Under the Kyoto Protocol, the signatory countries of the United Nations Framework Convention on Climate Change (UNFCCC) agreed to reduce greenhouse gas emissions and introduced a market-based “Clean Development Mechanism” (CDM). This approach supported projects and countries to trade emission reductions.
As a result, not only have there been increased emission reductions at national and regional scale, but also incentivised private sector participation in climate change mitigation.
Carbon Markets in the context of the Paris Agreement
As countries try to limit the global temperature rise to below 1.50c as set out in the Paris Agreement, there is need to cut domestic emissions through implementing low emission development projects.
If such projects are registered under CDM, they can generate Certified Emission Reductions (CERs) that can be purchased to offset emissions produced elsewhere.
In order to strengthen the region’s involvement in CDM projects, GIZ collaborates with the Ugandan Climate Change Department of the Ministry of Water and Environment, the East African Community Secretariat, the UNFCCC Regional Collaboration Centre, other development partners as well as private sector agencies.
The project operates alongside the Promotion of Renewable Energy and Energy Efficiency Programme of GIZ Uganda and allows formation of synergies between climate change mitigation and renewable energy.
Setting up a carbon markets project can be as complex as a plan for a hydropower plant or as simple as dissemination of improved cook stoves. Almost any adoption of efficient technologies and renewable energies like solar, or changing to energy efficient management practices, contributes to reducing and/or avoiding Greenhouse Gas emissions.
Whereas the above solutions are already widespread in East Africa, the region still faces numerous barriers with regard to carbon markets. These include: lack of proper coordination among the EAC countries on issues related to carbon markets and related mitigation actions; lack of information about the latest developments and opportunities of the global carbon market; limited experience and technical/financial capacity for entering the carbon market – especially among private sector actors; lacking access and ability to effectively utilize international climate finance in the region.
To support East Africa’s governments and the private sector to further participate in carbon market mechanisms such as CDM, and promote sustainable and low carbon development pathways.
The GIZ project works with both government institutions and the private sector to ensure an appropriate representation of East African Community countries as well as Ethiopia in carbon markets.
Priority is placed on utilisation and further enhancement of approaches and framework conditions that promote emission reduction projects. Specific services provided by the project include:
- Training the public and private sector in utilization of carbon market instruments and how they contribute to sectoral mitigation approaches.
- Supporting carbon market projects in joining already existing Programmes of Activities (POAs).
- Supporting the development of carbon market instruments such as Standardised Baselines (SB).
- Supporting the establishment of a regional platform to promote exchanges on carbon market mechanisms and wider mitigation actions.
Examples from the field
In the past, GIZ supported development of PoAs like the Improved Cookstoves for East Africa (ICSEA) which included improved cook stove projects from the region at relatively low costs. It is anticipated that six more projects will be included to this PoA with GIZ support.
To ensure the further uptake of CDM, GIZ has also supported development of Standardised Baselines (SB). In October 2015, a SB on improved institutional cook stoves in Uganda was approved by the UNFCCC. It is now available for use by project developers in Uganda who are interested in implementing institutional improved cook stoves projects. During this phase, the institutional improved cook stoves Standardized Baselines will be expanded to cover other countries in East Africa.