July 3, 2006

South Africa seen as carbon credit market

By Ed Stoddard

JOHANNESBURG (Reuters) - South Africa remains a largely
untapped source in the emerging carbon credit market though its
level of industrialisation means it has huge potential, an
analyst said on Monday.

The Kyoto Protocol obliges some 35 industrialized countries
to greenhouse gas emissions targets by 2008-12, but allows them
to meet these part-way by investing in pollution reduction in
developing countries, in units called carbon credits.

But of the some 223 projects registered under Kyoto's Clean
Development Mechanism (CDM) in the developing world, only three
are based in South Africa.

"There are still huge opportunities in South Africa. In
South Africa there is potential for millions and millions of
tonnes of carbon credits per year," said Randall
Spalding-Fecher, South African director of Econ Analysis, a
Norwegian environmental consultancy.

"A lot of carbon will be saved in South Africa as
industries switch from coal to natural gas," he said on the
sidelines of a seminar on carbon credits in Johannesburg
organized by PriceWaterhouseCoppers.

South Africa has one of the most industrialized economies
in the developing world and it is heavily reliant on the coal
which is found in abundance beneath its surface.

Spalding-Fecher also said South Africa had the capital and
the technical know-how to start up such projects and monitor
them. Costs for monitoring equipment alone can be prohibitive.

The potential elsewhere in Africa was limited because of
the simple fact that the world's poorest continent was not a
major emitter of greenhouse gases -- though many experts say it
will suffer most from the consequences of climate change.

"There aren't a lot of emissions in Africa,"
Spalding-Fecher said. "In the rest of Africa, most of the
potential lies in afforestation and reforestation projects."

Such projects create what scientists call "carbon sinks"
which soak up CO2 in the atmosphere.

The first such projects which have been sponsored by the
World Bank's BioCarbon fund are expected to get CDM approval in
the next couple of months.