Sunday, November 30, 2008

Uganda hopes to gain from carbon trading

Sunday Monitor, Evelyn Lirri, November 30, 2008

With countries battling to tackle effects of climate change, Uganda is looking at how she can benefit from the sale of carbon credits, a relatively new market mechanism intended to address global warming.

The initiative is part of efforts to implement the Kyoto Protocol, which commits particularly rich countries to reduce their green house gas emissions by 5.2 percent from their 1990 levels between 2008 and 2012 when the protocol expires, but also to create incentives for the expanded use of clean energy.

Carbon dioxide is the main green house gas which is contributing to global warming. The gas is usually emitted by burning fossil fuels like oil, petrol, coal and cutting down forests.

When in the atmosphere, green house gasses especially carbon dioxide and methane trap sunlight and make temperatures in the atmosphere to rise, causing changes in weather patterns.

Mr Xavier Mugumya who is in charge of development of the carbon portfolio at the National Forestry Authority says although the benefits Uganda hopes to reap from sell of carbon credits cannot be quantified in monetary terms as yet, it hopes to increase its negotiating power at the international level.

“We are trying to increase our negotiating power so that the conditions under which poor countries like Uganda can benefit from carbon credits are made more favourable,” Mr Mugumya told Sunday Monitor in an interview.

He said, Uganda is for example, pushing for more funding for tree planting programmes, one of the mechanisms through which it can tap on the carbon trade.

“If you want to plant one hectare of trees which is two and a half acres, it will cost between Shs1 and 3 million. Many people are still not able to afford that kind of money,” said Mr Mugumya.

“[And] if you have little volume, people may not be interested in buying. This is discouraging for many people who want to enter into the business,” he said.

Although developing countries like Uganda contribute less to global warming, they are the most vulnerable. Charity organisation Oxfam, in its 2008 report, “Turning up the heat, climate change and poverty in Uganda”, estimates that Africa currently contributes only 4 per cent to global carbon dioxide emission, mostly caused by land use changes while the rest is emitted by the richest and industrialised economies. Oxfam wants “rich countries, primarily responsible for creating the problem [to take up] a dual responsibility to stop harming, by cutting their green house emissions.”

Mr Mugumya said Uganda is liaising with the World Bank, one of the main players in carbon financing, to sell its carbon credits. The bank believes the carbon market has the potential to bring in between $25 and $120 billion annually in new financing for sustainable development to the poorest and developing countries.

Mr Philip Gwage, coordinator of the newly created Climate Change Unit in the Ministry of Water and Environment, however, notes that while Uganda can benefit from carbon trade, the gain will not be as big when compared to countries like South Africa and Kenya, whose economies are relatively larger.

“Because of our level of development, our benefits will be limited since our level of emission is relatively small, but there are still opportunities,” Mr Gwage said.
Mr Gwage explained that there are several mechanisms through which the trade can be carried out.

“There are several projects eligible in the carbon trade and the commonest is tree planting. We are aware that when trees are growing, they put in carbon dioxide and that carbon dioxide becomes carbon and it’s stored in the tree. When you want to do a trade in carbon, you have to calculate the amount of carbon in that tree and use it to derive the amount of carbon the tree used when it was growing,” he said.

According to Mr Mugumya, the amount of carbon dioxide is then verified through an audit before it is taken to the Executive Board of the Climate Change Secretariat where it’s registered under the UN Convention Framework on Climate Change for onward trading.

Water and Environment minister Ms Maria Mutagamba under whose docket the carbon trade projects are managed, however complains that Uganda has made slow and inadequate preparations for managing the emerging environmental challenges and opportunities including attracting carbon trade funds.

“We are neglecting not only environmental opportunities, but also economic opportunities,” she said in an interview.
The minister wants “a new drive to make immediate changes in how we carry out our environmental management business as a nation. Business not as usual but as unusual”.

Ms Mutagamba said up to now her ministry has been constrained by limited funding. Currently, she said, only 0.58 percent of Uganda’s Shs5 trillion national budget is allocated to the environment and natural resource sub-sector.