DEPARTMENT FOR
ENVIRONMENT, FOOD AND RURAL AFFAIRS News Release (463/07) issued by
The Government News Network on 12 December 2007
A ground breaking
scheme to boost sustainable development and carbon market
investment in Africa has today been announced at the UN Climate
Conference in Bali by UK Environment Secretary Hilary Benn today.
The African Springboard - a partnership between the UK Government
and major UK-based financial firms - will be a for-profit company
to develop Clean Development Mechanism (CDM) projects in
sub-Saharan African countries that have so far benefited little
from carbon market investment.
The Springboard will focus on projects that suit local
conditions, maximising the value from the carbon market to host
countries and communities, and is expected to generate $2 million
in CDM investment in its first year.
The CDM permits industrialised countries, which have emission
targets under the Kyoto Protocol, to invest in sustainable
development projects in developing countries that reduce
greenhouse gas emissions, and thereby generate tradable emission credits.
The UK has pledged an initial $200,000 (£100,000) in start up
costs as well as in-kind support and local liaison help to the
Springboard, which will initially focus on sub-Saharan countries
that have no CDM projects yet. The Springboard partners will
decide on three initial target countries early in the new
year.
The UK is a leading participant in the CDM and supports
CDM projects as a vital symbol of global commitment. UK companies
are now the largest investors in the programme. However, the
scheme has not delivered in Africa which is why action is needed.
African projects currently represent only 2.6 per cent of all
registered CDM projects.
There are significant barriers to CDM
projects in Africa which include an absence of capacity to
undertake projects and a lack of local capital and private sector
engagement, as well as investment and institutional barriers.
Ministers at the Bali talks are expected to abolish the payment
of registration fees and shares of the proceeds from CDM project
activities hosted in least developed countries on Friday. This is
intended to encourage confidence in CDM investment in Africa and
other areas.
Hilary Benn said:
"Action from the City and the broader financial sector is
crucial to developing the carbon market in Africa. To be
effective, we need to find a way to make CDM projects in Africa as
attractive as those in Asia and Latin America.
"These leaders in the London carbon market are experts -
making them the best people to find and undertake the projects
that will work. That's good for the City, and good for the
people in Africa who will benefit from their technical expertise.
"By establishing this as a profit-making company, we're
ensuring that there will be the right financial incentives for
success - so that others can follow what the Springboard achieves.
"This effort needs to link with the other good work
that's being done by development banks, environment
departments, NGOs and others, including strong links with the
Nairobi Framework partners."
The Springboard will help to establish the Clean Development
Mechanism in these countries by establishing CDM projects, and
will:
* Allocate the projects to buyers through a fair,
transparent allocation process that maximises the returns to the
community hosting the project.
* Work alongside Government and
other agencies to establish and resource a Designated National
Authority (which approves projects) in host countries;
* Help
to establish CDM methodologies that are applicable and appropriate
to local circumstances; and
* Providing demonstration projects
including bringing projects to the project registration stage.
The Springboard will initially be subsidised due to the
difficulty and additional cost of developing projects in
sub-Saharan Africa, but is expected to break even within three years.
It will be locally-based, with a secretariat in an African
country to be established in January 2008, and initially will have
local representatives in three countries, with all to be in place
by the middle of next year.
Participating organisations have agreed that the African
Springboard will complement existing programmes and initiatives by
governments and others. The Springboard will charge a mixture of
up-front fees and commission for developing the projects, with
partners excluding Defra receiving equity in proportion to their
share of the overall amount contributed.
The UK Government believes learning by doing will show that
investment in Africa can deliver both profits and sustainable
development in Africa, and will form part of the UK's
contribution to the Nairobi Framework launched last year.
The founding contributors are Defra, Agrinergy, Barclays, Carbon
Capital Markets, Climate Change Capital, JP Morgan Chase, Norton
Rose, Rabobank, Shell Foundation and Standard Bank.
Commenting on the Springboard Initiative, Mark Woodall, CEO,
Climate Change Capital said:
"As the carbon market develops, so does our collective
responsibility to ensure the benefits are increasingly visible
worldwide. We want to demonstrate that transforming the global
economy will bring new, sustainable investment opportunities to
Africa while protecting the global atmosphere."
"It's important for us to be involved in a
public-private initiative to boost CDM activity in sub-Saharan
Africa" said Geoff Sinclair from Standard Bank, Africa's
largest bank.
"The Springboard will be practical, commercial and will make
sure local communities benefit from their Projects. It's a
hand up, not a hand out, so it has real potential to achieve
concrete results."
Notes to editors
1. The African Springboard Initiative is not related to the Shell Springboard.
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