"A facility like ACAD can help in de-risking the CDM process [and should] continue doing what it is doing, especially now that there is a lot of uncertainty with regard to the future of the carbon market." Mr. Adriaan Tas, Founder and Managing Director, Carbon Africa Ltd
In Africa, the carbon market is still far from meeting its potential - constituting only 4% of the about 9,100 all Clean Development Mechanism (CDM), single or programmatic projects, the main regulated carbon finance market. The most notable factor to Africa’s frustrating performance is the insufficient carbon and project finance. Local financial institutions often do not have the experience in identifying, assessing, and providing finance to carbon projects
ACAD is a UNEP led public-private partnership that spurs low-carbon growth and development in Africa. It is part of the International Climate Initiative supported by the German Government. ACAD acts as a platform, providing seed funding for replicable investments that demonstrate market solutions to climate change. The partnership also helps African banks and entrepreneurs to realize local eco-solutions through training and hands-on carbon finance advisory services. The partnership aims to:
- Create a pipeline of self-sustaining, replicable low-carbon projects in Africa
- Provide jump-start finance to entrepreneurs
- Help Africa play its role in reducing greenhouse gas emissions and help mitigate climate change
- Increase the flow of investment to low carbon projects with a focus on replicable technologies
ACAD’s partnership approach is based on experience gained through previous programmes designed to improve low carbon project development capacity in sub-Saharan Africa. ACAD addresses key barriers to a more robust low carbon Africa by:
- Enhancing transactional capacity within African banks
- Mitigating early stage investment risks and providing "jump start" financing through competitive grants to defray front project development costs and to advance critical business planning or financial structuring milestones
- Technical assistance or financial advisory services provided in kind from partners
- Fostering regional solutions to ‘unblock’ critical market barriers by supporting key methodology development
Based on an initial success, the capacity and market development activities of the Facility have been extended into a second phase to continue supporting the Africa participation in the co-creation of future climate finance mechanisms and its financial institutions deepened engagement in funding sustainable solutions for a low-carbon economy. Other highlights include:
- US$800,000 worth of support to 17 CDM projects in 9 African countries. 3 of those projects reached registration, 9 projects are under validation
- 6 regional and national training events attracting more than 200 banking professionals
- Increased awareness and application of carbon banking structures among various bank business units.
- ACAD cited by CDM Board as model for soft loan facility for underserved carbon markets.
- Facilitated the development of Africa's first CDM standardized baseline in electric power sector as a way to enhance viability of regional RE/EE projects
- 5 million tonnes of CO2 emissions to be saved over 20 years
