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Carbon market woes blunt prospects for Cameroon CDM projects

Source: Thomson Reuters Foundation - Fri, 3 Jan 2014 12:17 PM
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Workers at the Nkolfoulou-Yaounde landfill site in Cameroon. TRF/ Elias Ntungwe Ngalame
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YAOUNDE, Cameroon (Thomson Reuters Foundation) – An initiative to reduce greenhouse gas emissions from landfill sites in Cameroon cannot be expanded to other Central African countries as planned due to a lack of income from the troubled carbon market, its backers say.

Two projects in Cameroon are registered to sell carbon credits via the U.N.’s Clean Development Mechanism (CDM), but the price of CDM offsets has slumped, blunting prospects for the landfill improvement scheme, according to officials with the state-owned Hygiene and Sanitation Company Cameroon (HYSACAM).

The Nkolfoulou-Yaounde and PK 10 Douala plants, built at a cost of around 10 million euros (around $13.6 million), mitigate methane emissions from waste decomposition by capturing and destroying landfill gas in enclosed flare stations.

“We started these two landfill projects in 2009, with plans to use our expertise to reproduce similar projects in other countries in the Congo Basin by 2015. But the expansion has been delayed for lack of funding,” said Bikoe Betrant Noel, head of Nkolfoulou-Yaounde.

According to Noel, the landfill projects are expected to generate more than 1 million CDM carbon credits by the end of 2015, but so far it has proven hard to find buyers for them.

“These are the first CDM projects in the Central African region, and we had envisaged reproducing similar projects in the other countries in the region at an estimated cost of 4.8 million euros ($6.5 million) each, but we don’t have funding for this,” Noel said.

Facilities to convert the trapped methane into cheap cooking gas have also had to be put on hold, HYSACAM director-general Michel Ngapanou said last year.

WARSAW DISAPPOINTMENT

Experts say the failure of November’s U.N. climate change conference in Warsaw to agree on measures that would lead to a sustained market price increase for CDM credits is likely to discourage private investment in CDM projects in developing countries.

This also spells trouble for the Adaptation Fund, set up under the United Nations Framework Convention on Climate Change (UNFCCC) to finance adaptation programmes in developing nations, as the CDM is meant to be its main source of income.

At the opening of the recent U.N. talks in Poland, UNFCCC Executive Secretary Christiana Figueres said investment in CDM projects was dwindling and needed a boost.

“Unfortunately countries could not agree in Warsaw on any better way for funding,” said Joseph Armathe Amougou, a Cameroonian delegate to the negotiations.

“Even proposals for green (climate) funds to be used to increase the price of CDM credits or to set a minimum price for CDM offset were rejected by Annex 1 countries (industrialised countries that are party to the Kyoto Protocol). This is not encouraging to investors in this area in developing countries,” Amougou added.

Certified Emissions Reductions (CERs) - a unit representing one tonne of carbon dioxide-equivalent sequestered or abated - can be traded, and are purchased by industrialised countries to help meet their emissions reduction targets under the Kyoto Protocol, the main international treaty for curbing global warming.

But the price of CERs has dropped from more than 10 euros in 2011 to below 50 cents, due to over-supply and uncertainty over future demand.

“We in Africa need to cushion current CDM efforts – such as integrated bio-gas production in countries like Kenya - from ongoing and future shocks, instead of letting (the CDM) die at a time when it is beginning to function,” said Robert Gichange from Kenya at an event organised by the PanAfrican Climate Justice Alliance on the sidelines of the Warsaw conference.

Some representatives of civil society groups said the creation of a special fund to support CDM projects - especially in Africa where they are suffering setbacks after a slow start - was imperative to revive investor interest.

“The private sector needs to be encouraged because this is the prime mover of any economy,” said Agustine Njamnshi of the Cameroon branch of the Bioresources Development and Conservation Programme.

FOREST FUNDING

But some environmental experts in Cameroon believe all is not lost.

“Financing of climate change (activities) in developing countries today - be it mitigation or adaptation - has both the approach of carbon markets and that of carbon funds,” said Zachee Nzohngandembou of the Centre for the Environment and Rural Transformation, a Cameroonian nongovernmental organisation.

“The Cameroon government, like other developing countries, cannot afford the resources required to encourage low-carbon and climate-resilient development, but they get support in the forestry sector, especially (from) international donor institutions like the European Union and World Bank,” he said.

Officials at the ministry of forestry and wildlife also struck a positive note.

“Carbon financing from bilateral and multilateral institutions in the forestry sector constitutes the major source of funding for the fight against climate change in Cameroon,” said Koulanya Koutou Danis, secretary-general at the ministry.

Officials point to the Forest Carbon Partnership Facility, a readiness fund that prepares countries in the Congo Basin and elsewhere in the developing world to receive and spend grants and other funding to protect their forests. Cameroon’s application for $1.6 billion was approved by the World Bank at the end of November. 

Elias Ntungwe Ngalame is an environmental writer with Cameroon's Eden Group of newspapers.

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