Innovative environment for enhancing carbon markets and prices
Africa’s share in the global market through the Clean Development Mechanism (CDM) is dismally low – standing at 2.42% of total CDM projects in the pipeline as at end of February 2010. Various barriers have been identified, including: CDM expertise, institutional/policy arrangements, awareness and information, and financing. This paper elaborates on Africa’s carbon potential, barriers limiting CDM implementation, and a barrier removal strategy. As part of the barrier removal strategy aimed at addressing some of the barriers, in particular financing, the paper proposes an innovative environment for enhancing carbon markets and prices.
A comparative analysis of CDM in South Africa and China. Redefining the role of CDM in the quest for putting a price on carbon in South Africa
John Fay, Farai Kapfudzaruwa and Lin Na
Both South Africa and China are emergent economies heavily dependent on fossilfuel based energy sources, and the potential to leverage the Clean Development Mechanism (CDM) is significant in both countries.
However, experience to date with CDM indicates South Africa has significantly lagged behind China in the uptake of the CDM, accounting for only 0.9% of the worldwide registered annual Certified Emission Reductions (CERs) while China has dominated the market, generating over 54% of the annual worldwide CERs. Thus, an opportunity exists to redefine the role of CDM in South Africa to better incentivise a lower carbon development trajectory.
This paper provides a comparative analysis of the CDM experience in China and South Africa in order to identify the underlying drivers and obstacles to CDM in both countries. It is the authors’ objective to analyse the lessons learnt from marketleading China and laggard South Africa to better understand the structures and policies necessary within host CDM countries to unlock the potential of CDM in a post 2012 regime.