Carbon Breakout - Potential• Regulatory is bounded by 1% in 2008-2012 for sequestration• In Africa, there is significant degraded/deforested land prior to 1990• 7% of Africa is on the grid, so there is need for small scale energy (pro poor)• Carbon payments go further in Africa to provide incentives• Many African communities and industries depend on wood for fuel• Some industries depend on diesel so there is a potential for fuel switch• 2002-2012: 42 M tC across Africa for forest restoration• 2002-2012: 168 M tC across Africa for avoided deforestation• Now: $25-50M tons delivered from LULUCF & community-friendly energy• Future: 2B tCO2 under Kyoto, 15% is CDM, Africa obtains 5% of CDM = 15 M

tCO2 @ $5 = $75-100M 2008-2012– (Only some of the $100M will not be ‘pro poor’ projects)

• Voluntary Market: Now: < $1M per year, Future: $20-40M (2008-2012)– Voluntary market may hold more potential for Africa and ‘pro poor’ benefits

Carbon Breakout - Potential

Theoretically$300M Technically

EconomicallyMarket

Regulatory

Feasible$100M Kyoto$20-40M Volun.

Carbon Breakout - Barriers• Transaction costs are quite high including bundling small scale projects

– Lower transaction costs in the voluntary market– Projects must be large scale to recover transaction costs– High transaction costs detracts from sustainable community benefits

• Getting out competed by large scale projects outside of Africa• Lack of information sharing and scientific data availability (for methodologies)• Projects are taking a long time

– Lack of access to upfront capital both in regulatory and voluntary markets– Inadequate infrastructure

• CDM rules (Methodologies, additionality start date)– Governments find it difficult to demonstrate sustainable development benefits

• Capacity of institutions at many levels• “First mover penalties” – lots of visibility from many stakeholders delays project activities• Corruption• Market development is needed for the voluntary market

Carbon Breakout - Regulatory• The CDM rules are onerous and require significant time• The complexity of PDDs requires hiring consultant, which increases the transaction

costs, so there is a longer learning curve• Original CDM objectives for sustainable development benefits are not being achieved• Potential exists to improve small-scale rules and bundling in particular to help links to

sustainable development• Potential to reduce transaction costs is important• Mismatches in local legal titling laws and forestry laws (e.g. participatory forest

management and forest reserves)• Difference between property rights and carbon rights, so management agreements and

concession fees must be consistent with carbon projects• Carbon/land/title rights are difficult to sort out

– Costs and time to get surveys affects ability to access land titling– Can get recognized title through de facto land management or concessions– However there is limited access to ‘large’ concessions – Group/community mgmt/ownership has new conflicts and opportunities & changes

relationships– The voluntary market may have less restrictions, but still has issues

Carbon Breakout - Capacity

• Demands on local project sponsors are high for carbon emissions delivery caused by the private sector expectations

• We must analyze which stakeholders need what type of capacity

• Regulatory market needs more government involvement and capacity

• Capacity development is more effective when coupled with projects

• Links are needed between local actors/NGOs and market needs like risk management

• Civil society needs more awareness to aid governments in passing sound laws and civil society can act as watch dogs for quality projects

• Capacity building not properly tailored for specific action plans

• Capacity for legislators, decision makers and local government is key

Carbon Breakout - Institutional

• Increase partnering with experienced institutions

• Leverage experiences from participatory forest mgmt– CARE and WWF can bring some on the ground experience to this

• We could develop a pooled ‘marketing’ of projects for Africa