AfDB and Clean Development Mechanism (CDM)

Context: Since 2004, the Clean Development Mechanism (CDM) has been the major international market-based instrument to enable otherwise financially unviable projects to become viable based on additional revenues from selling carbon credits. According to the UN, since 2004, the revenues resulting from the CDM have leveraged an estimated USD 315 billion in capital investments for low-carbon projects globally.

Key issues for Africao The fact that this instrument is based on trade and not international aid bears significance for Africa’s approach to development, by making available predictable and consistent financing for climate mitigation.o The common notion is that the CDM is not meant for Africa. However, considering achievements in other parts of the world including China, India and Latin America, it may be truer to say that Africa was not prepared for the CDM in terms of the availability of ready projects, capacity for project preparation, enabling procedures and political commitment. That said, there has been a 90% increase in the number of CDM projects in Africa since the beginning of 2011 owing partly to growing private sector engagement, economic development over the decade, increased technical capacity and interest. It is also clear that so called New Market-based Mechanisms, currently being proposed by various parties, largely build on areas where the CDM system has been successful, especially in monitoring and evaluation.o In 2012, the AfDB African Carbon Support Programme supported four Bank projects in starting their respective CDM certification processes. It developed a new methodology on “Interconnection Between Electricity Systems for International Energy Exchange”. Its approval by the CDM board makes interconnection projects for clean energy transmission eligible to benefit from the CDM and thus from carbon credits. As a result, the Ethiopia-Kenya Interconnection Project, used as a case study to support the methodology, has GHG emission reductions estimated at 7 million tCO2/annum.

AfDB projects for CDM validation Ethiopia – Kenya Interconnection Project

1,068 km transmission line from Ethiopia to Kenya

CDM project design document prepared

Estimated emission reduction of 7 million tCO2/yr

Additional revenue of €350 million over 10-year crediting period

Zina Solar Photovoltaic Power Plant Project20 MW solar photovoltaic power plant project in Burkina Faso

Estimated emission reduction of 16,000 tCO2/yr

Additional revenue of €800,000 over 10-year crediting period

Prior consideration of CDM was submitted to United Nations Framework Convention on Climate Change.

Itezhi Tezhi Hydro Power and Transmission Line

120 MW hydropower plant at existing Itezhi Tezhi dam on Kafue River in Zambia

Estimated emission reduction of 560,000 tCO2/yr

Additional revenue of €28 million over 10-year crediting period

CDM project design document prepared and submitted for CDM validation

Lagos Cable Propelled Transit Project

Construction of 3 Cable Propelled Transit systems for mass transit in Lagos

Estimated emission reduction of 30,000 tCO2/yr

Additional revenue of €1.6 million over 10-year crediting period

Developed as CDM programme of activities (PoA) and is currently under validation

Contact: Uzoamaka Nwamarah, Senior Climate Change Specialist, Energy, Environment and Climate Change Department, AfDB, u.nwamarah@afdb.org