Sustainable Development Makes a Case for Clean Development Mechanism, Finds Frost & Sullivan

CAPE TOWN, South Africa, June 14 /PRNewswire/ -- The global uncertainty regarding potential developments post Copenhagen has reined in the prospects of the African clean development mechanism (CDM) market. Africa has abundant resources to develop the CDM market, often at relatively low costs. The rising global awareness about sustainable development is going a long way towards establishing and supporting projects that cause minimal damage to the environment.

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New analysis from Frost & Sullivan (http://www.energy.frost.com), African CDM Market, finds that the market is expected to grow from 34 projects in 2009 to well over 100 projects by 2015. In this study, Frost & Sullivan examines the following end-user markets: chemicals, renewable energy, energy efficiency, landfill gas, waste handling and disposal, manufacturing, reforestation and others.

If you are interested in more information on this study, please send an e-mail to Patrick Cairns, Corporate Communications, at [email protected], with your full name, company name, title, telephone number, company e-mail address, company website, city, state and country.

"In 2008, the carbon market was valued at $118 billion, which represented a robust increase of 84.0 per cent in the total value of greenhouse gas (GHG) emission reductions traded in 2007," says Frost & Sullivan Programme Manager Cornelis van der Waal. "Africa can capitalise on this as, under the United Nations' CDM, developed countries are allowed to offset some of their GHG emissions by funding cleaner energy projects in developing countries."

Although most potential CDM projects, especially renewable energy, remain undeveloped in Africa, sustainable development could help many new projects to qualify for CDM credits. Many countries are increasingly realising the benefits of diversifying their energy mix or reducing waste. Hence, CDM projects are likely to multiply over the next two years despite the long CDM process and all the administrative hurdles.

"In South Africa, the recent feed-in tariffs are likely to offset the additional investment in coal-fired base stations," Van der Waal states. "However, there is some uncertainty regarding the future mechanisms for carbon finance."

The governments must take steps to co-ordinate and simplify the approach to CDM management to stimulate private investment as private financiers tend to be sceptical about the role CDM can play in making marginal projects feasible. This apprehension is causing a delay in the flow of funds, which, in turn, limits utilities' ability to expand supply.

Recently, the International Monetary Fund indicated that sub-Saharan Africa would have to invest about 3.0 per cent of its gross domestic product in the power sector to redress its chronic power shortages. Despite the considerable financial challenges, many projects still hold value.

"Companies are gradually realizing that they need to become more sustainable and hence, are changing their wasteful practices and often benefiting from this as a result of CDM," notes Van der Waal. "The chemicals sector in South Africa is a fine example of this with a number of projects in this space qualifying for CDM."

African CDM Market is part of the Energy & Power Growth Partnership Services programme, which also includes research in the following markets: CDM - Strategic Analysis for Growth Opportunities in Asia, Carbon Trading Systems and CDMs Brazil, SEA CDM Market - Opportunities for Equipment Suppliers, Impact of Global Warming on Latin American Energy Sector, The Steam Turbine Market in Sub-Saharan Africa, The Sub-Sahara African Power Pools, State of the South African Electricity Industry in 2009 and African Large-Scale Wind Turbine Market. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.

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African CDM Market

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SOURCE Frost & Sullivan