Nigeria earns emission credits amid high potential

Daily Independent April 10 2011
By Michael Simire Property & Environment Editor
Indications have emerged that a viable prospect lurks for the Nigerian sustainable development sector, which was last week grouped among major international players. However, indigenous financial industry practitioners seem indifferent to the venture. Within two years of participation and with four operational Clean Development Mechanism (CDM) projects, the West African country has been ranked ninth in anticipated global certified emissions reduction (CER) projects. Statistics released last week by the United Nations Framework Convention on Climate Change (UNFCCC) reveals that Nigeria has an expected average annual CER of 4,693,552 units, which is the highest in Africa and forms 1.03 percent of the world’s total. A major component of the Kyoto Protocol (KP), the CDM allows emission-reduction projects in developing countries to earn CER credits, each equivalent to one tonne of CO2. These CERs can be traded and sold, and used by industrialised countries to a meet a part of their emission reduction targets under the KP. According to the UNFCCC, the mechanism stimulates sustainable development and emission reductions, while giving industrialised countries some flexibility in how they meet their emission reduction limitation targets. According to the UNFCCC log, Nigeria is behind China ( 288,734,742 units, 63.26 percent), India (50,374,234 units, 11.04 percent), Brazil (22,108,040 units, 4.84 percent), Republic of Korea (17,195,547 units, 3.77 percent), Mexico (9,823,776 units, 2.15 percent), Indonesia (6,365,869 units, 1.39 percent), Malaysia (5, 338,105 units, 1.17 percent), Chile (5,017,481 units, 1.10 percent) and Argentina (4,789,047 units, 1.05 percent). In the continent, Nigeria is ranked above South Africa ( 3,247,426 units), Egypt (2,606,471 units), Tunisia (687, 573 units), Kenya (456,823 units), Morocco (287,447 units), Senegal (225,668 units), Tanzania (202,271 units) as well as Mali and Mauritania (both with 188,282 units each). However, in terms of CERs so far issued, Nigeria, with a paltry 1,867 units, trails Egypt (6,035,874 units), South Africa (1,877,195 units), Morocco (330,099 units) and Tanzania (13,587) in Africa. China remains the global leader with a staggering 321,194,584 units, representing 55.10 percent of the total. A couple of months ago, Nigeria was yet to earn a single unit. Nigeria has acquired its present status via four registered CDM activities, which are listed to include the Kwale Recovery of Associated Gas Project, Ovade- Ogharefe Gas Capture and Processing Project, Save 80 Fuel Wood Stoves and Asuoku/Umutu Gas Recovery and Marketing Facility. CDM expert and former Designated National Authority (DNA) in Nigeria, Victor Fodeke, submitted last week in Lagos that the future for the sector in the country was bright, in the light of the fact that seven new projects under consideration for approval by the UNFCCC had passed through the monitoring stage. The proposals entail two bio-fuel projects, an energy efficient bulb initiative, two variants of the energy-efficient cooking stove, a gas-gathering venture and a gas plant-to-heat- and-power scheme. He said, “There is an urgent need to double efforts with REDD (Reducing Emissions from Deforestation and Forest Degradation), integrated forest management, reforestation, revegetation and aforestation as well as renewable projects. This is very good news for local council chairmen and bankers.” According to him, no fewer than two “bankable” CDM project opportunities exist in every local government area in the country. He added that, contrary to a World Bank study that identified 750 CDM project opportunities nationwide, about 1,500 existed. “One out of the two is in the area of reforestation and revegetation. Other areas of potential are renewable energy/energy efficiency, biomass/waste-to-energy and hydro electric generation,” he added. Following a collaborative initiative involving the United Nations Development Programme (UNDP), Federal Government and the Cross River State Government, Nigeria a couple of months ago completed a Draft National REDD Readiness Programme (DNRRP), which is expected to be endorsed at the seventh Policy Board Meeting of the UN-REDD Programme scheduled for October this year in Berlin, Germany. Officials of the Nigerian National REDD Programme are fine-tuning arrangements to hold a scoping mission at Taraba, the second REDD Pilot Site/State after Cross River. A climate expert who pleaded anonymity lamented that Nigerian banks were lagging behind in the potentially beneficial renewable energy sector and needed to urgently brace up. “Banks need to see the opportunity for investment in CDM and related initiatives, what with UN disclosures that the country has a high potential here,” he said. He went on, “The banks really do need to be part of this venture which is being dominated by expatriate firms, some of who would buy these credits (CERs) at a cheap rate only to later resell at exorbitant price.” Another source urged national climate officials to wake up and live up to their responsibilities. He said, “It is quite commendable that within two years Nigeria has assumed the number nine position in the world in terms of expected yearly CER. But government officials should not rest on their oars and ensure that the CDM projects under consideration scale through the verification stage and eventually get approval. They should work hard to make sure the money comes in.” To earn a CER, a CDM project undergoes a nine-stage circle that entails obtaining an initial feasibility assessment along with the development of a Project Design Document (PDD); host country approval; validation of the project design document; registration/formal acceptance of the CDM project activity; financial structuring; implementation and operation; monitoring, verification; certification; and, issuance of CERs. The first four stages can span between six and 12 months. The CDM is the main source of income for the UNFCCC Adaptation Fund, which was established to finance adaptation projects and programmes in developing country Parties to the KP that are particularly vulnerable to the adverse effects of climate change. The Adaptation Fund is financed by a two percent levy on CERs issued by the CDM. The KP’s central feature is its requirement that countries limit or reduce their greenhouse gas emissions. By setting such targets, emission reductions took on economic value. To help countries meet their emission targets, and to encourage the private sector and developing countries to contribute to emission reduction efforts, negotiators of the Protocol included three market-based mechanisms - Emissions Trading, the CDM and Joint Implementation. The World Bank study stated that if all the 750 identified CDM project opportunities in Nigeria were implemented, slightly over 100 million tonnes of CERs could be generated yearly. At a current international carbon rate of 14.65 Euros for a tonne, this translates to about 1.4 billion Euros. In the week spanning March 14 to 20, 47 CDM projects were submitted for registration, believed to be the highest so far this year. The projects, with the potential to generate over six million CERs per annum, were submitted from 14 countries. China dominated the list with over four million CERs. The largest project submission was from China – methane power generation project generating over 1.1 million CERs per year. There were two projects from Pakistan including a cogeneration and a waste heat recovery and utilisation project. There was a biomass project from the Dominican Republic.

Nigeria to Establish Climate Change Insurance Scheme for Farmers

ABUJA – It has been revealed that only one percent of Nigerian farmers have access to insurance cover in the country. This was stated in a communiqué issued the end of a two day conference on climate based micro-insurance: providing protection for Nigerian farmers, said despite the fact that over 90 % of Nigeria’s agriculture is dependent on rain-fed systems. According to the communiqué, “Considering the important role insurance plays in stimulating banks to extend credit facilities to the agricultural sector and the role that perception of risk among financial institutions...

Published By: Vanguard News Monday, 28 March