Friday, July 15, 2011

CDM-Projects verses impacts of Climate Change in Kenya

By Charles Ogallo

Kenya has been taking Clean Development Mechanism -CDM projects seriously since Kyoto Protocol came into being despite indications that she was lagging behind in advancing to the category of nations with a satisfactory or good climate rating.

Kenya ratified the Kyoto protocol in 2005, paving the way for the country to engage with developed countries in CDM projects.

This comes as environmental experts list the country among the extremely vulnerable to Climate Change.

Stockholm Environment institute study report of 2009 on Kenya indicates that existing climate variability has significant economic cost on the country and that further climate change may lead to additional and potentially very large economic costs.

These include potential threats to coastal zones (sea-level rise), health burdens, energy demand, Infrastructure, water resources, agriculture and loss of ecosystem services.

Kenya’s economy heavily relies on Climate Vulnerable sectors, such as agriculture and tourism, and is among countries with experience in projects relevant to climate change in Africa.

“Emissions of greenhouse gases could double by the year 2030. Moreover, plans across the economy could ‘lock-in’ Kenya into a higher emission pathway” According to the study.

Kenya currently has relatively low emissions of greenhouse gases and has already introduced a range of low carbon options across many sectors. These include renewable energy in the electricity sector, more efficient use of biomass and sustainable land use management.

However, it’s estimated that energy related emission savings of 22% could be achieved by 2020.

Based on principles of the Kyoto Protocol, CDM Projects must result in demonstrable reduction in Green House Gases, sustainable development and new profit making opportunities for developing countries companies.

The country has quite a substantial number of projects in the pipeline, an indication of high priority the Kenya Government has attached to CDM, which is seen as an instrument for mobilizing investments in the country and advancing the development of new industrial projects.

Current CDM projects stem largely from the energy sector, and are undertaken by Kenya Electricity Generating Co. (KenGen), a public company mandated by the government to oversee general energy production in the country.

According to KenGen, more CDM projects were in preparation for which Letters of Intent (LoI) have been signed by the World Bank to purchase certified emission reductions.

Most of KenGen's ongoing geothermal, hydropower and combined cycle projects could qualify under the CDM since they generate less or no carbon dioxide at all in comparison to alternative fossil fuelled plants.

”KenGen’s interest in CDM started in 2000 when the company wrote to the UNFCC, through the Ministry of Environment seeking support in obtaining benefits from CDM for some of the projects. However, not much progress was made” says KenGen’s Chief Executive officer Engineer Eddy Njoroge.

Njoroge disclosed that the Company has six selected CDM projects, among them are Eburru Geothermal Project, Olkaria II Geothermal Expansion Project, Redevelopment of Tana Power Station Project, Optimisation of Kiambere Power Project, Kipevu Combined Cycle Power Project and Sondu Miriu Power Project.

These projects are anticipated to assist in the displacement of approximately 0.66 million tones of CO2 equivalent annually.

They are expected also to generate annual cash flow revenue to KenGen in the range of Kshs million 500 per annum up to the year 2012.

KenGen has already signed a Letter of Intent with the World Bank for sale of the emissions credits.

The Bank is expected to purchase one Certified Emission Reduction (CER) at price of US$ 10.5 for Olkaria II geothermal expansion, 13.9 US $ for Kiambere Optimisation, Redevelopment of Tana Power station and Eburru geothermal and 12.9 US $ Kipevu Combined Cycle and Sondu Miriu.

Most of these projects are eligible to receive a further 1 US $ per one tonne of CO2 from the carbon fund as direct benefits to the communities in surrounding areas where they are located.

“ Kipevu Geothermal Power project alone is expected to have an annual abatement of 122,650 tons of carbon dioxide equivalent, which when sold as Certified Emission Reductions (CERs) will earn the company annual revenues of about US$ 1 million” added Njoroge.

Kipevu combined cycle is an efficiency improvement project which qualifies to earn Emission Reduction credits under the Clean Development Mechanism (CDM) arrangement of the Kyoto Protocol.

The €40 million (Shs 3.6 billion) thermal plant has been upgraded by a capacity of 30 megawatts, from 60 –90 megawatts, through external funding from French Development Agency.

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