BY TERESIA WANGECI
Question 1: What is carbon trading?
Answer: Carbon trading may have several definitions all pointing out to one goal. Carbon trading is firstly a trade. This trade could happen between nations whose goal is to reduce emissions of carbon dioxide. The carbon trade offers an opportunity to countries that have higher carbon emissions to purchase the right to release more carbon dioxide into the atmospheres from countries that have lower carbon emissions.
It could also be defined as ability of individual companies to trade polluting rights through a regulatory system. Companies that pollute less can actually sell their unused pollution rights to companies that pollute more.
Question 2: How did the carbon trading concept come about?
Answer: The carbon trading concept came about during the KYOTO protocol in 1999.It was an international agreement whose main aim was to reduce carbon dioxide emissions and the presence of greenhouse gases between the year 2008 and 2012.
Question 3: So what is the main aim of carbon trading?
Answer: Simply said, to reduce the overall carbon dioxide emissions.
Question 4: How does the carbon trade work?
Answer: There is a regulatory system called ‘cap and trade’ used in the trade. The regulatory system is meant to reduce certain kinds of emissions and pollution and to provide companies with a profit incentive to reduce their pollution levels faster than their peers.
Under a cap-and-trade program, a limit (‘cap’) on certain types of emissions or pollution is set and companies are permitted to sell (‘trade’) the unused portions of their limits to other companies that are struggling to comply.
Question 5: So which nations should be or are actively involved in the carbon trade?
Answer: Countries that ratified to the Kyoto protocol are required to take part in the carbon trade. They are assigned maximum carbon emission levels and can participate in carbon credit trading.
The Kyoto Protocol has divided countries into two: Annex 1-Developed countries and Non-Annex 1-developing countries.
Emission limitations are placed on Annex 1 countries while Non-Annex 1 countries participate by investing in projects that lower emissions in their own countries. Kenya falls in the latter category. From these projects, they earn carbon credits. These credits can then be traded or sold to Annex 1 countries, which allow them a higher level of maximum carbon emissions for that period.
Question 6: Can the carbon trading concept be considered successful?
Well, there has been a lot of talk on this. Most economists argue that the profits meant to be retrieved from the trade don’t make economic sense. The trade has suffered huge blows by major players failing to ratify to the agreement like the USA.While other countries pulling out of it for example Canada and Australia. Though the European carbon market has made good progress been worth $176 billion. All in all, the carbon trade laid a good foundation in aid to reduce greenhouse gases. It may have a few loopholes, but the Kyoto protocol expires in 2015 and there will be a new treaty to replace it hoping it will address the underlying issues.
One of the issues that even led to USA not to ratify to the agreement is, India and China been classified in the Non-Annex1 category while they are major emitters of the greenhouse gases.
Question 7: Is Kenya actively involved in the carbon trade?
Kenya is a developing country so it falls in the Non-Annex1category. Hence can only participate by investing in projects that lower emissions. Then earn carbon credits which are then sold/traded to Annex 1 countries.
There are a few projects already under way. Below are two examples:
-300MW Lake Turkana Wind Power Project in Loyangalani District, Marsabit West County. Over time it is reported to have earned Kshs.26 billion from the carbon market over the life of the project.
-80,000 acre Rukinga forest reserve in South Eastern Kenya whose project name is Mikoko pamoja (Mangroves together). The main aim is to preserve mangrove swamps and sell their carbon credits from the project.
Question 8: Why hasn’t the carbon trade not picked momentum in Kenya and Africa like in Europe?
Answer: The United Nations Framework Convention on Climate Change (UNFCC) has registered over 3,927 clean Development Mechanism (CDM) projects in the world with only 84 of such projects in Africa.
We lack the required expertise, adequate legal institutional framework and financial constraints.
Question 9: Who should I contact for further queries on this?
Answer: KFS (Kenya Forest Service)-which promotes carbon trading in Kenya.
Carbon Africa Limited-Offers carbon credit training.
References:
www.kenyaforestservice.com
unfcc.int
www.carbonafrica.co.ke
The Kyoto Protocol