particularly successful in Africa, ACAD initiated an in-depth study of the actual relation between the two concepts. The conclusions were surprising in the sense that contrary to the common perception, PoAs are not a natural stepping stone for NAMA development. Legal issues and common law guiding ownership of emissions reduction from PoAs complicates the establishment of NAMAs in the same sector. The analysis initiated by ACAD instead shows that PoAs may be efficient implementation mechanisms if a NAMA is first established.
Perhaps ACAD’s greatest success however, was in the realm of methodologies. In particular, the facility examined grid emissions factors (GEFs), which are crucial for determining emissions reductions for projects that supply electricity to existing grids. Calculating GEFs in African countries is a challenge, mainly due to limited available data. But in some cases, the national focus of GEFs contradicts the actual flow of electricity and thus the real emissions reduction effect from emission-free technologies. E.g. if a hydro power project is built in a country that only has hydro power, there is no emissions reduction. But if the power is exported to a country predominantly producing electricity from coal, the emissions reduction is considerable – but a national GEF neglects this effect and thus effectively hinders access to carbon finance. In southern Africa, ACAD saw this situation in the Southern Africa Power Pool (SAPP) and initiated the single most important standardised baseline in Africa. The facility supported the development of a common GEF for SAPP, allowing several countries that previously had no access to the carbon market due to their low GEFs, to use a common GEF for the entire Power Pool. The existence of a common GEF for the region also reduces transaction costs and administrative hurdles for CDM project development. The success of the baseline for SAPP allowed ACAD to replicate the work in order to establish a similar standardized baseline for a common grid emission factor in the West African Power Pool (WAPP).
While the ups and downs of the carbon market had a significant impact on the second phase of ACAD, it also provided an opportunity to explore alternative approaches, and to show that climate-friendly investments do not depend entirely on an international carbon market. Strategies like community finance (in CARE’s wPower Project, see below), and creating solid common baselines, like in the case of SAPP and WAPP (see above) can help reduce emissions and improve quality of life without the need for climate finance.
For more information, please visit the project’s website at www.acadfacility.org
ACAD Lends a Hand to CARE’s wPower Project in Kenya
ACAD’s work extended to the world of microfinance, most notably by providing funding for the CARE Kenya wPower project. The CARE project specifically targets women providing them with access to two low-cost, efficient climate friendly technologies: cookstoves and solar lamps. But the programme doesn’t stop there, it also provides women with employment. Under the programme, small communal savings and loan operations, or “Group Savings & Loans” make loans to its members, mostly women, who then work with CARE-supervised local distributors to promote the use and sale of cookstoves and solar lamps. The project creates a self-perpetuating cycle turning around micro-finance, new technologies, and community.