Africa Power Sector Should Tap Carbon Credit Funds
Date: 26-Jun-08
Country: KENYA
Author: Duncan Miriri
Eddie Njoroge, head of the Union of Producers, Transporters and Distributors of Electric Power in Africa, told Reuters this was one of the options open to utilities who have to make the necessary investments to meet rising demand.
"There is a realisation that clean energy is the way forward and if you have got clean projects, there is no reason why you cannot claim some credits," he said at a union meeting in Kenya.
"We need to have innovative ways of financing the projects. I think we need to look at listing infrastructure bonds, export credit agencies and leveraging on our balance sheets."
In the carbon credit market under the Kyoto Protocol, worth US$13.4 billion last year according to the World Bank, companies and governments from rich nations invest in clean energy projects in developing countries and in return receive offset credits.
These credits, each equivalent to one tonne of carbon dioxide (CO2), can then be sold for profit or used to meet greenhouse gas emissions targets under Kyoto.
Africa needs to spend an estimated US$560 billion by 2030 to generate an additional 260,000 megawatts (MW) of power, experts say.
Njoroge said African firms have no choice but to find ways of raising the required funds to invest in the projects that are vital to the attainment of economic growth targets.
"The amount required is huge, but what is the option? If we don't have that money, Africa will not develop."
Also managing director of Kenya Electricity Generating Company (KenGen) Njoroge said firms like his were turning towards clean energy to raise funds.
KenGen, which produces 80 percent of east Africa's biggest economy's electricity needs, has nine clean development mechanism projects which it hopes will raise US$5 million a year.
"The projects are all in the process of being assessed by the executive board of the Kyoto protocol," said Njoroge, adding that modes of generating clean energy are cheaper as they do not require diesel power like thermal generation.
Kenya is focusing on geothermal energy to meet growing demand in a fast-expanding economy.
It produces 128 MW of the renewable source, against a potential of 7,000 MW, according to Njoroge.
On the primary market for certified emissions reductions (CERs), the credits traded under Kyoto, prices can range from US$16-$26 per tonne of CO2.
(Editing by Michael Szabo)
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