INNOVATIONS IN THE PRIVATE SECTOR RESPONSE TO CLIMATE CHANGE AND THE AFRICAN CARBON
MARKET DEVELOPMENT
Lloyd Chingambo
Seventh African Development Forum
Addis Ababa. Ethiopia
October 15, 2010
The Big Question
Private sector as viable partner in dealing Africa’s climate change agenda
Africa Carbon Credit Exchange Telephone: +260-1-238473/2 www.africACCE.com
The Current Position
Africa has little or no access to finance Private sector remains on the sidelines Domestic financial sector does lending to climate change
projects Little or no support for climate change investments Absence of legal framework to support and protect climate
change investments Little attempt to use what funds, as are available, to unlock more
funds for climate change No real attempts to create/generate funds for climate change
Little appreciation of the interlocking relationship between Climate Change and Development.
Africa Carbon Credit Exchange Telephone: +260-1-238473/2 www.africACCE.com
Key Problems of the African Carbon Market
1. LACK OF FINANCE
Lack of project finance opportunities stifle low carbon project development
2. LACK OF KNOWLEDGE
Lack of awareness, knowledge and competencies to leverage global carbon market at all levels (governments, private sector, financial sector, project developers, etc).
3. LACK OF BASELINE METHODOLOGIES
Much of Africa’s economic activities are agro-forestry based.
Africa Carbon Credit Exchange Telephone: +260-1-238473/2 www.africACCE.com
Low Carbon Africa
Crafting Problem Specific African Solutions
Awareness and
Sensitization
Commercial Interest in
Low-Carbon Projects
Enabling Policy
Environment
Project and Carbon Finance
Low-Carbon Project
Development
Carbon Credit
Trading
Access to KnowledgeAccess to Knowledge Access to FinanceAccess to FinanceTrading PlatformTrading Platform
The Unique Design of ACCE
PROJECT PIPELINE DEVELOPMENT
Africa Carbon Credit Exchange “Unlocking Low Carbon Africa”
Africa Carbon Credit Exchange “Unlocking Low Carbon Africa”
Access to Knowledge
The Green Knowledge
Institute
Access to Finance
Low Carbon Africa Fund
Portfolio
Trading Platform
A Transparent and Structured Marketplace
Lloyds(Fund Manager)
Co-FundManager
LOW CARBON AFRICA FUND
Zambian Investors
Offshore Investors
GTCEF
AMGF
LCAF 1
WEF
Mandate• Facilitate the development of
innovative instruments and financing structures thereby unlocking finance to catalyze low carbon project growth in Africa.
• Develop financing structures which would offer different risk profiles to unlock both the private sector and the domestic financial sector.
• Facilitate financial access and market development for project promoters including the smallholder farmer
• Facilitate appropriate green technology transfer to Africa.
Facilitate Access to Finance
CREDIT ENHANCEMENT FUND
Stage 1. ACCE Undertakes Evaluation and Engineering of Primary Securities.
Stage 2.a. With Better Presentation of Securities, Some Clients Go Straight to
the Lender.
Stage 2.a. With Better Presentation of Securities, Some Clients Go Straight to
the Lender.
Stage 2.b. Less Secure Clients will access components of the GTCEF
Stage 2.b. Less Secure Clients will access components of the GTCEF
ENHANCEDSECURITIES
TRADE INSURANCE
PROPERTY INSURANCE
CASHGUARANTEE
ENHANCEDSECURITIES
INDIVIDUAL IMPORTER
SYNDICATE OF
IMPORTERS
Income: Donor Agencies
Income: Money Market
Income: Investors
OFF-TAKER AGREEMENTS
TANGIBLE ASSETS
LIQUID ASSETS
EQUIPMENT
CARBON CREDITS
FINANCE TERMS
Green Technology Credit Enhancement Fund
Stage 3. Provision of Climate Change Technology Transfer Funding
TECHNOLOGY TRANSFER INCENTIVE
FUND
Private Equity Funds
Development Banks
Banks
Govt.
International International Funds Funds
POLITICAL RISK INSURANCE
LIABILITY INSURANCE
Public Bodies
Green Technology Credit Enhancement Fund
The Mechanization Guarantee Fund
Africa Carbon Credit Exchange Telephone: +260-1-238473/2 www.africACCE.com
Strategic Aims of the Fund Facilitate mechanization of rural agriculture Facilitate improved production and yields for the
rural Farmers Mobilise and secure finance for purchasing
equipment Increase technical support to rural farmers Facilitate the development of sustainable and lower
carbon footprint rural agricultural practices.
Facilitating Access to KnowledgeGreen Knowledge Institute (GKI)
Facilitating Access to KnowledgeGreen Knowledge Institute (GKI)
Strategic Aims of the Institute
Knowledge Hub for carbon market development in Africa
Information Sharing Hub for African Designated National Authorities (DNAs)
Facilitate the development of African appropriate carbon methodologies
Deal with issues of sensitization and capacity building issues (e.g., governments, public and private sectors, NGOs, and private sector
GKI is developing into a Bureau for connecting required technical expertise to develop carbon offset projects.
The Trading PlatformThe Trading Platform
A Transparent and Structured Marketplace
ACCE is building a regulated trading platform on which market players can buy and sell credible compliance and voluntary carbon credits generated in Africa
It provides a transparent price discovery mechanism is essential for African project developers to realize market value for carbon credits
Through a network of Brokers and local partners across Africa ACCE will provide a medium for transaction, clearing and supporting structures to facilitate climate change/carbon projects.
Network of Brokers across Africa
Scaling up to Africa
Network of Brokers
PartnersPartners
INSTITUTION TYPE OF SUPPORT
1. USAID/PROFIT Initial Financial Support Technical Assistance
2. NORAD Conservation Farming,
Initial capitalizations into:
o Green Tech. Credit Enhancement Fund,
o Mechanization Credit Guarantee Fund
3. DANISH GOVT. Funding the p-CDM activities
4. WORLD BANK/IFC Conservation Farming, Green Knowledge Institute.
5. UNEP Risoe Green Knowledge Institute.
6. QUEENS UNIV. CANADA
Development of Futures Market on the Trading Platform.
PartnersPartners
INSTITUTION/GOVT. TYPE OF SUPPORT
7. AFREXIM BANK Line of Credit Carbon Credit Delivery Guarantee Fund ACCE contracted to be Afrexim Bank CDM Project
implementation Advisor Afrexim Bank to finance ACCE CDM project book.
CONTACT DETAILS
AFRICA CARBON CREDIT EXCHANGEAFRICA CARBON CREDIT EXCHANGE
4th Floor, Godfrey House. Kabelenga Road.P.O. Box 390035Lusaka. Zambia
[email protected]@africacce.com
Website: www.africACCE.com
Telephone: +260-1-238473/2