Uganda: Region to Turn Waste Into Carbondioxide for Revenue
Volume: 1, Issue 2 |  Thursday, 19 August 2010 |  Martin Luther Oketch  |  1 comment

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Uganda is to generate about 750,000 tonnes of carbondioxide for sell over the next 10 years following. This follows the country's launch of the Programme of Activities (POA) that will reduce dangerous methane emissions into the environment in municipalities. The statement issued from the World Bank last week said the nine initial projects under the POA are using carbon finance to generate resources for social and community activities.

According to POA, a total of 156,889 Certified Emission Reductions (CERs) and 52,296 Verified Emission Reductions (VERs) will be sold to the World Bank's Community Development Carbon Fund.

The entire programme is voluntary in nature, both for National Environment Management Authority (the coordinating Entity) and the implementing municipalities. Officials say compositing of waste has multiple benefits over landfills, the most common practice in Uganda and many other countries.

Compositing returns the much needed organic matter to the soil, prevents land degradation, and significantly reduces methane emissions. "This POA, the first in Africa, is important not only because of its greenhouse gas mitigation potential, but also because it serves as an example for many other African countries to design and implement large scale mitigation activities," Mr Henry Aryamanya Mugisha, the executive director of the Nema said last week.

"Although the process is complex, it has been an extremely useful learning experience, which we hope to replicate all over Uganda." The new programme will help Ugandan municipalities to set up municipal waste compositing facilities that are financially sustainable because of the revenues generated from the sale of both compost and carbon credits.

While nine municipalities have already been identified for this purpose, other cities are expected to request that similar projects be included in this registered programme.

"With the threat of global warming, there is an urgent need to scale up climate change mitigation, shifting from project-based to programmatic approaches. This is the Bank's first Programme of Activities under CDM and we are very happy to see Uganda spearhead such a programme and serve as an example for the rest of Africa", said Mr Joëlle Chassard, the manager of the Carbon Finance Unit, World Bank.

While the programme represents many "firsts" in the carbon finance community, it is also an important model because it builds on south-south linkages by harnessing expertise and models of simple composting development in South Asia. The programm was designed with involvement of experts from India, who will also offer monitoring and training support.

The latest annual report from the World Bank on the global carbon market showed that in 2009 it grew to $144 billion, up 6% from 2008 despite enduring its most challenging year to date.

However, at the same time, the global economic crisis negatively impacted both demand and supply sides and, as industrial output plummeted, the demand for carbon assets fell. The State and Trends of the Carbon Market 2010, released last month by the World Bank at Carbon Expo in Cologne, also said that on the supply side, the reduction in access to capital made it difficult for many project developers to lock in financing. As a consequence, project origination ground to a halt.

The State and Trends report analyzes data from the trading of European Union Allowances (EUAs) and secondary Kyoto offsets under the European Union Emissions Trading Scheme (EU ETS). It also evaluates transactions under the Kyoto markets: Certified Emission Reductions (CERs), Emission Reduction Units (ERUs), and Assigned Amount Units (AAUs), as well as data from voluntary markets.

"The annual State and Trends report has become a flagship publication for the World Bank and, indeed, continues to provide the world with objective and well-informed assessments of the carbon market. The authors have again succeeded in accurately measuring the pulse of the market in an extremely difficult year", said Mr Warren Evans, Director of the World Bank's Environment Department.The EU ETS remained the engine of the global carbon market with over 6 billion EUAs transacted in 2009 for a total value of $118 billion. On the other hand, project-based transactions declined by 54% to US$3.4 billion in 2009, led by CDM, which declined by 59% to an estimated $2.7 billion with slightly more than 200 million tons of CO2e transacted at an average price of $12.7.

As the forescast for offsets (CERs and ERUs) available for compliance looked increasingly somber, countries with compliance needs under the Kyoto Protocol turned to AAUs, seeking sizable and predictable assets. The AAU market increased, reaching $2 billion in 2009, a dramatic 7-fold increase compared with 2008.

With the weakening demand for pre-2013 offsets and the lack of traction on the post-2012 front, the residual demand for Kyoto assets could reach 230 million tons by 2012. A large share of the demand for offsets under the EU Climate and Energy Package remains to be contracted, thus theoretically sustaining future demand and prices."Ironically, the same issues that have hindered the project-based mechanisms may ultimately be the silver lining that sets the stage for a stronger post-2012 market. Nonetheless, clear policy and regulatory signals must be provided urgently if a stronger global market is to emerge", said Mr Alexandre Kossoy, co-author of the report.

Another trend in 2009 was the development of national mitigation efforts. One of the best pieces of news came from New Zealand which established the first economy-wide and mandatory ETS outside Europe. In addition, new initiatives in developing and developed countries are emerging, exploring market approaches for climate finance solutions. In that context, carbon finance remains as an important tool to provide incentives to a shift to a lower carbon development path.