21 May 2008

Rwanda: Mininfra - Global Climate Change - How Rwanda Can Benefit From Carbon Credits

Kigali — Hydropower as a source of renewable energy might allow Rwanda to participate in the global trade of Carbon Credits

The phrases 'global warming' and 'climate change' are used to describe dramatic changes in the world's weather patterns attributed to increases in greenhouse gas emissions in the atmosphere.

These changes have taken the form of cyclones, floods, severe storms, droughts, increased landslides, sea level rises as well as incremental changes in temperature that particularly affect agriculture and can lead to famine.

Scientists have urged for an immediate reduction in "anthropogenic climate change" i.e. mankind induced climate change.

Our current emissions of Carbon Dioxide and other gases that induce climate change are far greater than the ability of 'carbon sinks' such as forests to absorb it from the air. A reduction in green house gas emissions would be necessary to contain the damage done to the environment.

As a response to this phenomenon the Kyoto Protocol, United Nations Framework Convention on Climate Change was signed and came into force in February 2005.

This Kyoto Protocol elaborates on potential trade in carbon emission reductions which is why so called Carbon Credit markets emerged.

Recognising that industrialised countries are the biggest polluters to our atmosphere, the Kyoto Protocol legally committed the industrialised signatories to reducing their collective emissions by an average of 5.2% from 1990 levels in the period 2008 to 2012.

Developing countries were exempted in this first commitment period to allow these countries to pursue economic growth with the lowest possible energy costs in the hope that clean energy technologies would become cheaper and more attractive over time or due to the revenue stream from carbon credits.

Unfortunately not all countries have signed up to the Kyoto agreement and this was one of the most important issues in the debate during the Bali conference that took place late 2007.

Negotiations are currently ongoing on how to assure that all countries sign to the Kyoto Protocol, on how fast industrialising economies such as China or India can be included in an wider agreement and how we can move ahead after the end of the present accord end in 2012.

The Kyoto Protocol recognises that it is expensive and time consuming for industrialised economies to change pollution patterns for instance through the construction of less polluting power plants or through the introduction of cleaner vehicles.

While these efforts are ongoing, the protocol provides the industrialised economies with an option to buy carbon credits from developing countries listed in an annex to the Kyoto Protocol so that they can achieve their targets at least cost, while buying extra time to allow their industries to adjust.

Those carbon credits are bought to enhance the quota of allowed emissions allocated to specific countries through carbon emissions saved elsewhere.

That means, either non-emitted quotas are traded or emission reduction projects are funded and can offset other emissions.

This system thus enables developing countries to reduce their own emissions while gaining a new revenue stream from the credits sold, because industrialised countries would fund part of the investment required for clean technologies.

However one has to note that carbon credits can not be traded at fixed rates but are subject to market developments like other commodities.

But unlike those ordinary goods they need to be certified and approved through a United Nations body first.

The trading in these carbon credits has grown to a large international business and is expanding very fast.

For instance in 2006 the carbon market grew to a value of US$ 30 billion, three times greater than in the previous year.

By far the largest share of these credit passed through the European Union Emission Allowance Trading Scheme (EU EATS) which allows companies belonging to member countries to trade carbon credits in a multinational market in order to attain their (and their country's) emission reduction targets.

While the EU countries are the biggest buyers of carbon credits, the largest sellers are China and India with respectively 61% and 12% of the total CDM market in 2006. African countries so far have not played a major role with only 3% of the market in the same year.

However, there is now a concerted effort from many organisations such as World Bank Carbon Finance group, UNDP and also private institutions to change that picture.

Over the last years many buyers are attracted to the potential development of a carbon market in Africa. Right now South Africa still has the biggest number of carbon projects either approved or in the pipeline but the interest is spreading to other countries.

For projects to be eligible for trading under the Clean Development Mechanism Scheme, they have to prove what we call "Additionality".

That means it needs to be verified that the project under discussion is only being developed because of the current concern about climate change mitigation, or put differently, the project becomes viable because of the potential additional income through carbon credit trade.

Besides the trade in certified emission reductions, individuals, companies or states can also buy voluntary emission reductions to reduce their carbon footprint.

However those are not traded under the Clean Development Mechanism.

More and more airlines offer their customers for example to offset the emissions incurred through flights through investing in emission reduction projects.

Carbon Credit Potential in Rwanda

Rwanda has the opportunity to profitably play an active role in climate change mitigation through participation in the carbon credit markets that have emerged as a result of the Kyoto Protocol.

Rwanda is a very small polluter relative to most countries in the world: We invest mainly in renewable energies.

Our industries are still small to cause anything close to an alarming pollution, and we are investing in energy efficiency through the use of Compact Fluorescent Lamps and the improved cook stoves.

We can convert this 'non-pollution initiatives' into carbon credits that we can sell to countries struggling to reduce their emissions as promised.

This would mean more money for development projects such as power plants in Rwanda, increased investment in clean and modern technologies, and our own contribution to reducing climate change.

Rwanda is in a good position to exploit carbon credit markets especially through current projects in our energy sector.

On one hand the Government is aiming at replacing expensive and polluting rental diesel generators.

Replacing a polluting source of energy with a clean one such as hydro, micro hydro, wind, solar, geothermal, methane gas or biogas will make our projects eligible for the carbon market.

Besides the replacement we are also attempting to trade in carbon credits for specific renewable energy projects themselves.

Projects that the Government is actively considering include our two big Hydropower Projects, the Nyabarongo and Rukarara Hydropower Plant which are going to produce electricity without polluting emissions.

We are also looking into gaining carbon credits from the various micro hydro power plants that are currently under construction.

Currently the Government has already been approached with a proposal for carbon credits in the context of our National Domestic Biogas Programme.

The Biogas Programme is party to the CDM for two reasons, first of all no fuelwood is burnt, the trees are not cut down and can thus serve as a Carbon Dioxide storage.

Second, and more important, Methane, that is produced in anaerobic fermentation of organic materials is not emitted into the atmosphere.

This is very important because Methane is one of the gases that contribute significantly to the greenhouse effect and climate change.

Its effect is much stronger than that caused by the Carbon Dioxide. Through a biogas plant, the produced Methane is burnt through the the cooking and lighting. Methane is produced in our Kigali landfill through the rotting waste and can be transformed into energy instead of polluting our atmosphere. This is a project we are currently working on.

One of our biggest power generation projects, the extraction of methane gas from Lake Kivu and the transformation into electricity will also be presented at the United Nations for certification of carbon credits.

Efforts are also being undertaken to obtain Carbon Credits for our ongoing solar initiatives. Since the Government is planning to electrify more than 600 public institutions through solar photovoltaic systems, this non polluting energy will prevent utilization of generators.

The revenue generated form the sales of carbon credits will help Rwanda to invest further in renewable and sustainable energy sources and avoid relying on polluting ones. It will also assist our government in increasing access to electricity to our population.

Every possible effort must and is being undertaken if we have to achieve our target of increasing electricity access from 5% to 16% as foreseen our EDPRS target.

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