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Standard Bank eyes Africa green energy
by Bruce Hextall

Reuters    Translate This Article
11 October 2010

MELBOURNE |(Reuters) - Africa's largest lender, Standard Bank, expects a boom in green project developments across the continent, the bank's head of carbon trading Geoff Sinclair said on Monday.

The bank expects to boost financing of energy efficient projects in African countries, which promise to overcome local energy shortages and generate carbon credits that can be sold to polluters in developing countries, said Sinclair.

'We're focused on commercial opportunities and over-coming hurdles to developing low carbon sustainable projects,' Sinclair told the Reuters Global Climate and Alternative Energy Summit on the sidelines on a carbon conference in Melbourne.

Standard Bank teamed up with the United Nations and the German government earlier in the year to establish an African Carbon Asset Development Facility (ACAD).

Sinclair said ACAD was a starting point in removing investment barriers within Africa to low-carbon sustainable development by providing grants for projects for Clean Development Mechanisms (CDMs), finance to local banks for low carbon projects and training.

Approved CDMs under the Kyoto Protocol can generate Certified Emission Reduction units (CERs) which are traded as carbon credits in the European carbon market, the only existing compliance carbon market apart from New Zealand's recently launched carbon market.

CDMs are generated from projects achieving measurable carbon emission reductions in developing countries, but Africa currently only contributes about 2 percent of the world's CDMs and even less CERs, according to Sinclair.

'We've identified a number of problems that are stopping CDM growth in Africa, including the composition of industry as, unlike China, there aren't the steel plants and chemical plants that are often associated with CDM projects so there were issues with the methodology applying to Africa,' said Sinclair.

'There's also a general lack of knowledge and a lack of finance as local banks had no experience in financing CDMs.'


Sinclair said interest was growing in green energy within Africa following the success of a number of projects including a low cost solar hotwater project for low income households in Port Elizabeth, South Africa.

'Africa has taken a long-time to pick up on the potential for these sort of projects but it is now starting to do that and in a few years time we think there will be a lot more,' said Sinclair.

'Once you get a demonstration project that works and people make money out of it then all of a sudden interest grows.'

Sinclair said ACAD was likely to become a hub for providing private loan facilities and equity.

'It will provide carbon finance generally rather than being just another development grant scheme,' he said.

With the right financing mix, he said Africa could emerge as an important source of CERs for the European carbon market and other compliance markets once they were established.

'Africa fits well from a supply-side for CERs but it does go beyond that,' said Sinclair.

'If you look at South Africa there's been a surge in renewable energy because of the introduction of feed-in tariffs so growth is being driven by domestic policy.'

(Editing by Michael Perry)

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