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Is there a potential to generate carbon credits from projects that effectively demonstrate emission reductions through the replacement of kerosene lamps with modern off-grid lighting products?
By displacing the kerosene that is burned in wick lamps, modern off-grid lighting technologies can generate significant greenhouse gas emission reductions and thereby contribute to climate change mitigation. Under certain circumstances, these emission reductions can be monetized through international carbon markets, creating an additional revenue stream for lighting manufacturers, project developers and distributors.
However, the rules and regulations governing the international carbon markets are complex and, to date, there has been very little documentation related to attempts at leveraging carbon finance for off-grid lighting in Africa. To fill this knowledge gap and develop a baseline valuation of kerosene displacement, in addition to a more comprehensive understanding of associated transaction costs.
Lighting Africa Carbon Finance Program
In response to this market gap and to the significant interest in the potential to generate tradeable credits to account for the reduction in emissions resulting from the displacement of kerosene with modern off-grid lighting products, Lighting Africa is developing a carbon finance program, to investigate potential approaches and methodologies for generating project based credits, both under regulatory and voluntary schemes.
With regard to regulatory schemes, it may be quite feasible, under the Clean Development Mechanism (CDM) of the Kyoto protocol, for countries that have ratified Kyoto and companies included in the EU Emissions Trading Scheme to meet to buy and sell Certified Emission Reductions (CERs) to achieve their legal requirements (i.e. their emissions cap).
In addition, in voluntary carbon markets, the potential to obtain Verified Emission Reductions (VERs) may provide further opportunities to meet emission reduction targets. Apart from increased revenue streams environmental improvement resulting from incentivizing emission reductions, carbon reductions deliver additional social and environmental benefits with regard to fuel-based product replacement, such as the prevention of indoor air pollution, avoided burns and fire danger, and the minimization of fossil fuel reliance.
Over the coming months, Lighting Africa will release preliminary information that will serve to shed light on the following key questions, relevant for anyone looking to engage in and make informed choices about potential CDM opportunities:
- Under what circumstances is carbon finance an economically viable option?
- What are the expected revenue streams?
- What transaction costs and risks are involved? What are the available options for emission reduction credits in the Clean Development Mechanism (CDM) market (Kyoto "compliance market") verses the voluntary carbon markets selling verified emission reductions?
- Which methodologies can project developers use to account and market their GHG emission reductions? What is the process one must undergo to apply for carbon financing?
- Is it the same procedure across varying regions or is it country specific (i.e. is it easier to register a CDM project in certain countries as opposed to others, for example, those that may a have more stringent host country endorsement processes?
- What are the eligibility criteria for registering a CDM project?
- How do I obtain more information about this?
Lighting Africa Carbon Finance Training Workshop
March 26-27, 2008, The World Bank Group organized Lighting Africa: Carbon Finance Training workshop- Exploring Carbon Market Opportunities, in Dar Es Salaam, Tanzania. To learn about the workshop and access the presentations and other relevant information, please click on the following link: Carbon Finance Workshop
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