CDMs and carbon trading in South Africa In South Africa, the first carbon credits were issued in June 2008. To date, there are 228 CDM projects that have been submitted to the Department of Minerals and Energy – 189 Project Idea Notes and 39 Project Design Documents (PDDs). Out of these 39 PDDs, 20 have been registered by the CDM Board as CDM projects (7 issued with carbon credits), and 19 are at different stages of the project cycle – DME approval, validation stage and/or request for review. The projects submitted to the DME for initial review and approval cover the following types: bio-fuels, energy efficiency, waste management, cogeneration, fuel switching and hydro-power.
They include sectors such as manufacturing, mining, agriculture, energy, waste management, housing, transport and residential. 9 Whilst CDMs are still considered a useful mechanism to help finance clean development projects that are typically costly, South African companies have been slow to take advantage of CDMs and, to date, very few companies have been awarded carbon credits. Two notable CDM projects in South Africa are the Kuyasa Housing Project and the eThekwini Municipality Landfill. •
The Kuyasa project is based in the Khayelitsha settlement in Cape Town. The project is a collaborative partnership between the City of Cape Town and SouthSouthNorth, an international CDM NGO. In August 2004 the project was awarded gold standard recognition by the UNFCCC which allows it to earn carbon credits. The project was also awarded joint third place at the global Point Carbon’s Best CDM Project 2004 Competition in Amsterdam. The project involved retrofitting eight low-cost houses and two crèches with simple energy-saving devices such as insulated ceilings, low-watt bulbs and solar water heaters.
This has saved almost 2.85 tons of carbon dioxide each year. The retrofitted buildings are 5% warmer in winter and 5% cooler in summer allowing a saving of up to 40% on electricity bills. The project seeks to include more than 2000 dwellings in the Kuyasa settlement over the next 21 years. • The eThekwini Municipality Landfill project isfunded by the French Development Agency and aims to generate electricity through the fermentation of household waste. The methane released by the waste will be converted into electric power by generators.
The project is expected to generate up to 10 Megawatts of electricity (enough to illuminate about 9000 homes). This will reduce the volume of coal burnt at city power stations, thereby reducing GHG emissions. The landfill sites used in the project are Bisasar Road, Marianhill and La Mercy. More recently, Gold Fields’ Beatrix Mine in Welkom has been accorded CDM status. The project captures methane gas, which is considered to be a more destructive gas than carbon dioxide, at source in the mine.10 The gas is then conveyed to the surface and then flared or, alternatively, used to generate electricity.
It is expected that Gold Fields’ carbon emissions will be reduced by 1.7 million tons of carbon dioxide equivalent between 2011 and 2018. It is expected that Gold Fields could earn up to R200 million from the sale of carbon credits that will be yielded from the Beatrix Mine project.11 There have also been developments in the carbon credit market outside of CDM projects and the trade in carbon credits.
Pioneers within the carbon credit market, Sterling Waterford, created the first investment derivative (Carbon Credit Note) and also publicly listed the first carbon credit derivative on the JSE. The company subsequently released their first fixed-interest carbon credit linked instrument – The Collateralised Enhanced Yield Certificate – another first in this market. In 2008 Sterling Waterford Holdings issued and listed a second retail investment note (Carbon Credit Note 2) on the JSE Securities Exchange. It matures in December 2012 and is listed under the short code CBN013 on the JSE.
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