Clean Development Mechanism (CDM) projects have for the most part bypassed Africa with a large majority of registered projects being in China and India as Sub-Sahara Africa only claims 1% of the world’s total. However, all of that is subject to change with the onset of the successor to the Kyoto Protocol.
A financing and project development framework is nearly complete for the Lake Turkana Wind Power project in Kenya that will increase Kenya’s power capacity by about 25% once finished. JP Morgan also runs a Climate Care office in Nairobi that sells CERs to individuals and businesses.
Consultancies have even begun cropping up in Kenya, such as Carbon Africa Ltd. which developed the carbon asset portion of the Turkana wind project. Carbon Africa’s director, Adriaan Tas, says carbon credits retain the potential to increase project income and leverage financing in Africa. It is plausible that carbon credits could offer leverage by increasing the internal rate of return for a project from an average of 10% to 12% and leverage additional project financing.
Carbon Africa’s Adriaan Tas said: “Personally I think we are facing an interesting window of opportunity. Especially in Kenya, the interest in renewable energy has picked up a lot… Financers seem to be more keen to invest in projects in Africa and also carbon finance opportunities are on the rise in the region.” However, the costs and constraints may remain underestimated here. Tas added, “Because of the Turkana project, many people have caught an interest in wind power but they underestimate the cost and complication of developing a project.”