Addis Fortune (Addis Ababa)

21 April 2013

Ethiopia: Six New Clean Energy Projects On Tap for Exploration

The Ministry of Water & Energy (MoWE) and the Environmental Protection Authority (EPA), have setup a joint steering committee that will develop and implement clean and renewable energy projects which can later be entered into the carbon trading scheme. A dozen people, three from the MoWE, and nine from the EPA were selected as committee members during a meeting between the two parties, on April 10, 2013.

The decision to form the committee was made a week earlier, at another meeting where both Wondimu Tekle, state minister for Water & Energy and Desalegn Mesfin, deputy director of the EPA, were present.

Fortune was able to confirm the meeting but its repeated attempts to contact people for more information did not bear fruit.

Biogas bottling; biodiesel from Jatropha oil; electric and clean energy stoves and electric taxis are the six green economic endeavours being considered by the new committee.

Concept notes for four of the six projects, excluding Jatropha biodiesel and clean energy stoves, have been given to the committee members of MoWE for evaluation. These four endeavours need 137 million dollars of financing, in order to be implemented.

After looking at the documents, the three members of the committee at MoWE will meet with their counterparts at the EPA this week to discuss how to best pursue implementation.

The committee will create detailed ideas, look for financing and also work towards entering the projects into the carbon trading scheme, according to Tesfaye Alemayehu, co-ordinator of the bio-energy sector at MoWE, who is also a member of the committee.

Three of the four projects now handed over to MoWE are expected to reduce just over 65.72 thousand tonnes of Carbon-dioxide and greenhouse gases. The fourth, the electric project, if implemented, could save 460.8Gw/hr.

Since its inception in 2005, carbon trading, whereby the amount of greenhouse gases, reduced through clean energy projects is converted into credit and sold on the international market, has boomed into a market that brings in billions of dollars every year.

The scheme was the result of the Kyoto Protocol, an international environmental agreement, signed by 191 countries in 1995, and put into effect 10 years later. The agreement places a cap on green house gas emissions for industrialised countries. They have the choice to abide by the Protocol either by reducing emission amounts in their own countries, or by purchasing carbon credits from developing countries to offset them.

MoWE reached an agreement with the EPA to form a committee during its attempt to register its current solar power projects into the carbon trading scheme.

Through its Rural Electrification Fund (REF) office, MoWE has procured 25,000 solar panel systems to install in four regions of the country. The project, said to be the biggest solar powered project inAfrica, has 130 million dollars in funding from the World Bank.

MoWE submitted a proposal to the EPA, which is the Designated National Authority (DNA), for approval to enter the carbon trading scheme, two months ago, according to Hailu Geletu, Environmental Officer for the Rural Electrification Fund office under MoWE. Discussions that followed led to the agreement to work together to develop more clean energy ideas that the EPA and MoWE are currently working on.

"There are many clean energy projects inEthiopiathat could benefit from the money the sales would bring," Hailu told Fortune.

The country was a recent beneficiary of carbon trading, when World Vision (WV) funded the Humbo reforestation project in Woliyta zone of the Southern Region.Ethiopiareceived Certified Emission Reductions (CER), which are sellable carbon credits, from the United Nations Framework Convention on Climate Change (UNFCC). The latter is the designated authority that certifies that a project has actually reduced emissions.

"The money would be used to financially support the future development of similar projects and financially assist individuals that are involved," Hailu told Fortune. "If the project is accepted, the money from the carbon trading could be used to cover financing costs."

The initiative, however comes at a time when the carbon trading market has declined in terms of value. Whereas reduction of a tonne of carbon dioxide or equivalent used to cost as high as 25Euros in 2005, atEurope's Emissions Trading Scheme (ETS) market, it is now down to five Euros.

ETS is the largest carbon trading market in the world.

Carbon prices have also fallen by 49pc, between 2011 and 2012, according to reports from Environmental Leader, an energy and carbon trading publication.

"Despite the low price it is still better to tap into the market." Hailu told Fortune. "Since our projects will be designed to cut down a substantial amount of emissions they could fetch higher prices."

The EPA declined to give detailed comments on the agreement when contacted by Fortune.

"It is still too early to comment," Mohammed Ali, Technology Transfer Directorate Director of the EPA, said.

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