INNOVATIONS IN THE PRIVATE SECTOR RESPONSE TO CLIMATE CHANGE AND THE AFRICAN CARBON

MARKET DEVELOPMENT

Lloyd Chingambo

Seventh African Development Forum

Addis Ababa. Ethiopia

October 15, 2010

The Big Question

Private sector as viable partner in dealing Africa’s climate change agenda

Africa Carbon Credit Exchange Telephone: +260-1-238473/2 www.africACCE.com

The Current Position

Africa has little or no access to finance Private sector remains on the sidelines Domestic financial sector does lending to climate change

projects Little or no support for climate change investments Absence of legal framework to support and protect climate

change investments Little attempt to use what funds, as are available, to unlock more

funds for climate change No real attempts to create/generate funds for climate change

Little appreciation of the interlocking relationship between Climate Change and Development.

Africa Carbon Credit Exchange Telephone: +260-1-238473/2 www.africACCE.com

Key Problems of the African Carbon Market

1. LACK OF FINANCE

Lack of project finance opportunities stifle low carbon project development

2. LACK OF KNOWLEDGE

Lack of awareness, knowledge and competencies to leverage global carbon market at all levels (governments, private sector, financial sector, project developers, etc).

3. LACK OF BASELINE METHODOLOGIES

Much of Africa’s economic activities are agro-forestry based.

Africa Carbon Credit Exchange Telephone: +260-1-238473/2 www.africACCE.com

Low Carbon Africa

Crafting Problem Specific African Solutions

Awareness and

Sensitization

Commercial Interest in

Low-Carbon Projects

Enabling Policy

Environment

Project and Carbon Finance

Low-Carbon Project

Development

Carbon Credit

Trading

Access to KnowledgeAccess to Knowledge Access to FinanceAccess to FinanceTrading PlatformTrading Platform

The Unique Design of ACCE

PROJECT PIPELINE DEVELOPMENT

Africa Carbon Credit Exchange “Unlocking Low Carbon Africa”

Africa Carbon Credit Exchange “Unlocking Low Carbon Africa”

Access to Knowledge

The Green Knowledge

Institute

Access to Finance

Low Carbon Africa Fund

Portfolio

Trading Platform

A Transparent and Structured Marketplace

Lloyds(Fund Manager)

Co-FundManager

LOW CARBON AFRICA FUND

Zambian Investors

Offshore Investors

GTCEF

AMGF

LCAF 1

WEF

Mandate• Facilitate the development of

innovative instruments and financing structures thereby unlocking finance to catalyze low carbon project growth in Africa.

• Develop financing structures which would offer different risk profiles to unlock both the private sector and the domestic financial sector.

• Facilitate financial access and market development for project promoters including the smallholder farmer

• Facilitate appropriate green technology transfer to Africa.

Facilitate Access to Finance

CREDIT ENHANCEMENT FUND

Stage 1. ACCE Undertakes Evaluation and Engineering of Primary Securities.

Stage 2.a. With Better Presentation of Securities, Some Clients Go Straight to

the Lender.

Stage 2.a. With Better Presentation of Securities, Some Clients Go Straight to

the Lender.

Stage 2.b. Less Secure Clients will access components of the GTCEF

Stage 2.b. Less Secure Clients will access components of the GTCEF

ENHANCEDSECURITIES

TRADE INSURANCE

PROPERTY INSURANCE

CASHGUARANTEE

ENHANCEDSECURITIES

INDIVIDUAL IMPORTER

SYNDICATE OF

IMPORTERS

Income: Donor Agencies

Income: Money Market

Income: Investors

OFF-TAKER AGREEMENTS

TANGIBLE ASSETS

LIQUID ASSETS

EQUIPMENT

CARBON CREDITS

FINANCE TERMS

Green Technology Credit Enhancement Fund

Stage 3. Provision of Climate Change Technology Transfer Funding

TECHNOLOGY TRANSFER INCENTIVE

FUND

Private Equity Funds

Development Banks

Banks

Govt.

International International Funds Funds

POLITICAL RISK INSURANCE

LIABILITY INSURANCE

Public Bodies

Green Technology Credit Enhancement Fund

The Mechanization Guarantee Fund

Africa Carbon Credit Exchange Telephone: +260-1-238473/2 www.africACCE.com

Strategic Aims of the Fund Facilitate mechanization of rural agriculture Facilitate improved production and yields for the

rural Farmers Mobilise and secure finance for purchasing

equipment Increase technical support to rural farmers Facilitate the development of sustainable and lower

carbon footprint rural agricultural practices.

Facilitating Access to KnowledgeGreen Knowledge Institute (GKI)

Facilitating Access to KnowledgeGreen Knowledge Institute (GKI)

Strategic Aims of the Institute

Knowledge Hub for carbon market development in Africa

Information Sharing Hub for African Designated National Authorities (DNAs)

Facilitate the development of African appropriate carbon methodologies

Deal with issues of sensitization and capacity building issues (e.g., governments, public and private sectors, NGOs, and private sector

GKI is developing into a Bureau for connecting required technical expertise to develop carbon offset projects.

The Trading PlatformThe Trading Platform

A Transparent and Structured Marketplace

ACCE is building a regulated trading platform on which market players can buy and sell credible compliance and voluntary carbon credits generated in Africa

It provides a transparent price discovery mechanism is essential for African project developers to realize market value for carbon credits

Through a network of Brokers and local partners across Africa ACCE will provide a medium for transaction, clearing and supporting structures to facilitate climate change/carbon projects.

Network of Brokers across Africa

Scaling up to Africa

Network of Brokers

PartnersPartners

INSTITUTION TYPE OF SUPPORT

1. USAID/PROFIT Initial Financial Support Technical Assistance

2. NORAD Conservation Farming,

Initial capitalizations into:

o Green Tech. Credit Enhancement Fund,

o Mechanization Credit Guarantee Fund

3. DANISH GOVT. Funding the p-CDM activities

4. WORLD BANK/IFC Conservation Farming, Green Knowledge Institute.

5. UNEP Risoe Green Knowledge Institute.

6. QUEENS UNIV. CANADA

Development of Futures Market on the Trading Platform.

PartnersPartners

INSTITUTION/GOVT. TYPE OF SUPPORT

7. AFREXIM BANK Line of Credit Carbon Credit Delivery Guarantee Fund ACCE contracted to be Afrexim Bank CDM Project

implementation Advisor Afrexim Bank to finance ACCE CDM project book.

CONTACT DETAILS

AFRICA CARBON CREDIT EXCHANGEAFRICA CARBON CREDIT EXCHANGE

4th Floor, Godfrey House. Kabelenga Road.P.O. Box 390035Lusaka. Zambia

lchingambo@africacce.comskhan@africacce.com

Website: www.africACCE.com

Telephone: +260-1-238473/2