The Middle East and North Africa region is highly susceptible to climate change, on account of its water scarcity, high dependence on climate-sensitive agriculture, concentration of population and economic activity in urban coastal zones, and the presence of conflict-affected areas. Moreover, the region is one of the biggest contributors to greenhouse gas emissions on account of its thriving oil and gas industry.
The world’s dependence on Middle East energy resources has caused the region to have some of the largest carbon footprints per capita worldwide. Not surprisingly, the carbon emissions from UAE are approximately 55 tons per capita, which is more than double the US per capita footprint of 22 tons per year. The MENA region is now gearing up to meet the challenge of global warming, as with the rapid growth of the carbon market. During the last few years, many MENA countries, like UAE, Qatar, Egypt and Saudi Arabia have unveiled multi-billion dollar investment plans in the cleantech sector to portray a ‘green’ image.
There is an urgent need to foster sustainable energy systems, diversify energy sources, and implement energy efficiency measures. The clean development mechanism (CDM), under the Kyoto Protocol, is one of the most important tools to support renewable energy and energy efficiency initiatives in the MENA countries. Some MENA countries have already launched ambitious sustainable energy programs while others are beginning to recognize the need to adopt improved standards of energy efficiency.
Among regional countries, the United Arab Emirates has launched several ambitious governmental initiatives aimed at reducing emissions by approximately 40 percent. Masdar, a $15 billion future energy company, will leverage the funds to produce a clean energy portfolio, which will then invest in clean energy technology across the Middle East and North African region. Egypt is the regional CDM leader with twelve projects in the UNFCCC pipeline and many more in the conceptualization phase.
CDM Prospects in MENA
The MENA region is an attractive CDM destination as it is rich in renewable energy resources and has a robust oil and gas industry. Surprisingly, very few CDM projects are taking place in MENA countries with only 23 CDM projects have been registered to date. The region accounts for only 1.5 percent of global CDM projects and only two percent of emission reduction credits.
The two main challenges facing many of these projects are: weak capacity in most MENA countries for identifying, developing and implementing carbon finance projects and securing underlying finance. Currently, there are several CDM projects in progress in Egypt, Jordan, Qatar, Morocco, UAE and Tunisia. Many companies and consulting firms have begun to explore this now fast-developing field.
The Al-Shaheen project is the first of its kind in the region and third CDM project in the petroleum industry worldwide. The Al-Shaheen oilfield has flared the associated gas since the oilfield began operations in 1994. The project activity is expected to reduce GHGs emissions by approximately 2.5 million tCO2 per year and approximately 17 million tCO2 during the initial seven-year crediting period.
Potential CDM projects that can be implemented in the region may come from varied areas like sustainable energy, energy efficiency, waste management, landfill gas capture, industrial processes, biogas technology and carbon flaring. For example, the energy efficiency CDM projects in the oil and gas industry, can save millions of dollars and reduce tons of CO2 emissions. In addition, renewable energy, particularly solar and wind, holds great potential for the region, similar to biomass in Asia.
The Clean Development Mechanism (CDM) is an extremely simple concept. Companies in developed economies can continue with their polluting ways so long as they pay for reductions in greenhouse gas emissions elsewhere in the world. Substitute Egypt, Libya, Sudan, Zimbabwe and a string of other African countries for 'elsewhere'.
CDM may not figure highly on the financial radar screens of many entrepreneurs and business people across the globe. They're probably much more exercised over the merits or otherwise of business banking services, for example, offered by erstwhile multinational giants like HSBC, Barclays, Citibank and others. But maybe they should be looking at CDM, not least because entrepreneurial activity and green make interesting bedfellows these days.
The rationale behind CDM is a fascinating one. It's predicated on the belief that it's far harder and costlier for industrialized countries to reduce greenhouse gas emissions than developing countries. That's because developing countries usually start from a less-cluttered and less-regulated historical background. However, projects demonstrating reduced greenhouse gas emissions must also meet sustainable development and additionality criteria in order to qualifying for CDM support.
Put simply, this means any project or venture must clearly show that the use of resources not only meets human needs but also doesn't harm the environment at the same time. And any greenhouse gas reductions made as a consequence would have happened anyway, with or without CDM funding. The international treaty, the United Nations Framework Convention on Climate Change (UNFCCC), was the forerunner to the legally binding Kyoto Protocol, adopted by almost all countries of the world.
Under Kyoto, the most highly industrialized countries are required to achieve quantifiable reductions in greenhouse gas emissions. Less-developed countries, which are much more likely to suffer disproportionately from the effects of any climate change, don't have such targets. According to the UNFCCC secretariat, the CDM and other market-based mechanisms, adopted as part of the Kyoto Protocol negotiations, allows emission-reduction projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one tonne of CO2. These CERs can be traded and sold, and used by industrialized countries to meet a part of their emission reduction targets under the Kyoto Protocol.
The mechanism, says the UNFCCC secretariat, stimulates sustainable development and emission reductions, while giving industrialized countries some flexibility in how they meet their emission reduction limitation targets. The UNFCCC announced at the beginning of February 2013 the number of CDM projects registered had reached the 6,000 mark. Last week, the UNFCCC secretariat and the East African Development Bank (EADB) signed a partnership agreement to establish a regional collaboration centre in Kampala, Uganda, in an effort to increase participation in CDM projects.
It is the second such centre in Africa, the first one being opened several months ago in Lomé, Togo, by the UNFCCC in collaboration with the BanqueOuestAfricaine de Développement. UNFCCC Executive Secretary, Christiana Figueres, said, “The two regional collaboration centres in Lomé and Kampala are designed to help Africa increase its attractiveness and potential for CDM. Our goal is to build capacity, reduce the risk for investors in such projects and help make the continent an increasingly attractive destination for CDM projects.”
The office in Kampala will be operational from May 2013. Besides hosting the office, the EADB is also expected to provide personnel, as well as administrative and logistical support. EADB Director General Vivienne Yeda lauded the partnership between the two organizations and said, “This partnership with UNFCCC is key for us at EADB as we invest in sustainable development and seek to ensure sustainability in all our operations. We hope that the new office will help increase the regional distribution of CDM projects in East Africa where there is an acute need for sustainable development.”
The Kampala office is expected to enhance capacity-building and provide hands-on support to governments, non-governmental organizations and businesses interested in developing CDM projects in more than 20 countries in the region. Among the countries that can seek support from the new office are Egypt, Kenya, Uganda, Tanzania, Rwanda, Burundi, Angola, Botswana, Comoros, Equatorial Guinea, Eritrea, Ethiopia, Lesotho, Libya, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Sudan, Swaziland, Zambia and Zimbabwe.
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