| VOLUNTARY EMISSION REDUCTION PROJECT | | | | sensitization ? KNCPC has handled big projects e.g. |
| PROPOSAL | | | | Eco-labelling and LVEMP I among others 4.0 Design |
| PROPOSER: NICHOLAS KIBET ROTICH (B. Tech | | | | and implementation |
| Che.eng/EIA/EA/CDM Expert) for KENYA | | | | The mandate of KNCPC shall resemble that one |
| NATIONAL CLEANER PRODUCTION CENTRE P.O | | | | of Nairobi stock exchange in the share market. It |
| Box 1360-00200 Nairobi, Kenya View the profile | | | | will thus do the project registration, verification, |
| of the author at ‘our staff profile’ | | | | crediting, monitoring and evaluation of the |
| LENGTH OF THE PROJECT: THREE YEARS | | | | quantified VER on the ground and thus will be the |
| SUPERVISING INSTITUTION: KENYA NATIONAL | | | | midst between the carbon buyer and the seller. |
| CLEANER PRODUCTION CENTRE | | | | KNCPC therefore has to seek the support of the |
| PROJECT SITE(S): WHOLE OF KENYA | | | | Kenyan government to transact these businesses |
| Acronyms CDM Clean Development Mechanisms | | | | on behalf of all the carbon traders from within the |
| NEMA National Environmental Management | | | | region. One scenario here can be that one of a |
| Authority ICI Investment Climate Index KNCPC | | | | farmer who has planted trees in a ten acre piece |
| Kenya National Cleaner Production Centre UNFCCC | | | | of land and wants to benefit from the voluntary |
| United Nations Framework Convention on Climate | | | | carbon sale. KNCPC will be charged with the |
| Change DNA Designated National Authority MSCL | | | | responsibility to register the project, quantify the |
| Mumias Sugar Company Limited CER Carbon | | | | carbon credits that can be sequestrated, Issue a |
| Emission Reduction VER Voluntary Emission | | | | certificate bearing the seal of the centre together |
| Reduction CDMEB Clean Development Mechanisms | | | | with the one for the concerned ministry |
| Executive Board USD United States Dollar IETA | | | | (Industrialization), and the quantity of the carbon |
| International Emission Trading Association GHG | | | | credits in terms of VER, this are the credits. The |
| Green House Gases 1.0 Background | | | | centre will seek to enjoy the monopoly in the |
| With much appreciation that the UNFCCC CDM | | | | market until other lead agencies attains the same |
| focal point (Designated National Authority ) for | | | | capacity to transact the business. KNCPC could |
| Kenya is placed strategically at (NEMA), | | | | then buy credits from viable projects and sell it to |
| awareness about the existence and the ecological | | | | other companies either within Kenya or the rest |
| economic benefits that can be accrued through | | | | of the world where voluntary or domestic carbon |
| small and large scale CDM project implementation | | | | market is allowed. A possible client of the centre |
| has not been fully exploited. The current CDM | | | | for instance will be the airlines which will be forced |
| investment climate index for Kenya is rated as | | | | to impose charges on all travellers either within |
| adequate, this means that the country’s | | | | the country or internationally to pay an extra cent |
| ability though not excellent as compared to that | | | | or as may apply per unit mile travelled in order to |
| of Tunisia and South Africa, has enough resources | | | | offset their own carbon footprints. These |
| in terms of Carbon Emission Reduction (CER) to | | | | contributions will be channelled back to the centre |
| keep her running its industrially sustainable | | | | to manage the carbon monitoring and verification |
| activities for another couple of decades. According | | | | expenses while the rest will be channelled to other |
| to Dr. Inge Hackenbroch in his paper – CDM | | | | projects that helps in the fight against the |
| market briefing done in Nairobi (2007) for the | | | | ecological imbalance, e.g. investing in renewable |
| German office for foreign trade, Tunisia and | | | | energy sources and/raising awareness on |
| South Africa are the countries in Africa with the | | | | voluntary carbon reduction. 5.0 Anticipated |
| most adequate climate for such projects. The | | | | Problems In every component a project, pros and |
| following is an abstract rating of the 54 countries | | | | cons are MUST be encountered. This project is |
| of Africa in order with the highest CDM | | | | deemed to encounter the following problems; ? |
| Investment Climate Index to the lowest. | | | | Lack of awareness is likely to retard the progress |
| 1. Tunisia ………….. 78.5% good climate 2. | | | | especially during its initial stages ? Financial |
| South Africa ……. 77.8% good climate …. | | | | implications by the technical staff as in verification |
| 9. Kenya …………… 54.7% Adequate …. | | | | before registration of the projects since regular |
| 54. Somalia ………….. 4.4% unsatisfactory | | | | site visits will definitely we required. Mobility factor |
| climate Kenya is thus rated as within the top ten | | | | will be catered by this component ? Computer |
| good climates for CDM projects. With this rating | | | | hardware, software and other device |
| however, Kenya as at 2007 had no project | | | | requirements ? Maintenance of the set up office |
| registered by UNFCCC CDM Executive Board. | | | | where the projects will be received by an officer |
| Moreover, the country has locational advantages | | | | employed on a contract specifically for that job |
| such as rapid economic growth increasing by | | | | 6.0 Seeking financial support There is a need to |
| about 6% annually, brisk investment authority, | | | | ascertain where funding for such a project can be |
| good consumer climate, resumption of assistance | | | | achieved. The basis here is that climate is for |
| from IMF and World Bank, government efforts in | | | | everyone and thus it is a global responsibility to |
| economic reforms and liberal economic order with | | | | engage available resources in curbing further global |
| a well developed private sector alliance. Projects in | | | | warming and ozone depletion. The centre is |
| Kenya that are currently registered and/or are | | | | capable of providing a few components such as |
| under validation by the CDM executive board are | | | | setting up the office and providing occasional |
| countable. Just to mention a few; ? 35 MW | | | | sitting by a team of experts when scrutinizing a |
| Bagasse Based Cogeneration Project (Mumias | | | | project. It is important to mention at this level |
| Sugar Company Limited (MSCL) ? Olkaria II | | | | that several projects will be aggregated before |
| Geothermal Expansion Project (35 MW) ? Sondu | | | | any one sitting is done so as to avoid under utility |
| Miriu Hydro Power Project (run-of-river, 60 MW) ? | | | | of the resources. The implication of this is that |
| Green Belt Movement afforestation project | | | | besides what the institute can provide, an extra |
| among others but bearing in mind they are not | | | | support is required to initiate the project and |
| more than ten. | | | | mobilize the stakeholders for awareness creation |
| What are the underlying issues behind lack of | | | | among the project developers and owners which |
| development in the CDM projects and CER | | | | in this case is anticipated to be small scale |
| market in Kenya? In our view this is deemed to | | | | farmers, community based organizations, small |
| be two key components namely; 1. Lack of | | | | NGO’s among others. It is against this |
| adequate awareness; Even thought Kenya’s | | | | reasoning therefore that we seek the support of |
| intellectual level is among the top in the region, the | | | | the multinational Non-Governmental Organizations, |
| issues to do with climate change has not been | | | | governments and the goodwill of the general |
| given due priority. The consequences of this | | | | public both locally and globally to support in |
| ignorance have led to lack of basic knowledge in | | | | financing to cater for a reduction of every single |
| the protection and maintenance of the required | | | | unit of emission reduction. |
| ecological balance. To an extent lack of proper | | | | 7.0 Budgetary implication of the project The initial |
| policies and legal framework for implementation of | | | | working budget is deemed to be high and is |
| multilateral environmental agreements such as the | | | | expected to reduce as the project time goes. |
| Kyoto protocol is also a factor. The subject has | | | | The budget set below is as how it may be in an |
| not been given due consideration even when new | | | | event financial support is acquired. Project |
| teaching curricula are developed by institutions of | | | | component Quantity Monthly Unit cost (Ksh) |
| higher learning. Most Kenyan Universities as at | | | | Project life span cost (Ksh) Project Head(s) 2 |
| now teaches ‘reactive’ ways of dealing | | | | 150,000 10,800,000 Energy & Environment |
| with environmental matters instead of | | | | Experts (hire) 3 100,000 10,800,000 Subordinate |
| incorporating proactive ways such as carbon | | | | Staff 3 15000 1,620,000 Computing equipment |
| reduction through say sustainable energy | | | | (including laptops) 10 1,000,000 Vehicles 2 |
| management, cleaner production and other | | | | 4,000,000 Office Stationery 10,000 360,000 |
| technologies. 2. Clumsy process for project | | | | Awareness Raising costs (workshops) 3 500,000 |
| registration under the UNFCCC CDM executive | | | | 1,500,000 Initial amount for Purchasing ER’s |
| board (EB) is also playing a role in retarding the | | | | Approximated to buy 3 million ER’s (at 4 USD |
| technology transfer of the processes. Many | | | | per Unit) 12,000,000 Project monitoring Cost |
| ordinary people and including scholars have | | | | implications Depending on the distance and No. of |
| identified projects that are viable for registration | | | | project sites 10,000,000 Miscellaneous 5,000,000 |
| but again the registration is too long and involving. | | | | Total Project Cost (Ksh) 57,080,000 8.0 Work |
| To me the carbon offset market which ideally | | | | plan This section outlines the necessary steps to |
| was supposed to represent a ‘win win’ | | | | be undertaken to ensure that the project cycle is |
| strategy between the country’s ecological | | | | successful and the alternative to the long route to |
| versus economical balance has turned into a rare | | | | attaining the trading units is shortened. Step 1; |
| opportunity and is deemed to fail. In Leo Paskett, | | | | Submit project proposal and/or project |
| Cecilia Luttrel and David Brown paper titled | | | | questionnaire to KNCPC: The Set up office will |
| ‘Making voluntary Carbon Markets work for | | | | provide project questionnaires and/or guidance on |
| the poor: the case of forestry offset’ the | | | | the proposal specifications. This proposal will be |
| volume of private finance flowing through the | | | | submitted to the Energy division Committee on |
| voluntary carbon market has increased | | | | Offsets (the technical team) for review and |
| significantly over recent years with an eight-fold | | | | preliminary approval and may be further referred |
| rise from around 5 million to about 43 million US | | | | to scientific technical advisory committees (this |
| dollars between 2004 and 2005 alone (Capoor et | | | | could be a consultant from outside). It is worth |
| Ambrosi, 2006). A significant proportion of this | | | | noting that the submitted project proposal should |
| amount is destined to developing countries. What | | | | only outline the project idea and must not try to |
| is likely to happen to this money? Will it be used | | | | quantify the amount of sequestration else the |
| to benefit the developing world, provide new | | | | effort to simplify the Kyoto mechanism will not |
| opportunities for growth and poverty reduction? | | | | be achieved and consequently needless to initiate |
| Investment in carbon market currently takes | | | | this project. Step 2: Obtain project verification: |
| place through two mechanisms: the heavily | | | | Upon project approval by the technical team, a |
| regulated clean development mechanisms (CDM) | | | | project owner or aggregator must obtain |
| governed by the Kyoto Protocol and the more | | | | verification by a technical verifier from the energy |
| flexible ‘voluntary’ mechanisms developed | | | | division. Verifiers use information provided by the |
| separately from CDM and are not bound by its | | | | project owner or aggregator, combined MUST |
| regulations. Can Kenyan Institutions make | | | | site visits, to accurately assess a project’s |
| voluntary carbon trading work for the poor? | | | | actual, annual greenhouse gas (GHG) sequestration |
| 2.0 Objective(s) and Hypothesis (es): | | | | or destruction. Verification reports are reviewed |
| The main objective of this paper is to propose | | | | by the team. Step 3: Register as KNCPC offset |
| initiate the formation of a voluntary carbon trading | | | | provider or Offset Aggregator: Join KNCPC as an |
| complex at the Kenya National Cleaner Production | | | | Offset Provider, or enrol the project through an |
| Centre. This can be done through the introduction | | | | existing Offset Aggregator. Project owners or |
| of a more flexible method of trading in carbon | | | | aggregators may enrol an unlimited number of |
| reduction units which will be referred to as | | | | eligible projects for offset credit. Each distinct |
| Voluntary Emission Reduction (VER). This will | | | | project within the portfolio must be registered |
| ensure that the goal of the Kyoto Protocol is | | | | independently; aggregated projects are registered |
| achieved but in a flexible, hustle free and with the | | | | on a combined basis. Note that for this trade to |
| least transaction expenses possible. The trading | | | | make an economic and ecological sense, a project |
| unit will therefore be the VER and will trade in | | | | will only be registered once under this project and |
| competing prices compared to the current price | | | | may not be double registered with the CDM |
| of the CER going for 4-60 USD, One CER is | | | | projects which are governed by the Kyoto |
| equivalent to 1000t (a metric tonne) of CO2 | | | | protocol. KNCPC will thus be counter checking the |
| sequestrated from the environment. This plan has | | | | project registration with the designated national |
| worked successfully for the developing world and | | | | authority for CDM (located at NEMA) to avoid this |
| will definitely gain momentum in Kenya and the | | | | conflicts. Step 4: Receive Voluntary Emission |
| rest of Africa. Other domestic emission trading | | | | Reduction (to be registered as VER’s) |
| schemes that are operational and are being | | | | contracts for project offset: Upon approval by |
| supported by the international emission trading | | | | the Committee on Offsets, KNCPC issues the |
| association (IETA) are: ? United Kingdom emission | | | | Offset Provider or Aggregator VER contracts in a |
| trading scheme ? European union emission trading | | | | quantity equal to the project’s GHG |
| scheme ? New south Wales abatement scheme ? | | | | sequestration or destruction Offset Projects are |
| Chicago Climate Exchange ? Canadian emission | | | | issued VER contracts on an annual basis, with the |
| trading scheme ? California Climate action registry | | | | VER Vintage applying to the program year in |
| Even though the above mentioned seems to be | | | | which GHG mitigation took place. For example, a |
| the giants in the carbon trade world, it is | | | | methane capture and destruction offset project |
| observed that the efforts to counter the effects | | | | for methane destruction that occurred during |
| of climate change in Africa enjoys due support | | | | calendar year 2008 would earn a given quantity |
| from International Monetary fund, the World Bank, | | | | of 2008 VER contracts. 9.0 So how good is a |
| SIDA etc. Through out the preliminary | | | | company/individual which/who has a stock of |
| development of this project, we expect to get | | | | VER’s? The companies which will have |
| appreciable support from any other willing donor. | | | | attained the certificates of emission reduction |
| 3.0 Justification for setting up the complex at | | | | units will now be champion contributors to the |
| KNCPC | | | | achievement of the Kyoto protocol in another but |
| This sounds relatively a new business to venture | | | | similar way. These companies should now be |
| in. However KNCPC is an accredited national | | | | given incentives e.g. exempted from several |
| organization with the required expertise to handle | | | | taxes by recovering (their taxes) from the initial |
| a greater part if not whole of the project. Even | | | | support of this project. As for the individuals, the |
| though the centre is not materially well to do, it is | | | | sponsoring institutions/organizations through |
| well endowed with human resource which is of | | | | KNCPC will facilitate motivation of such persons |
| value in venturing into this project. The centre is | | | | depending on the amounts of emission reductions |
| continually growing in terms of projects and | | | | attained by his/her project. They will thus not only |
| publicity as well as engaging fresh blood in its | | | | benefit materially but also earn themselves good |
| human resources arm. KNCPC has been handling | | | | names within the hierarchy of corporate social and |
| various CDM projects in conjunction with the | | | | environmental responsibility. |
| climate change office at National Environment | | | | 10.0 Conclusion on the Potential Impact: The |
| Management Authority and thus is competently | | | | overall impact of the project is presumed to |
| entrusted for this project. As suggested by the | | | | initiate best environmental practices since all the |
| values of the CDM investment climate index (ICI), | | | | companies will be striving to offset their own |
| the country has the potential and KNCPC has | | | | carbon. On the other side, this will be a ‘win |
| successfully created windows of opportunities in | | | | win’ strategy since, as all carbon traders try |
| the same, just to mention but a few of the | | | | to achieve the most carbon credits by registering |
| related projects currently conducted by the | | | | projects, a clean environment is gradually |
| centre; ? The centre has developed a curriculum | | | | achieved. It will also sphere economic |
| for training experts in Clean development | | | | achievements of the centre (KNCPC). There will |
| Mechanisms ? Assessing the possibility of CDM | | | | be charges for each verification and will be |
| opportunities in the leather, edible oil and leather | | | | charged on a per VER basis. The centre can also |
| industries through environmental and cleaner | | | | trade in the VER’s overseas at higher prices |
| production audits carried out under the UNIDO | | | | than the buying prices in which the carbon credits |
| support few years ago ? Establishment of cleaner | | | | are obtained locally. |
| production awards which can be platforms for | | | | |