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Carbon trading: why Tanzanians fail to take full advantage of CDM[/TD]
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Written by Admin
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[TD="class: createdate"]Friday, 13 August 2010 11:02[/TD]
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YAKOBE CHIWAMBO
THE inordinately high cost that is associated with registering a project under the Clean Development Mechanism (CDM) and conversion of Certified Emissions Reduction (CER) is one of the reasons why firms and other institutions in Tanzania continue to be shut out of the carbon trading/carbon credit stakes.
Other reasons include and are not limited to ignorance of the benefits that would accrue from such a venture, and a singular lack of local experts needed to effectively implement the projects related to the concept of carbon trading.
As it happens, the very few experts in CDM are already fully-occupied at such hallowed institutions of academia as the University of Dar es Salaam and the Sokoine University of Agriculture in Morogoro Region.
According to a senior environment officer in the Vice-President's Office, Freddy Manyika, ''experts (in the CDM field) are few and, as such, cannot do all that it takes for such projects to be accepted in terms of the CDM requirements...
And, even if they could do that, there is still a need for foreign experts to come in at some point or another as part of the procedural requirements,'' Manyika said, adding as an afterthought that ''there is no shortcut to the process. It is costly with the amount to be paid depending on the size and type of CER project to be sold.
''Stressing that not many local firms have taken to the available opportunities compared with foreign ones operating in Tanzania, Manyika attributed this apparent lack of interest to the fact that Tanzanians are yet to fully appreciate the benefits that come with exploiting the opportunities presented there in.
''We have been conducting seminars and other sensitization programmes for potential firms and other interested parties to ensure that they understand these opportunities and grab them... In a nutshell, such projects are tantamount to direct investments in the country; they offer employment opportunities and, at the same time, bring about development for the nation,'' Manyika explains.
So far, only one major project has been registered for carbon trading in Tanzania. This is the Mtoni Land Fill, located in Temeke, Dar es Salaam. Although it was projected to sell up to US$200,000 per annum in carbon trading, it is currently selling only between $50,000 and $60,000-worth.
Speaking to Business Times on the subject, the assistant director for the Environment in the Vice-President's Office, Richard Muyungi, said Tanzania mainly relies on foreign consults for the job and, therefore, it is costly for local institutions to successfully venture into such projects especially especially when the firms and communities are not fully aware of the benefits that accrue from such an undertaking.
According to Muyungi, a consultant is paid anything up to US$100,000 (roughly (Tsh150 million) for writing up a proposal for a CDM/CER project, doing the carbon conversion into CERs that are sold in US dollars.
Carbon credit projects are subdivided into many sectors including forests, energy, industries and transport.Companies which use heavy oils are said to contribute the most to global climate change. If and when such companies comply with CDM requirements by, say, converting to alternative energy use like natural gas, the climate is saved to a certain degree. In the event, the companies stand to benefit doubly.
In the first place, use of natural gas is far cheaper compared to the available heavy oils. Secondly, the companies get paid for cutting down on carbon emissions under the CDM/CER arrangements. In Tanzania, a few companies have already taken to using natural gas instead of heavy fuel oil as a way of reducing carbon emissions and, at the same time, cutting costs. Among these are the Artumas Gas Project in Mtwara Region; Katani in Tanga Region; Mbeya Cement in Mbeya Region, and Mkwano, a cooking oil manufacturer in Dar es Salaam.
Global statistics indicate that CERs from CDM projects were traded on a forward basis in 2
006/07 for between US$5 and US$20 per tonne CO2 equivalent.
CDM Clean Development Mechanism is an arrangement under Article 12 of the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC) which allows developed country parties (Annex-I countries) with a greenhouse gases (GHG) reduction commitment, and developing country parties (Non-Annex-I countries), to jointly undertake emission reduction project
activities in developing countries that contribute to sustainable development and result in certified emission = reductions (CER). The Protocol was established in 1997 and entered into force in February 2005. Tanzania ratified the Protocol in August 2002.The greenhouse gases identified in the Protocol are carbon dioxide (CO2); methane (CH4); nitrous oxide (N2O); hydrofluorocarbons (HFCs); perfluorocarbons (PFCs) and sulphur hexafluoride (SF6).The Kyoto Protocol sets GHG reduction targets of five per cent below the 1990 levels of
emissions for developed countries between 2008 and 2012.
According to projections, by the end of 2012, expected annual CER to be issued is over US$960 million. Apart from the use of natural gas instead of heavy oils as one way of reducing carbon emissions, the Government of Tanzania offers chances to people or firms to plant trees (afforestation or reforestation) on huge hectares of land in semi-arid areas.The trees must be taken good care of and can only be cut down after some years according to certain provisions incorporated in the relative legislation.In the transport sector, CDM encourages the use of gas instead of petrol which produces a lot fumes especially from locomotive and motor vehicle engines.Although developing countries seem to be at the forefront in reducing carbon emission, the amounts of carbon they produce is generally low.For instance, Tanzania is said to produce less than one per cent of the global carbon emissions... About 0.004 per cent!
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