CDM Opportunities and Challenges in Ethiopia
The global carbon market is worth $64 billion and is doubling in value every year. UNDP-UNEP's aim is to assist Ethiopia to tap into this new and vibrant source of financing to drive the country's environmental and sustainable development agenda.
Although there are no registered CDM projects in Ethiopia, the country has considerable CDM potential, notably in the form of:
- Animal and human waste management (methane flaring and/or electricity generation)
- Urban landfill (methane flaring and/or electricity generation)
- Agricultural residues (e.g. co-generation using bagasse; use of coffee, floriculture, forest and other residues as feedstock in kilns and furnaces, or as feedstock in bio-digesters)
- Renewable energy, notably mini-hydro and perhaps wind – particularly in an off-grid context as the Ethiopian grid is already very 'clean' (hydro-powered). Ethiopia’s grid emits just 0.008 kgCO2/kWh.
- Industrial fuel-switching – e.g. in peri-urban industries such as cement factories, paper & pulp mills, breweries, brick-making factories, etc.
- Afforestation / reforestation – e.g. to rehabilitate degraded land, to protect watershed catchments and for energy plantations.
However, there are also some specific challenges that need to be addressed in the Ethiopian context, including:
- Awareness-raising amongst domestic stakeholders and potential project developers. Many potential eligible CDM project concepts are currently unknown to factory owners, communities, NGOs and state utilities. In such cases, an opportunity is missed to contribute to addressing climate change through the reduction of emissions, as well as monetization (in hard currency) of the carbon credits associated with these projects.
- Awareness-raising and confidence-building amongst potential overseas investors and carbon buyers. UNDP is engaged with a number of regional and private-sector banks regarding the CDM investment opportunities in countries such as Ethiopia. But more needs to be done to reach out to the global carbon community to make them aware of Ethiopia’s potential.
- Scoping studies & CDM resources. Provision of assistance to project developers in navigating the rules and modalities of the CDM.
UNDP and UNEP are jointly organizing a series of workshops, scoping studies and other resources to assist in this task.
- The ‘forestry problem’. Afforestation and Reforestation (AR) activities offer considerable potential to reverse the deforestation that Ethiopia has experienced over recent decades. The CDM, by offering project developers monetisable carbon credits for undertaking AR activities, represents a financial catalyst for such activity. However, CDM AR methodologies are complex and forestry is intrinsically a more risky activity than many other types of CDM project because of the long time-scales involved, the risk of damage to trees (e.g. due to fire or flood) and the adverse environmental impacts (e.g. on biodiversity and water) that can accompany badly-designed projects.
A key challenge for UNDP and UNEP is to enable CDM project developers to successfully navigate these difficulties and undertake much-needed forestry projects. UNDP has already developed a CDM forestry methodology tool, to enable project developers to select the most appropriate CDM methodology. Further resources – and specialised ‘bio-carbon workshops’ – are planned.