Friday, 20 April 2012

New CDM loans launched

A new loan scheme to support Clean Development Mechanism (CDM) projects in developing countries has been launched in Addis Ababa. CDM projects aim to reduce greenhouse gas emissions, contribute to sustainable development and technology transfer, benefiting the world’s poor economies.

The CDM allows emission-reduction projects in developing countries to earn certified emission reduction credits (CERs), each equivalent to one tonne of carbon-dioxide. These CERs can be traded and sold, and used by industrialized countries to a meet a part of their emission reduction targets under the Kyoto Protocol. The mechanism stimulates sustainable development and emission reductions, while giving industrialized countries some flexibility in how they meet their emission reduction limitation targets. 

The loans will be interest free for CDM projects in LDCs as well as countries that have fewer than 10 registered CDM projects. These The loans will finance the development of Project Design Documents; validation by a Designated Operational Entity; registration of the project with the UNFCCC; and the monitoring and verification of Certified Emissions Reductions.

The scheme is run jointly by the United Nations Framework Convention on Climate Change (UNFCCC), the United Nations Environment Programme (UNEP) Risoe Centre and the United Nations Office for Project Services (UNOPS).

Christiana Figueres, the UNFCCC Executive Secretary said the launch of the loan scheme is both timely and relevant. “ With the European Union Emission Trading Scheme to only accept CERs from LDCs starting next year and many LDCs being located in Africa, the loan scheme "has come at the right time
and to the right place," she said. "The CDM Loan Scheme is a chance to improve the access to and spread of the CDM, particularly in Africa," Ms. Figueres said. "I hope during next year's Africa Carbon Forum, we will see the positive impact this scheme has made towards ensuring the active participation of the continent in the CDM."

However, the projects that stand to benefit from this loan scheme include those that have a probability of registration with the UNFCCC; a reasonable expectation of generating at least 7,500 CERs per year, and documentation that is developed with an experienced CDM consultant.

The time is right for Africa to increase its share of CDM projects, said John Christensen, Head of the UNEP Risoe Centre.
"We have been working to try and increase the engagement of African countries in the carbon market," he said. "We have had some modest success. We hope with the loan scheme and continued capacity-building we can make a real difference in the number of projects here."

By Mubatsi Asinja Habati

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