The collapse of global carbon prices has thwarted the hopes of several communities that had set up eco-friendly projects. 

According to public and private sector bodies spearheading environment-friendly programmes in the region, under the United Nations-sanctioned Clean Development Mechanism (CDM), scores of projects, mainly those focusing on clean energy, energy-saving equipment and forestation, have stalled.

In the past five years, the prices have plummeted from a high of $30 a tonne to less than a dollar, making it difficult for individuals and organisations to establish eco-friendly projects or maintain the existing ones.

The projects were to act as global carbon sinks and also provide a source of livelihood to communities across the region.

“The hopes the carbon trade held out for local communities at one time are no longer there,” said Ali Mohammed, special secretary, climate change, in the Office of the Presidency in Kenya.

“The prices of carbon have declined by more than 90 per cent and this has become a major challenge for developing countries keen on promoting environment-friendly projects.”

A dark shadow

The stalling of projects casts a dark shadow on the global programme that aims to create a cleaner environment by encouraging communities to establish conservation programmes and get paid for them by countries that emit greenhouse gases into the environment.

Most of the projects that were being established in parts of Kenya’s Central, Western, Coast and Rift Valley regions stalled at conception or the development stages, meaning they were abandoned before undergoing the mandatory inspection and verification required under CDM regulations prior to being allowed to start selling carbon credits.

Africa Carbon Exchange, one of the organisations involved in helping individuals and communities in East Africa to establish projects that can benefit from the trade in carbon under the CDM framework, also confirmed that several projects had stalled.

The organisation’s chief executive, Tsuma Charo, said East African Community residents were finding it difficult to establish environment-friendly projects because the costs outweighed the benefits following the collapse of prices.

“The cost of undertaking the carbon component of a project in order to be allowed to sell carbon credits to emitters of greenhouse gas, who are mostly in the developed world, is too high for now, forcing many small investors to shy away from the whole programme,” Mr Charo told The EastAfrican.

To deal in carbon credits — to get an emission or reduction permit for one of the seven greenhouse gases — a project has to undergo thorough inspection by certified environment auditors and verifiers. This undertaking is too costly without external funding.

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It is not only small investors that are suffering; even large investors such as Kenya Electricity Generating Company (KenGen), which had invested heavily in environment-friendly projects, have seen their earnings from the carbon trade decline.

KenGen had targeted to earn $13.8 million annually from trading in carbon credits in the belief that they would be bought at more than $10.
However, this has not been possible.

“We intend to widen the scope of our carbon markets by venturing into the new and unregulated markets outside the Kyoto mechanisms, such as the Voluntary Carbon Markets (VCM),” said KenGen in its annual report last year.

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Kyoto Protocol

The carbon trade was established in response to the Kyoto Protocol, signed in Kyoto, Japan, by some 180 countries in December 1997.

The agreement, which expired in 2012, called for 38 industrialised countries to reduce their greenhouse gas emissions between 2008 and 2012 to levels 5.2 per cent lower than in 1990.

It is as a result of the protocol that the European Union developed the Emissions Trading Scheme (ETS), which has been its flagship climate policy.

The ETS and the Reducing Emissions from Deforestation and Forest Degradation scheme (REDD+) have helped to establish many conservation projects that have improved livelihoods in Africa.

The expiry of the Kyoto Protocol in 2012 made the situation deteriorate since it was the backbone of CDM, under which the carbon trade operated.

Some developed countries, among them Russia, Japan, Canada and New Zealand, announced they would not sign a new framework, throwing the entire carbon trade under the CDM into disarray.

Mr Mohammed said Kenya has the most projects benefiting from the carbon trade — some 16 major projects and 16 programmes. Other EAC member countries also have projects, mainly on clean energy, benefiting.