World Bank Urges CO2 Markets to Invest in Africa
NAIROBI The World Bank criticised carbon market investors on Thursday for failing to fund clean energy projects in Africa and said there were many untapped opportunities on the world's poorest continent.
The Kyoto Protocol set rich countries limits on emissions of heat-trapping greenhouse gases, but lets them meet these by paying for projects like wind and hydropower in developing nations under its Clean Development Mechanism (CDM).
But carbon credit prices in Africa were about 20 per cent lower than global averages, the Bank said in a new survey, due to investors' perception of the risk of doing business there.
"The World Bank is urging investors to buy in Africa ... We believe that perception of risk is not justified," Karan Capoor, the Bank's regional coordinator for carbon markets, told reporters at a major U.N. climate conference in Kenya.
"Certainly, a lot of African countries' economies have been booming and are open for this type of transaction."
The growing CDM trade was worth $5 billion in the last 20 months or so, but most funds have so far gone to China, India and Brazil. Many African countries have limited industrial sectors, and so have comparatively limited opportunities to reduce carbon emissions.
Most of the continent's transacted projects have been in South Africa and Egypt, but Capoor said half the volume of projects in the Bank's new CDM "pipeline" was accounted for by Nigeria and Equatorial Guinea.
He said there were also substantial opportunities in the clean power sector in countries like Kenya, where he said only 15 percent of the population had access to electricity. He said so far CDM did not adequately reward clean power projects.
"We believe this unnecessarily penalises the poorest people in the poorest countries in the world, and we would urge policymakers to look at that," he said.