CARBON FINANCE, DEFORESTATION AND SUSTAINABLE DEVELOPMENT: ISSUES AND CHALLENGES

 By 

Kwadwo TutuFSSDD, UNECA

    

WEST AFRICAN CARBON FINANCE INVESTMENT FORUM FOR FINANCIAL INSTITUTIONS    

Dakar, Senegal12 - 14 February 2008

   

 

Deforestation a major Problem

• Deforestation is both a local and global issue• Local - forests are important for the SD

(economic, social, environment) of African countries

• Global – deforestation and land use change accounts for 20% of GHG Emissions

• Africa’s forest most depleted, 30% left• Addressing deforestation addresses both SD of

Africa and Global Climate Change Problem

Africa’s Forests key to SD

• 25% of world’s remaining tropical forests in Africa

• 400 m out of Africa’s 600 rely on Forests• 80% of energy is wood biomass• Forests important for recharge of water

bodies for health, agric and electricity• 20% of world’s biodiversity hotspots in

Africa

Carbon Finance in Forestry

• Carbon Finance used in ff: areas

Avoided DeforestationAfforestationLand use Practices

Issues and Challenges in Carbon Finance

• Complexity of Causes of Deforestation• Permanence• Leakages• Baseline DataEstimates of deforestation, carbon,

emissions• Land administration and influx of giant

firms, benefits

Addressing Challenges

• Awareness Creation of CC for Policy Makers, Stakeholders, Financial Institutions by DNAs, etc

• Integrating CC into Development Strategies (PRS incorporating SD issues, NSDS, SD Issues being considered)

• Address Deforestation as a SD issue• Lobby and Defend the case for Carbon Finance in

Forestry (concept defn., competitive carbon payments etc)

Addressing Challenges Cont’d

• Carbon credits to assist build Forestry Assessment and Monitoring Systems (FAM)

• FAM includes produce latest forest change maps by collect,

digitize, archive, update spatial data Undertake multi-stakeholder consultation• FAM will address Leakages, Baseline data,

estimates and benefits

Specific Actions for Financial Institutions

• Assist consumers use solar will reduce demand for electricity from hydro-dams that cause deforestation

• Initial high fixed cost of solar for consumers is cause for non-use and FI’s can help finance this initial cost. The IRR of project (even not including deforestation cost) is high.

• Finance initial fixed cost of gas cooking stoves will significantly increase demand and reduce deforestation. The IRR of project (even not including deforestation cost) is high.

• Demand from The West Africa Gas Pipeline from Nigeria to some WA countries will increase when stoves are financed and will reduce GHG emission through gas flaring

ECA’s Activities in CC

• ECA new in CC activities. Current activities include

a) Developing Climate for Development (ClimDev)

b) Planning to Establish African Centre for Climate Policy Studies at ECA following Bali

• These Activities will Provide Climate information for SD of Africa Build capacity and Awareness in Africa by

coordinating activities under the NF with partner Agencies and DNAs

Build networking among CC Practitioners