Interview with Climate Change Specialist, Uzoamaka Nwamarah on “Prospects for an Africa Carbon Facility”
The Gender, Climate Change and Sustainable Development (OSUS) Unit recently hosted a roundtable on the economics of adaptation. The unit will, from April 29-30, 2010, host a seminar on the theme: ‘Prospects for an Africa Carbon Facility’. The climate change specialist, Uzoamaka Nwamarah, has been coordinating Bank efforts towards the Africa Carbon Facility. In an interview with BIA, Ms. Nwamarah explains what the facility is all about.
Question: Why is OSUS involving the Bank in so many climate change related activities?
Answer: Climate change is central to the Bank’s core business and it requires urgent action. OSUS is simply implementing its mandate as the Bank’s focal point on climate change to support the Bank and its regional member countries to address the challenges as well as take advantage of whatever opportunities that climate change brings. OSUS has over the last three months, engaged with other Bank departments, AfDB regional member countries, other multilateral development banks and partners, to roll out a program that will clearly position the Bank as the continent’s champion and Africa’s voice in tackling climate change issues. These engagements we are having are the outcome of these consultations and strategizing. Many more initiatives are underway.
Question: What is the upcoming seminar on Africa Carbon Facility all about and who are those participating in the seminar?
Answer: The carbon market, estimated at about US$136 billion as at January 2010 is one sure source of financing. Unfortunately, despite its huge potentials, Africa is a very insignificant player in this market.
Having critically assessed the reasons for Africa’s poor performance in this market and also responding to the expressed needs of the institution’s regional member countries, OSUS is proposing the creation of an Africa Carbon Facility that will serve as an instrument to significantly increase Africa’s share in this market. This seminar aims to consolidate ideas on the potential and possible structure for this facility, which will enable the Bank help its regional member countries further engage in the carbon markets. If the proposed Copenhagen Green Fund has identified the carbon market as the main private sector financing source, it therefore implies that Africa can no longer afford to lag behind in this huge market.
The Bank cannot address the challenges of climate change alone with its own resources. It therefore seeks to leverage additional resources to support this effort by collaborating with its development partners. In this regard, experts from the Swedish Energy Agency (SEA), Baker and McKenzie Law Firm (the World’s foremost climate change law firm), Asia Pacific Carbon Fund and Standard Bank Plc will attend the event to make presentations at this seminar. The seminar is designed for Bank staff and managers, particularly those dealing with energy, transport and forestry sectors so as to make Bank projects environmentally and financially more sustainable by benefitting from carbon revenue that would result from reducing greenhouse gases.
Question: What could an Africa Carbon Facility at the AfDB look like and how does it differ from the African Carbon Asset Development (ACAD) Facility?
Answer: The Africa Carbon Facility (ACF) is proposed as one of the mechanisms for the Bank’s climate change financing platform. It would comprise three main financing windows
- CDM Project Facilitation Mechanism,
- Post-2012 Purchase Guarantee and
- Leveraging AfDB Debt Financing.
The African Carbon Asset Development (ACAD) Facility which is run by UNEP with support from Germany’s International Climate Initiative (ICI) focuses on transaction cost sharing, technical support to project developers and financial institution training. The main difference between the two is therefore the post-2012 purchase guarantee which the AfDB Africa Carbon Facility will offer. This purchase guarantee will provide buyers and investors with a real and bankable product thereby maintaining private sector confidence while the post-2012 regulatory framework continues to be negotiated and agreed upon. Importantly, the Africa Carbon Facility is African, and it is being hosted by the Bank as a financial mechanism will place it, head and shoulders, above other similar facilities in responding to the needs of AfDB regional member countries.