How best to generate carbon revenue for small-scale projects in sub-Saharan Africa

• Main Author: Atkins, Peter Stuart
• Other Authors: Prasad, Gisela
• Format: Dissertation
• Language: English
• Published: University of Cape Town 2014
• Subjects: Energy and Development Studies
• Online Access: http://hdl.handle.net/11427/5914

Includes abstract. === Includes bibliographical references. === The Clean Development Mechanism (CDM) has not worked for sub-Saharan Africa and its mainly small projects, delivering only 0.3% of the total CDM carbon offsets. This is thought to be because of the low intensity of the greenhouse gas reducing interventions prevalent in sub-Saharan Africa, the lack of institutional capacity relating to the CDM processes, the high transaction costs of the lengthy CDM process – typically amounting to R 500 000 per project per year and taking years to complete the process. An alternative for small carbon emission-reducing projects is to register carbon reductions with the voluntary carbon market and its Verified Emission Reductions (VERs) carbon credits. By examining the carbon markets in some detail through the lens of a particular case study, this dissertation has investigated and identified the main factors affecting the cost-effective generation of small emission reduction projects in sub-Saharan Africa. The chosen case study was a small-scale South African voluntary carbon project, the Umdoni bioethanol gel fuel-switching project. Umdoni was identified as an example of a project that generated carbon revenue outside of the CDM. By assessing the manner in which this project addressed the critical requirements of the carbon market while simultaneously alleviating poverty, the study seeks to provide new insight in the components of effective carbon markets. Both the detailed understanding of the voluntary carbon market components and the exposition of an example in which this market worked effectively is considered important at a time when the efficacy of the CDM is being reviewed, casting uncertainty over the role of market based instruments in addressing the global threat of an anthropogenically warmed climate. The study has identified the main factors affecting the ability of small carbon projects to generate net-positive carbon revenue and has suggested ways a small project could exploit this information to its benefit: The type of carbon market the project operates in – the small voluntary carbon market is best, with higher prices and lower costs - The inherent attractiveness of the project to potential carbon offset buyers – small projects with strong sustainable development aspects command higher carbon prices - The registry and carbon standard through which the project trades its carbon offsets – registries and standards which measure and emphasise sustainable development benefits realise higher prices for suitable projects - The type of buyer – Corporate buyers purchasing carbon offsets for image and public relations purposes are best for small projects with good sustainable development co-benefits - The supply-demand situation in the relevant carbon markets – the voluntary carbon market has been relatively unaffected by the crash in the compliance market in 2012 - The project size and the calculation methods chosen – the volume of emission reductions is sensitive to the project scale, the emission reducing technology and the emission reduction methodologies chosen - The transaction costs – the transaction costs for a CDM project are in excess of R500 000, which is far bigger than the likely carbon revenue. Whereas some small voluntary carbon market registry costs are lower by a factor of six and yet they get comparable carbon prices.