Republic of Cameroon - University of Torontoindividual.utoronto.ca/markpurdon/CDMReport_english_Final.pdf · Republic of Cameroon Ministry of Environment and Nature Protection with

Republic of Cameroon Ministry of Environment and Nature Protection

with the support of

The Canadian International Development Agency (CIDA)

What Potential for Rural Development in Cameroon through the Clean Development Mechanism (CDM)

of the Kyoto Protocol

a report regarding the links between climate change and development policy, the CDM governance structure, as well as capacity-building in

regards to small-scale CDM projects for the promotion of rural development

Written by: Mark Purdon, GyreSustainable

GyreSustainableGyreSustainableGyreSustainableGyreSustainable Socioenvironmental Consulting

211 Edgar Street Welland, Ontario • L3C 1T2 • Canada

Tel (Canada): +1 (905) 735 3990 Tel (Cameroon): (+237) 519 5777 Email: [email protected]

CDM climate forests communities policy

How can we

know the

dancer from

the dance?

-WB Yeats

In Collaboration with: Regional Centre for Development and Conservation (RCDC) ICRAF (The World Agroforestry Centre) Global Forest Watch – Cameroon Ministry of Forests and Fauna (Cartography Department) IRAD - Batoke CETEF

August 18, 2005

What Potential for Rural Development through the CDM? GyreSustainable, socioenvironmental Consulting Email: [email protected], socioenvironmental Consulting Email: [email protected], socioenvironmental Consulting Email: [email protected], socioenvironmental Consulting Email: [email protected]

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Table of ContentsTable of ContentsTable of ContentsTable of Contents

LIST OF ACRONYMS ................................................................................................................................... IV

ACKNOWLEDGEMENTS ..............................................................................................................................V

EXECUTIVE SUMMARY ................................................................................................................................1

1. INTRODUCTION TO THE CLEAN DEVELOPMENT MECHANISM .......................................................................1 2. FOCUS AND AIM OF THE REPORT ..................................................................................................................1 3. CDM PROJECT CONDITIONS, PROJECT CYCLE AND PROJECT TYPES............................................................2 4. THE POTENTIAL OF THE CDM FOR SUSTAINABLE RURAL DEVELOPMENT...................................................2

4.1. African Participation in the Emerging GHG Market ............................................................................2 4.2. Development and Climate Change Policy in Cameroon .......................................................................3

5. THE CDM GOVERNANCE STRUCTURE ..........................................................................................................4 5.1. CDM Designated National Authority ....................................................................................................4

Cameroon Stakeholder Impressions of the DNA Structure......................................................................4 DNA Structures of Other African Countries ............................................................................................4

5.2. Criteria for Sustainable Development ...................................................................................................5 6. SMALL IS BEAUTIFUL: SMALL-SCALE PROJECT POTENTIAL .........................................................................5

6.1. Tali-Bara Small-scale CDM Project Feasibility Case Study ................................................................6 6.1.1. Fuelwood Project............................................................................................................................6 6.1.2. Reforestation Project ......................................................................................................................6

7. STATE OF THE GHG MARKET .......................................................................................................................7 8. RECOMMENDATIONS .....................................................................................................................................8

8.1 Recommendations Issuing from the Report ............................................................................................8 8.2. Recommendations Issuing from the Seminar.......................................................................................10

I. INTRODUCTION TO THE CLEAN DEVELOPMENT MECHANISM ...............................................11

1.1. OVERVIEW ...............................................................................................................................................11 1.2. THE CDM AS ONE OF THREE KYOTO PROTOCOL “FLEXIBILITY MECHANISMS”.....................................11 1.3. THE TWIN GOAL OF THE CDM: LINKING CLIMATE CHANGE AND DEVELOPMENT POLICY .......................12 1.4. THE CDM IN THE CONTEXT OF FUTURE CLIMATE CHANGE NEGOTIATIONS...........................................12

2. FOCUS AND AIM OF THE REPORT.......................................................................................................14

2.1. POVERTY IN CAMEROON: A CONCENTRATION IN RURAL AREAS ..............................................................14 2.2. OBJECTIVES AND METHODOLOGY ...........................................................................................................15

3. CDM PROJECT CONDITIONS, PROJECT CYCLE AND PROJECT TYPES ..................................16

3.1. SPECIAL CONDITIONS OF THE CDM.........................................................................................................16 3.2. CDM PROJECT CYCLE .............................................................................................................................16 3.3. TYPES OF CDM PROJECTS .......................................................................................................................19

3.3.1. Overview of CDM project types .......................................................................................................19 3.3.2. Special provisions for forest projects ...............................................................................................21

3.3.2.i. Eligibility of lands for afforestation/reforestation......................................................................21 3.3.2.ii. Special provisions for project cycle and treatment of the issue of permanence ........................21 3.2.2.iii. Definition of “forest” under the CDM .....................................................................................21

3.4. GLOBAL WARMING POTENTIALS: A CONSIDERATION FOR PROJECT IMPLEMENTATION ...........................22 3.5. POLICY RECOMMENDATIONS FOR MANAGING AND PROMOTING CDM PROJECTS ...................................22

4. THE POTENTIAL OF THE CDM FOR SUSTAINABLE RURAL DEVELOPMENT .......................23

4.1. AFRICAN PARTICIPATION IN THE EMERGING GHG MARKET...................................................................23 4.1.1. Determinants of the GHG market.....................................................................................................23

4.1.1.i. Political Ambiguities in Climate Change Policy........................................................................24 4.1.1.ii. Climate Change Policy Awareness and Capacity in Africa ......................................................24 4.1.1.iii. Structural Issues in Climate Change Policy .............................................................................24

4.2. DEVELOPMENT AND CLIMATE CHANGE POLICY IN CAMEROON ..............................................................27 4.2.1. Development Priorities and Strategies Identified in the 2003 PRSP................................................27


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4.2.2. Climate Change Policy Priorities Identified in the 2005 National Communication ........................30 4.2.3. Synthesis of Climate Change and Development Policy ....................................................................30

4.3. POLICY RECOMMENDATIONS FOR REALIZING THE POTENTIAL OF THE CDM FOR SUSTAINABLE RURAL

DEVELOPMENT ................................................................................................................................................31

5. THE CDM GOVERNANCE STRUCTURE ..............................................................................................33

5.1. CDM DESIGNATED NATIONAL AUTHORITY ............................................................................................33 5.1.1. Overview of the Roles of the DNA ....................................................................................................33

5.1.1.i. Role 1: Evaluation and Approval ...............................................................................................34 5.1.1.ii. Role 2: Capacity-Building.........................................................................................................35 5.1.1.iii. Role 3: Marketing CDM Projects – a conflict of interest? .......................................................35

5.1.2. Potential Structures of the DNA .......................................................................................................35 5.1.2.i. Existing DNA Models ................................................................................................................35 5.1.2.ii. Suggestions for DNA Structure from Stakeholder Interviews ..................................................36 5.1.2.iii. DNA Structures of Other African Countries............................................................................37 5.1.2.iv. Recommendations from Seminar .............................................................................................37

5.2. CRITERIA FOR SUSTAINABLE DEVELOPMENT ..........................................................................................39 5.2.1. Cameroon Development Priorities and the MDGs...........................................................................39 5.2.2. Portrait of Cameroon Stakeholder Interpretations of Sustainable Development and Criteria for its

Assessment..................................................................................................................................................41 5.2.3. Sustainable Development Criteria of Other African Countries........................................................42

5.3. POLICY RECOMMENDATIONS FOR CDM GOVERNANCE STRUCTURE ........................................................46

6. SMALL IS BEAUTIFUL: SMALL-SCALE PROJECT POTENTIAL ..................................................48

6.1. INTRODUCTION: TRANSACTION COSTS AND THE MOVE TOWARDS SMALL-SCALE PROJECTS....................48 6.2. TALI-BARA SMALL-SCALE CDM PROJECT FEASIBILITY CASE STUDY ....................................................49

6.2.1. Improved Woodstove Project............................................................................................................50 6.2.1.i. Introduction ................................................................................................................................50 6.2.1.ii. Results .......................................................................................................................................50

6.2.2. Reforestation Project ........................................................................................................................54 6.2.2.i. Introduction ................................................................................................................................54 6.2.2.ii. Project Methodology .................................................................................................................54 6.2.2.iii. Results......................................................................................................................................55

6.3. FEASIBLE RURAL CDM PROJECT IDEAS ISSUING FROM THE SEMINAR .....................................................57 6.4 POLICY RECOMMENDATIONS FOR CDM FUELWOOD AND REFORESTATION PROJECTS............................57

7. STATE OF THE GHG MARKET ..............................................................................................................58

7.1. MAIN PLAYERS IN THE GHG MARKET ....................................................................................................58 7.2. PRICES FOR GHG CREDITS THROUGH THE CDM .....................................................................................58 7.3. RECOMMENDATIONS FOR THE ROLE OF THE DNA IN THE GHG MARKET................................................59

8. CONCLUSION .............................................................................................................................................60

9. REFERENCES..............................................................................................................................................61

10. APPENDICES.............................................................................................................................................63

APPENDIX A: KENYAN GOVERNMENT GUIDELINES ON THE CDM (SOURCE: PEMBINA INSTITUTE 2003) .....63 APPENDIX B: TREATMENT OF BIOMASS IN CDM PROJECT ACTIVITIES ...........................................................65 APPENDIX C: FUELWOOD PROJECT METHODOLOGY ......................................................................................66 APPENDIX D: CDM INVESTMENT COMPANIES ................................................................................................69


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LLLLIST OF IST OF IST OF IST OF AAAACRONYMSCRONYMSCRONYMSCRONYMS AAU Assigned Amount Units AIJ Activities Implemented Jointly ANOVA Analysis of Variance CDM Clean Development Mechanism CER Certified Emission Reduction CH4 Methane CO2 Carbon dioxide CO2eq Carbon dioxide equivalent COP Conference of Parties (to the UNFCCC) DOE Designated Operational Entity EIA Environmental Impact Assessment ERU Emission Reduction Unit ET Emissions Trading EU European Union Gg Gigagram Gt Gigatonne Ha Hectare IISD International Institute for Sustainable Development IPCC Intergovernmental Panel on Climate Change JI Joint Implementation Kg Kilogram Kt Kilotonne LULUCF Land-use, land-use change and forestry MDG Millennium Development Goal MINEF Ministry of Environment and Forests (former ministry) MINEP Ministry of Environment and Nature Protection MINFOF Ministry of Forests and Fauna N2O Nitrous oxide NGO Non-governmental Organization NIE New Institutional Economics PDD Project Design Document PSE Permanent Secretary of the Environment RCDC Regional Centre for Development and Conservation TOE Tonne Oil Equivalents UNDP United Nations Development Program UNEP United Nations Environmental Program UNFCCC United Nations Framework Convention on Climate Change


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AAAACKNOWLEDGEMENTSCKNOWLEDGEMENTSCKNOWLEDGEMENTSCKNOWLEDGEMENTS This report would not have been possible without a number of people and organizations. A first thank you is due to Mr Jean-Claude Mailhot, Director of Coopération Canadienne in Yaoundé, who was able to secure funding for this consultation to proceed. Another thank you is due to Mr Jean-Claude Soh of Coopération Canadienne who coordinated the project. In turn, this consultation would not been possible without the inquiry and cooperation of the Cameroon Ministry of Environment. In particularly the author would like to thank Dr Joseph Amougo as well as Mr Victor Nkwanyuo for their work in coordinating this work on the Cameroon government side. In terms of the seminar organization, many thanks are due to two assistants, Tih Armstrong Ntiabang and Mr Albert Tamfu. Many thanks to Ms Florentine Enseme and the Ecumenical Service for Peace who greatly simplified logistics. As for the Tali-Bara project, initial thanks go to Mr Emmanuel Nuesiri for obtaining funding to initiate the community forest project there. Similar thanks are due to the team of the Regional Centre for Development and Conservation (RCDC), particularly Mr Alfred Che Akumsi. Another thank you should go to the Pan-African Institute for Development – West Africa, who allowed me to work on this consultation on a part-time basis while working as a volunteer at the Institute. I would also like to thank friends and family who supported me during the months I have spent here in Africa, both emotionally and financial. A final thanks is due to the people of Tali 1, Tali 2 and Bara without whom there would have not been a project. In particular I would mention Mr Nelson Mbu, Ms Lucy Taboko, Mr Mbongayah Taïh-Ndip and Chief Orock. Their generosity I hope can in part be repaid by the current report.


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EEEEXECUTIVE XECUTIVE XECUTIVE XECUTIVE SSSSUMMARYUMMARYUMMARYUMMARY

1. Introduction to the Clean Development Mechanism The Clean Development Mechanism (CDM) is a part of the 1997 Kyoto Protocol, an agreement negotiated through the 1992 United Nations Framework Convention on Climate Change (UNFCCC) to reduce the amount of greenhouse gases (GHGs) in the Earth’s atmosphere which contribute to climate change. Also known as global warming and the greenhouse effect, climate change is understood as the gradual rise in the planet’s temperature that is expected to lead to extreme fluctuations in climate and weather patterns around the world over the course of the next century.

While the 1992 UNFCCC established voluntary measures to reduce GHG emissions, the failure of industrialized countries to do so led to the 1997 Kyoto Protocol, a binding agreement. Industrialized countries such as Canada that have ratified the Kyoto Protocol are committed to reducing their share of greenhouse gases by the Protocol’s “first commitment period” of 2008-2012. Most are required to reduce their GHG emissions by a prescribed amount (approximately 5%) below 1990 emission levels. When the United States withdrew from the Kyoto Protocol in 2001, many in the international community were afraid the Protocol was doomed. But with Russia’s ratification in November 2004, the Kyoto Protocol is now a reality—it came into force on February 16, 2005. This should be celebrated as a first step towards a more energy efficient and sustainable world economy.

Aside from addressing the goal of mitigating climate change, the coming into force of the Kyoto Protocol presents opportunities for Cameroon through the emerging trade in GHG credits. As a result of the “common but differentiated responsibilities” for climate change between industrialized and non-industrialized countries, the Kyoto Protocol sets binding limits on GHG emissions only for industrialized countries during the first commitment period (2008-2012). As a result, Cameroon does not currently have any binding limits on its GHG emissions. It should be noted at the outset however that notion of GHG emission limits for non-industrialized countries for the period after the first commitment period (ie, post-2012) is very much a matter of debate (Baert et al. 2000, Najam et al. 2003).

Despite there not yet being an emission reduction target set for Cameroon, the Kyoto Protocol allows for the development of projects located in countries such as Cameroon which generate GHG emission reduction credits which are then transferred to industrialized countries—this process occurs through the CDM. The CDM should thus be understood not as international development assistance, but as marking the emergence of a new market in GHG emission reduction credits—an emerging market in which developing countries are intended to partake. What distinguishes the CDM from other sources of foreign direct investment is that it has been explicitly designed to foster sustainable development in Cameroon as well as mitigate the global problem of climate change. Indeed, the CDM is charged with this “twin goal”: both mitigating climate change and promoting sustainable development. This is clearly expressed in paragraph 2 of Article 12 of the Kyoto Protocol:

“The purpose of the clean development mechanism shall be to assist Parties not included in Annex I [non-industrialized countries] in achieving sustainable development and in contributing to the ultimate objective of the Convention, and to assist Parties included in Annex I [industrialized countries] in achieving compliance with their quantified emission limitation and reduction commitments under Article 3.”

This “twin goal” distinguishes the CDM from the other flexibility mechanisms under the Kyoto Protocol—Emissions Trading and Joint Implementation—which do not have the notion of sustainable development as clearly defined.

2. Focus and Aim of the Report The aim of this report is to build capacity in Cameroon in regards to the CDM, with a particular

focus on the links between the CDM and development priorities in Cameroon. The focus is on the rural sector because the 2003 Poverty Reduction Strategy Paper (PRSP) shows that poverty in Cameroon is clearly concentrated in rural areas: in 2001 the incidence of poverty was nearly 50% in rural areas while 22.1% in urban areas. Some good news is that the PRSP notes a decrease in the total incidence of poverty: from 53.3% in 1996 to 40.2% in 2001. However, this reduction has been


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more prominent in urban areas, where the incidence of poverty has declined by -19.3% from 1996 to 2001. In rural areas this has only declined by -9.7% over the same period. In other words, the rural poor have benefited least from economic development between 1996 to 2001.

What is most promising about the CDM is its potential to counteract this trend by promoting what might be called “redistributed growth”—dispersing the creation of wealth. Particularly through the advent of “bundling” procedures for small-scale projects, the CDM can ostensibly allow smaller, disaggregated projects to be combined under a single administrative procedure in order to achieve an economy of scale that is competitive on the market. However, the rules for these small-scale projects have just recently been agreed to and the feasibility of their implementation is largely unknown. The specific objectives of the report are set out in Table 3 of the main report.

The methodology used has been to combine a literature review—including up-to-the-minute references to relevant websites—with Cameroon stakeholder interviews, an email survey with the DNA and Kyoto Protocol officials in 12 other African countries (though only 3 completed the surveys) as well as field work in conjunction with an on-going community forest implementation project. Finally, preliminary results of this report were presented at a seminar on August 9, 2005 held at the Palais des Congres in Yaoundé, where a number break-out groups treated questions of CDM governance and project feasibility.

3. CDM Project Conditions, Project Cycle and Project Types There are a number of conditions which any CDM project needs to meet, which might be divided

between the two aspects of its twin goal. In terms of sustainable development, (i) each CDM host country is required to develop its own criteria for assessing a CDM project’s contribution to sustainable development and (ii) funds flowing into a CDM project must be independent of an industrialized country’s Official Development Assistance (ODA). In terms of mitigating climate change, any project must meet conditions of (i) measurability, (ii) additionality and (iii) should also avoid leakage. In order to ensure that all of these conditions are met, a complex project cycle must be followed which has important implications for transaction costs.

As for types of projects, the CDM Executive Board has identified 15 CDM project sectors. Broadly speaking, these might be divided amongst two CDM project categories: (i) those projects that will reduce GHG emissions and (ii) those that “sink” GHGs (particularly carbon) in trees, commonly known as Land-use Change and Forestry (LULUCF) projects. In the first category, project sectors that may be of interest to rural development are those in Sector 1: Energy industries; Sector 3: Energy demand; Sector 13: Waste handling and disposal; Sector 15: Agriculture. In the second category of CDM projects there is Sector 14: Afforestation and reforestation. It is also noted that rules and methodologies for small-scale projects have recently been developed which might be more conducive to rural development, which are discussed in more detail in Section 6. For large-scale projects, these methodologies need to be developed on a case-by-case basis. Demonstrating measurability and additionality for afforestation/reforestation projects is slightly more difficult than other project sectors, requiring more a complex project cycle, methodology and crediting system (the latter to account for issues of the permanence of GHG emission reductions). Finally, it is noted that fuelwood projects are not considered as a part of the Energy sector but, rather, as falling under the scope of afforestation/reforestation projects as “renewable biomass”.

One important observation about CDM projects is their informational nature. Transaction costs associated with the transfer of information can be facilitated by making use of appropriate information technologies and the Internet. Indeed, the CDM and GHG market does not deal in GHGs at all, but rather in GHG credits which are really just information. Differing from markets dealing with physical commodities, the new GHG market entails the purchase of virtual commodities—information and data—that represent GHG emission reductions. One goal of this report is to promote an understanding of the informational nature of the GHG market and to develop strategies accordingly to assist countries such as Cameroon generate “redistributed growth” through it.

4. The Potential of the CDM for Sustainable Rural Development

4.1. African Participation in the Emerging GHG Market

The participation of Africa in the GHG market that has been opened up by the Kyoto Protocol has been slow, particularly in sub-Saharan Africa. The latest figures show that the sales of GHG credits originating from projects in Africa is in the range of 0-3% of total volume (Lecocq and Capoor 2005).


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The lack of significant African participation in the emerging GHG market has raised concerns about the equity of the CDM market and its promise for sustainable development (CDM Watch 2004, Lecocq and Capoor 2005: 23). As Lecocq and Capoor observe, the CDM market is following market patterns consistent with the general flow of Foreign Direct Investment. That is, CDM investments are being made in projects where a return on investment is most secure: projects in countries on the cusp of industrialization such as India, Brazil and China. The GHG market resembles not globalization, but “glocalization” (sensu Swyngedouw 2004).

There are a number of explanations for the current lack of African participation on the GHG market. Broadly speaking, we might divide these between:

(i) political ambiguities surrounding the coming into force of the Kyoto Protocol; (ii) a corresponding lack of awareness and capacity on the part of Africa governments for the

promotion of CDM activities; (iii) structural issues regarding

a. transaction costs associated with the CDM b. the controversy surrounding the use of forests

i. Politics ii. Uncertainties in the measurement, verification and permanence of forests as

GHG sinks c. political economy of the Kyoto Protocol itself

These issues are discussed in depth in the text with the recommendation that Cameroon and African countries take a stronger role in the negotiations regarding the implementation of the Kyoto Protocol. This would be possible through a delegation to attend the next meeting of the Conference of Parties (COP) to the UNFCCC, December 2005 in Montreal, Canada.

4.2. Development and Climate Change Policy in Cameroon

In order to assess how the CDM might contribute to sustainable development in Cameroon, it is necessary to explore the country’s development priorities. The “ultimate objective” of the 2003 PRPS is to “achieve a sustainable and visible improvement in the standard of living of Cameroon’s populations that would come from tackling the very roots of poverty,” (p. 31). This will result from (i) implementing policies designed to create the conditions for strong, sustainable economic growth and (ii) aligning poverty reduction policies with the Millennium Development Goals (MDGs). To this end, the 2003 PRSP identifies seven strategic priorities for its growth and poverty reduction strategy. Most of the potential linkages between the PRSP and CDM occur at the level of Strategic Priority 2 (Strengthening growth through economic diversification), Strategic Priority 3 (Empowering the private sector), and Strategic Priority 4 (Developing basic infrastructure and natural resources in an environmentally sustainable manner).

In Cameroon, GHG emissions are clearly associated with the rural sector. Data on the three primary GHGs (CO2, CH4 and N2O) assembled in the recently published First National Communication under the UNFCCC show the Land-use, Land-use Change and Forestry (LULUCF) sector and Agriculture were the principle sources in 1994, together representing nearly 90% of emissions. In terms of energy consumption, the Cameroonian profile again underscores the importance of the rural sector. Of the 1994 total energy budget of 3,744 million tonnes oil equivalents (TOE), biomass energy sources (including fuelwood, charcoal and other sources of biomass) constituted the primary energy source. Fuelwood alone accounted for 61.2% of total energy consumption. The First National Communication also outlines measures to reduce GHG emissions including the Forest, Waste, Agriculture and Energy Sectors which have implications for rural areas.

However, it remains to be seen how the above climate change mitigation measures will be articulated with development policy. Climate change policy does not appear to figure prominently within current development policy in Cameroon. Both the 2003 PRSP and 2004 PRSP Progress Report are devoid of reference to climate change policy, the Kyoto Protocol and the CDM. While a number of possibilities for integrating the CDM into rural development policies described in the 2003 PRSP are identified in the report, these policies are dispersed under a number of strategic priorities. It would be important that MINEP consolidate a plan of action for integrating these.


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5. The CDM Governance Structure

5.1. CDM Designated National Authority

The national body responsible for governance of the CDM is the Designated National Authority (DNA), the main responsibility of which is the evaluation and approval of any CDM project, ensuring that it is voluntary, that it will mitigate GHGs and most importantly that the project meets criteria for sustainable development. The extent to which the DNA is able to give such confirmations will depend on how it is constituted within the Cameroon government and what powers it is granted. Other roles the DNA may choose to play are in capacity building and marketing. But as noted in Cigaran and Iturregui (2004), the goal of both approving and marketing CDM projects can present a conflict of interest.

The DNA thus forms an integral part of an already complex CDM process—it is one of three regulatory phases of the CDM, the others being the validation and verification by Designated Operational Entities (DOEs).1 However, the exact structure of the DNA is not prescribed by the Kyoto Protocol, rather it can be tailored to fit the needs of the host country. During the course of the consultation it was learned that MINEP has already taken initial steps towards implementing the DNA. As of July 2005, a CDM interim National Committee has been established, based on an inter-ministerial and inter-sectoral structure. Its next main task will be to develop procedures for evaluation and approval, including criteria for sustainable development. In terms of these procedures, all CDM projects will be subject to an EIA.

Cameroon Stakeholder Impressions of the DNA Structure

Almost all stakeholders interviewed suggested an inter-ministerial and inter-sectoral structure for the DNA, though recognizing that MINEP is best placed to lead its coordination. However, concern about bottlenecks under this structure were voiced, though with different strategies for minimizing this. One strategy was to ensure that the DNA has a good focal point, with strong communication skills. As for the rest of the DNA, it would be comprised of an ad-hoc committee of experts that would be assembled for specific project evaluations. A second strategy suggested that the evaluation and approval process would be more efficient if well-defined decision-making procedures were developed first. These could be defined in an inter-ministerial fashion, but then transferred to one body for efficient implementation. It was noted that power in Cameroon is very much dispersed amongst various ministries and government bodies, making it difficult to reach decisions for issues that the CDM might require. Furthermore, such procedures could be stream-lined for small-scale projects to promote such activities in the rural sector. Stakeholders also voiced a number of concerns regarding the DNA. One stakeholder observed that the structure of the DNA was really not as important as the rules for selecting individuals/institutions of which it would be composed. This selection procedure needs to be open and transparent. Similarly, other stakeholders emphasized it was necessary to establish a complaint mechanism into the DNA in the event of grievances. Others still saw a conflict of interest between the role of approving projects and marketing them. It was suggested that the role of marketing a CDM project portfolio might be better allocated to another government ministry (MIN Commerce), though ensuring access there to environmental expertise. Finally, while the multi-sectoral approach was most often suggested as the best DNA structure, some noted that the private sector is accorded a disproportionate advantage in such a structure. Finally, it was noted that implementation of a well-functioning DNA was always more difficult than to agree on its design.

DNA Structures of Other African Countries

Email surveys completed by CDM authorities of Mali, Benin and Morocco all show a similar pattern to the structure of their DNAs. All are situated in their country’s equivalent to the Ministry of Environment. The DNAs of Mali and Morocco make use of a pre-existing government structure; Benin’s DNA is completely new and only recently formed along with the Kyoto Protocol National Focal Point. All three are multi-sector government bodies, with distinct councils and executive bodies/permanent secretariats. All are financed through their national budgets, though Mali and Morocco cite capacity-building assistance from international donors (UNEP/UNDP/World Bank). The

1 As an aside, it should be noted that currently there is no African-based DOE, which certainly increases transaction costs for CDM projects in Africa since outside experts need to be flown in.


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decision-making process for Mali and Benin is not well articulated; however, that of Morocco entails a defined dual-screening process. The duration of the decision-making process is described as 1-3 weeks for Mali and 6 weeks for Morocco (2 weeks for primary screening; 4 weeks for secondary screening. Created in January 2005, Benin stresses that its DNA just starting-up and needs to gain experience.

5.2. Criteria for Sustainable Development

This section presents three complimentary approaches to developing sustainable development criteria. The first is suggested by the UNEP Riso Centre, which is to link criteria for sustainable development with existing national development strategies such as the PRSP and MDGs (Olhoff et al. 2004). The second approach is to provide a collage of different definitions of sustainable development and criteria for its assessment that have been gathered from Cameroon stakeholder interviews. The last is to examine the criteria of other African countries for the purposes of the CDM, which have been attained for this consultation through email surveys with a number of African DNAs.

There are however two problems with the first approach. An initial observation is that direct reference to the Kyoto Protocol is missing from the MDGs, likely because of uncertainties regarding its coming into force. However, it is possible to align MDG7 with the CDM, and perhaps a few others. But the second problem with this approach is that the link between the PRSP’s Strategic Priorities and the MDGs is not clear. Indeed, criteria for measuring progress on the PRSP Strategic Priorities do not readily present themselves. This points to the need to more comprehensively develop criteria for poverty reduction and sustainable development, which might then form the basis of criteria for CDM projects. For example, other more specific policy documents such as the Sectoral Strategy for Rural Development might lend themselves better to the development of these criteria. It is noted that for two of the African countries surveyed, the development of their CDM criteria for sustainable development has been the responsibility of government bodies devoted to sustainable development.

6. Small is Beautiful: Small-Scale Project Potential In an effort to reduce transaction costs and make CDM projects more feasible amongst low-

income individuals and communities, simplified rules for small-scale projects have been agreed to. Of the simplified procedures, perhaps the most innovative is the ability to “bundle” projects. This allows project activities to be dispersed between different communities and brought together under a collective administrative procedure. In this way, project activities can be scaled down to a level that is manageable yet also feasible for working with low-income communities. Another novelty of small-scale projects established to reduce transaction costs is that a number of predefined and simplified methodologies have been agreed to, though not yet developed for afforestation/reforestation projects. Indeed, a draft is currently being discussed by the CDM Small-Scale Working Group.2 Similarly, the methodology linking renewable biomass to afforestation/reforestation is currently being developed by the CDM Methodology Panel.3

There are however limits on the size of small-scale projects, designed to ensure that such projects remain (true to their name) small. Small-scale CDM GHG emission reduction projects are limited in terms of the size of the project as well as annual emissions. Small-scale reforestation and afforestation projects are limited in the annual CO2-eq reductions per year they can sequester (8 kt CO2eq/yr). In addition, small-scale afforestation/reforestation projects “should directly benefit the low-income community and individuals that are project participants.”4

2 UNFCCC (2005) Simplified baseline and monitoring methodologies for selected A/R small-scale CDM project activity categories. Website: http://cdm.unfccc.int/Panels/Panels/ar/Inputs_Afforestation_Reforestation (accessed August 1, 2005)

3 UNFCCC (2005) See Section K of the Report of the 16th Meeting of the CDM Methodologies Panel. Website: http://cdm.unfccc.int/Panles/meth/Meth16_rep_ext.pdf (accessed August 1, 2005) Note that this report is reproduced as Appendix B in this report.

4 See the preamble of the “Simplified modalities and procedures for small-scale afforestation and reforestation under the clean development mechanism in the first commitment period of the Kyoto Protocol and measures to facilitate their implementation” in the COP10 Decision (Decision -/CP.10)


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6.1. Tali-Bara Small-scale CDM Project Feasibility Case Study

The report presents preliminary results from potential small-scale CDM projects in an ongoing community forest implementation project with the Tali and Bara communities, located in the forested region of South West Province, Cameroon—a recognized biodiveristy “hotspot”. The project seeks to grant the Tali-Bara communities title to a 3500 ha stretch of forest representing their communal lands, currently now used for a combination of rural activities including: farming, hunting, collection of non-timber forest products and artisanal logging. These community lands are situated between a forest concession (UFA 11-002) granted to Wijma corporation and the Banyang-Mbo Wildlife Sanctuary. The reason for focusing on a community forest is that small-scale reforestation projects require a low-income community or individual as a project partner. Community forests established under Cameroon’s 1994 Forest Law represent just such a partner. Two forms of CDM projects have been considered: improved woodstove efficiency and reforestation. A word of caution is called for in the interpretation of results presented here as the methodologies used and results obtained have been made in the absence of the officially agreed small-scale methodologies for reforestation and fuelwood projects.

6.1.1. Fuelwood Project

The fuelwood project had two objectives: (i) to obtain data that could be used to establish a baseline emission scenario and (ii) to install a prototype improved woodstove (designed by Dr George Eyabi, IRAD-Batoke5) in order to estimate emission reduction potential. A secondary goal was to determine social customs of fuelwood harvesting and use, which is summarized in Purdon (2005). The methodology used was to visit individual households in order to obtain data on fuelwood consumption. A fuelwood survey was conducted including semi-structured interviews with the woman of the house and the weighing of fuelwood. A total of 39 households were visited resulting in seventy-five daily estimates of fuelwood consumption.

Data were analyzed to determine average daily fuelwood consumption and (using results from the week-long study) to determine fluctuations in fuelwood consumption. Fuelwood biomass might be converted to GHG emissions using procedures outlined in the Reference Manual (Volume 3) of the Revised 1996 Guidelines for National Greenhouse Gas Inventories (IPCC 1996). Average domestic-only levels of fuelwood consumption (not cooking for market sale) was conservatively estimated6 at 7.99 kg which corresponds to 0.015 tonnes CO2eq. Regression analysis with household size demonstrates a discernible increase in fuelwood consumption with household size for those cooking for domestic-consumption-only. Application of this regression equation to a list of household size for each the 124 households in the Tali-Bara community resulted in an estimation of the annual community GHG emissions from domestic-consumption-only-cooking at 579.7 tonnes CO2eq/yr. Fuelwood consumption from cooking for sale and bush mango preparation were too infrequent to be statistically recorded. Comparisons of fuelwood consumption between the traditional stove and an improved woodstove indicate a reduction in fuelwood consumption and CO2eq emissions of 38.5%. If all 124 households would adopt the improved woodstove technology, it is possible that the total emissions from the Tali-Bara community estimated earlier at 579.7 tonnes CO2eq/yr could be reduced to 356.5 tonnes CO2eq/yr. Thus a gross estimate of GHG credits that could be generated through the improved woodstove CDM project is 223.2 tonnes CO2eq/yr. Assuming a five year crediting period, this could generate 1116 tonnes CO2eq which might have a value on the GHG market of $5,580 USD.7

6.1.2. Reforestation Project

The strategy for reforestation project at Tali-Bara was to determine land available for reforestation and estimate the carbon sequestration that might result from the inplanting of agro-forest species. Data on the early growth stages (years 2-4) and thus carbon sequestration potential of two agro-forest species was obtained from the ICRAF, World Agroforestry Centre (see Table 26 in Section 6.2.2).8 These results indicate that by their fourth year, new plantings of Njansang (Rhicininodendron

5 Dr George Eyabi, Email: [email protected]

6 Lower bound of the 95% confidence interval of the mean 7 Based on an estimate that one tonne CO2eq will have a value of $5 USD 8 Asaah, E. (2005) Presentation for this seminar: Reforestation Potential of Agroforestry Species for Livelihood and Environmental Services. Email: [email protected]


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heudelotii), Plum (Dacroides edulis) and their combination will sequester 3.60, 0.13 and 3.73 tonnes CO2eq/ha at a planting density of 10m x 10m (100 per hectare). Assuming a GHG value of $5 USD per tonne, this translates into $18, $0.65, and $18.65 USD per hectare. It should be noted that this value will increase into the future as the trees grow.

However, a major handi-cap to the reforestation project was the identification of eligible lands.9 Aerial photos from 1990 were found at MINFOF, but only enough to cover approximately one-third (804 ha) of the proposed community forest territory (3500 ha). Photo interpretation carried out by MINFO indicated with confidence 32 ha available for agroforest inplanting. There is an additional 124 ha of long-term fallows, which may qualify as deforested areas, but this cannot be known with confidence.10 However, satellite images from 2003 available at GFW were not of a high-enough resolution to carry out a similar analysis of present conditions to assess which areas are still eligible for reforestation. This might be circumvented by ground-truthing the 1990 aerial photos with a GPS or obtaining higher-resolution satellite images. A conservative estimate of reforestation potential, using then 32 ha of farmland 1990 as a proxy, over an initial four-year period is estimated in Table 26 in Section 6.2.2. Because of the difficulty in identifying eligible lands for reforestation (limited to 32 ha), the amounts of CO2eq that might be sequestered are quite small. However, these quantities might be manageable and thus significant for rural communities. It would be important to determine if long-term fallows meet the definition of forest or not.

7. State of the GHG Market The latest version of the World Bank’s State of the Carbon Market (Lecocq and Capoor 2005) attests to the importance of the coming into force of the Kyoto Protocol, with the market picking up. At the outset it should be emphasized that unilateral projects are possible through the CDM. Following decisions made by the CDM Executive Board in February 2005, CDM projects can now be initiated without the participation of an industrialized country partner (Aalders and Haites 2005). This development might kick-start CDM entrepreneurial activity in countries such as Cameroon which have been passed over in the CDM bilateral market. However, in this arrangement the host country project proponents assume most of the risk. As for major buyers, currently European entities are responsible for most purchases—though an important share of these transactions are handled by the World Bank. Canada’s role as a market buyer is marginal (less than 5% of total volumes purchased recently), despite the fact that Canada is currently 26% above its emission reduction target under the Kyoto Protocol. This suggests that Canada will be seeking to purchase a large number of GHG credits to meet its Kyoto commitments. However, the biggest player on the market is the World Bank. From January 2004 to May 2005, the World Bank was responsible for 22% of purchases on the GHG market (Lecocq and Capoor 2005: 22).11 In terms of price, prices for GHG credits are currently rising, which might be interpreted as an indication that demand is greater than current supply (Lecocq and Capoor 2005). The official GHG emission credit generated under the CDM (Certified Emission Reductions (CERs)) have been trading between $3 to $7 USD per tonne CO2eq. This is significantly less than prices for GHG credits generated through Emissions Trading (particularly on the EU Emissions Trading System) which in May 2005 were selling at €15 EURO per tonne CO2eq. The main reason for this price differential are the risks inherent in project-based transactions such as the CDM, which are usually based on forward contracts for yet undelivered credits. The DNA could increase the value of CDM projects by reducing some of these risks. Similarly, Cameroonian entrepreneurs might develop projects

9 Lands eligible for reforestation under the CDM need to have been deforested continuously since prior to 1990 10 “Forest” is a minimum area of land of 0.05-1.0 hectares with tree crown cover (or equivalent stocking level) of more than 10-30 per cent with trees with the potential to reach a minimum height of 2-5 metres at maturity in situ. A forest may consist either of closed forest formations where trees of various storeys and undergrowth cover a high proportion of the ground or open forest. Young natural stands and all plantations which have yet to reach a crown density of 10-30 per cent or tree height of 2-5 metres are included under forest, as are areas normally forming part of the forest area which are temporarily unstocked as a result of human intervention such as harvesting or natural causes but which are expected to revert to forest. Within the ranges given in this definition, each host country shall fix its values for minimum land area, crown cover and minimum height at maturity in situ that will apply for the first commitment period. 11 This heavy presence has not gone without comment, with some critics arguing that the World Bank is able to use its position to keep the value of GHG credits purchased through the CDM low. In response, the World Bank has maintained that it has taken a number of risks in pioneering the GHG market. It is also noted that private entities engaging in the GHG market are not required to disclose the price they purchased credits at, unlike public institutions like the World Bank.


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unilaterally, thus accepting risk themselves but perhaps being able to sell any GHG credits generated for a higher price.

8. Recommendations

8.1 Recommendations Issuing from the Report

Recommendations 1 : Recommendations for managing and promoting CDM projects

• Track Developments in CDM Methodologies (particularly afforestation/reforestation and fuelwood): methodologies for project development are open to public comment through the UNFCCC website.12 It is important to follow these developments as they provide insights into how to (and how not to) formulate CDM projects. Relevant current methodologies being considered now are for small-scale afforestation/reforestation projects as well as fuelwood projects (known as “non-renewable biomass” by the CDM Executive Board). The next few months should see important developments on the treatment of these projects.

• Recognize the informational nature of the CDM: The CDM might be promoted in the rural sector by recognizing the informational nature of CDM projects. Given computing power and the Internet, trade in GHG market should be made more open to management through the use of information technology that can be dispersed through the rural sector.

Recommendations 2 : Recommendations for realizing the potential of the CDM for promoting sustainable rural development

• Cameroon delegation to COP11 in Montreal: Cameroon should increase its participation and

could take a leadership role in promoting African interests vis-à-vis the Kyoto Protocol and CDM. The next meeting of the UNFCCC’s Conference of Parties (COP) which governs the Kyoto Protocol is December 2005 in Montreal, Canada. Funding will be necessary.

• Coordinate existing programs with the potential of linking climate change policy and rural development policy: MINEP should promote linkages between activities under the PRSP, particularly programs such as the Integrated Rural Development Strategy, Small-Medium Enterprises program, the National Microfinance Program Support Project, and the Rural Electrification Agency with the Community Telecentres Project in terms of promoting, managing and “bundling” small-scale project portfolios. MINEP should seek clarification on investment and property right law in regards to the CDM amongst OHADA and seek to promote a regional climate change policy through CAEMC.

• Development and Climate Change Plan of Action: MINEP should consolidate a plan of action to better link existing government development programs with its climate change strategy. Note: this has links to the criteria for sustainable development that need to be developed for the CDM.

Recommendations 3 : Recommendations for the CDM governance structure

Recommendations for the Structure of the DNA • Keep the DNA small, focused and efficient: it is important to reduce bureaucratic processing

time by keeping the DNA small and focused with a limited yet balanced number of sectors involved.

• Develop detailed evaluation and approval procedures: It is noted that power in Cameroon is dispersed amongst a number of different ministries and government bodies which might prove difficult to coordinate vis-à-vis the CDM. To surmount this, the DNA should have well-drafted and detailed procedures to follow, based on an extensive and transparent, inter-governmental and inter-sectoral consultations.

• Clear rules for the selection of participants to the DNA: participation in the DNA and in the drafting of its decision-making procedures should be based on a number of objective criteria and explanations for the selection of individuals to the National Committee should be made available

• Eventual transfer of CDM project promotion to Ministry of Commerce: while the DNA might initially promote CDM projects, the conflict of interest this might present warrant that this role be transferred to another ministry, the Ministry of Commerce being the best suited.

12 UNFCCC (2005) CDM Methodology Panel Website: http://cdm.unfccc.int/methodologies (accessed August 1, 2005)


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Recommendations for Sustainable Development Criteria • Criteria should be developed by a sustainable development commission: a government

body or commission with a mandate to promote sustainable development should be assembled (if it does not already exist) to draw-up sustainable development criteria required for the CDM. Such an approach is justified from the example of Morocco which had the most comprehensive sustainable development criteria and appeared to have invested a great deal of time in developing them. It is also noted that CDM criteria in Mali are also being drafted by the sustainable development focal point.

• Identification of 12 criteria for sustainable development: eleven criteria have been identified (mostly through the interviews carried-out with Cameroon stakeholders) comprising Economic, Social, Environmental and Project Management criteria for CDM projects. An additional criterion related to the promotion of an equilibrium balance of payments has been included from the Moroccan example in order to ensure that projects also promote macro-economic stability

• Promotion of the use of a scalar evaluation matrix: perhaps the most important result of the stakeholder interviews was the identification of the need to consider criteria for sustainable development at different scales: local, national and global. Thus the criteria above should be evaluated at different scales through the use of a scalar evaluation matrix

Recommendations 4 : Recommendations for CDM fuelwood and reforestation projects • Coordinate research to develop fuelwood and reforestation methodologies: the

government of Cameroon could assist with resolving uncertainties regarding fuelwood and reforestation methodologies by focusing research in this domain

• Adopt a definition of “forests” under the CDM that maximizes reforestation potential: a definition of forests with a minimum crown density of 30% (ie, as large as possible given the range permitted under the definition of forest by the UNFCCC) will make it more feasible to include degraded forest lands as eligible for reforestation (thus as not being forest)

• Facilitate procedures for obtaining aerial and satellite images: the process of obtaining and interpreting aerial photos and satellite images might prove complicated. It would be important that MINFOF establish clear procedures while GFW might seek to procure higher-resolution satellite images.

Recommendations 5 : Recommendations for the role of the DNA in the GHG market • Bring down risk of CDM transactions: as noted Aalders and Haites (2005), the DNA might

reduce risks inherent in CDM transactions by providing clear guidance on the evaluation and approval of CDM projects as well as for the transfer of GHG credits generated through the CDM to buyers/investors

• Foster the Cameroon CDM entrepreneurial sector: unilateral projects under the CDM are now officially allowed which may allow some entrepreneurial Cameroonians to enter the GHG market directly in the hopes of selling fetching a higher price for any GHG credits generated, though assuming the risks if they do not


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8.2. Recommendations Issuing from the Seminar

Seminar Results 1 : Recommendations for the CDM governance structure Recommendations for the Structure of the DNA • Autonomous organisation under the leadership of MINEP • Decentralized structures for the regional/provincial level (regional offices) • Personnel recruitment following well defined profiles • Terms of reference for the above profiles elaborated by an independent body Recommendations for Sustainable Development Criteria • Improvement in living standards (education, water, revenue) • Good governance: transparency, equity, justice • Sustainability • Participatory management and monitoring • Conformity with laws and regulations • Conformity with development priorities • Rational management of natural resources • Technology transfer

Seminar Results 2 : Feasible Rural CDM Project Ideas Energy • Improve stove for energy efficiency in the rural sector of Cameroon

a. Fuelwood b. Charcoal

• Demonstration and valorization of improved fish smoking ovens • Biogas electrical energy from organic household and animal waste (can allow for use of electrical

stoves) Reforestation • Integrating high value tree species (nutrition medicine and environmental services) in the existing

farm systems, forest mosaic, protected area landscapes and community forests [focus on farms and young fallows]

• Small-scale fuelwood plantation with fast growing species in degraded lands • Afforestation of degraded land with high value species for social, economic and environmental

services • Afforestation of degraded landscapes with high value species for the sustainable implementation

of CDM Improved agricultural practices • Improved agricultural practices • Soil conservation agriculture with soil fertilizing species • Promotion of mixed farming systems that mitigate slash and burn agriculture • Promotion of fodder banks establishment to mitigate bush fires for pasture regeneration [in

sudeo-sahalien zones]

Seminar Results 3 : General recommendations for the CDM in Cameroon • Institutional and technical capacity building regarding CDM • Production of a Practical Guide for the Elaboration of CDM projects in lay-men’s terms • Seek support from the Canadian High Commission for a strong representation of Cameroon at

the next Conference of Parties (COP) to the UNFCCC in Montreal, Canada • Conservation and appropriate use of the environment and natural resources • Environmental Impact Assessment for any CDM project suspected of affecting the environment • Facilitate the access of local populations to the benefits resulting from the exploitation of genetic

resources


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I. II. II. II. INTRODUCTION TO THE NTRODUCTION TO THE NTRODUCTION TO THE NTRODUCTION TO THE CCCCLEAN LEAN LEAN LEAN DDDDEVELOPMENT EVELOPMENT EVELOPMENT EVELOPMENT MMMMECECECECHANISMHANISMHANISMHANISM

1.1. Overview The Clean Development Mechanism (CDM) is a part of the 1997 Kyoto Protocol, an agreement

negotiated through the 1992 United Nations Framework Convention on Climate Change (UNFCCC) to reduce the amount of greenhouse gases (GHGs) in the Earth’s atmosphere which contribute to climate change. Due to an over-accumulation of GHGs in the atmosphere, more and more of the sun’s energy is retained along the Earth’s surface and lower atmosphere thus affecting climate, in much the same way as a blanket might trap a person’s heat (Figure 1). Also known as global warming and the greenhouse effect, climate change is understood as the gradual rise in the planet’s average temperature that is expected to lead to extreme fluctuations in climate and weather patterns around the world over the course of the next century.

While the 1992 UNFCCC established voluntary measures to reduce GHG emissions, the failure of industrialized countries to do so led to the 1997 Kyoto Protocol, a binding agreement. Industrialized countries such as Canada that have ratified the Kyoto Protocol are committed to reducing their share of GHGs by the Protocol’s “first commitment period” of 2008-2012. Most are required to reduce their GHG emissions by a prescribed amount (approximately 5%) below 1990 emission levels. When the United States withdrew from the Kyoto Protocol in 2001, many in the international community were afraid the Protocol was doomed. But with Russia’s ratification in November 2004, the Kyoto Protocol is now a reality—it came into force on February 16, 2005. This should be celebrated as the Kyoto Protocol is a first step towards a more energy efficient and sustainable world economy.

The Kyoto Protocol recognizes the “common but differentiated responsibilities” of industrialized and non-industrialized countries in combating climate change. That is, industrialized countries are acknowledged to be mostly responsible for the emissions of GHGs that have led to climate change, while non-industrialized countries are expected to be most adversely affected by climate change because of low capacity for adaptation. Africa in particular is expected to suffer most, primarily through reductions in precipitation which will affect crop yields and other ecological processes (IPCC, Third Assessment Report 2001). For instance, Malhi and Wright (2004) present data from the past 40 years indicating a strong drying trend in African rainforests.

Aside from addressing the goal of mitigating climate change, the coming into force of the Kyoto Protocol presents opportunities for Cameroon through the emerging trade in GHG credits. As a result of the “common but differentiated responsibilities” for climate change between industrialized and non-industrialized countries, the Kyoto Protocol sets binding limits on GHG emissions only for industrialized countries during the first commitment period (2008-2012). As a result, Cameroon does not currently have any binding limits on its GHG emissions (though in Section 1.4 this issue in light of future climate change negotiations is examined). However, the Kyoto Protocol currently does allow for the development of projects located in countries such as Cameroon which generate GHG emission reduction credits which are then transferred to industrialized countries—this process occurs through the CDM.

The CDM should thus be understood not as international development assistance, but as an important part of an emerging market in GHG emission reduction credits—an emerging market in which developing countries are intended to partake. The CDM is a potential source of foreign direct investment, but one which is designed to foster sustainable development in Cameroon as well as mitigate the global problem of climate change. Indeed, the CDM is charged with this “twin goal”: both mitigating climate change and promoting sustainable development.

1.2. The CDM as One of Three Kyoto Protocol “Flexibility Mechanisms”

The CDM is one of three different types of “flexibility mechanisms” included in the Kyoto Protocol to assist industrialized countries reach their GHG emission reduction targets through the purchase of GHG credits. Because the problem of climate change is a global one, projects which generate GHG credits can be carried-out anywhere in the world. The rationale for these flexibility mechanisms is that they alleviate the burden industrialized countries face in reducing their levels of GHGs domestically as they can still buy “credits” for domestic emission reductions from abroad. This is the gist of GHG trading.


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Besides the CDM, the other “flexibility mechanisms” allowing for trade in GHG credits are Joint Implementation (JI) and Emissions Trading (ET). The former is similar to the CDM but restricted to projects realized in industrialized countries (particularly under the lower-cost conditions of countries making the transition from communism to market economies), while ET is restricted to GHG emission allowances established by the quota system amongst industrialized countries who have signed the Kyoto Protocol. The official names for the different GHG credits under these flexibility mechanisms are listed in Table 1.

1.3. The Twin Goal of the CDM: linking climate change and development policy The issues of climate change and development that the CDM is intended to address might be better appreciated from knowledge of the history of its negotiation. The CDM grew out of proposal from Norway at the initial 1992 UNFCCC session calling for a global GHG credit trading scheme, culminating in the adoption of the mechanism called Activities Implemented Jointly (AIJ) at the 1995 Conference of Parties (COP) to the UNFCCC (Eyzaguirre and Kalas 2002). Note that this was prior to the 1997 Kyoto Protocol; AIJ was only intended as a learning process for the eventual establishment of a GHG trading mechanism.

When the COP was again convened in 1997 (in Kyoto, Japan) there was a sense of dissatisfaction with the AIJ, particular in terms of benefits accrued to non-industrialized countries as well as the administrative costs for verifying and monitoring GHG credits. This led to a proposal from Brazil for a Clean Development Fund (Werksman 1998, Gupta 2000) which would be distinct from AIJ described earlier. According to the Clean Development Fund, industrialized countries that failed to meet their emission reduction targets under the Kyoto Protocol would be required to pay a fine into the fund. This money would then be used for climate mitigation and adaptation projects in developing countries; that is, it would be used to help them develop sustainably.

The resulting Clean Development Mechanism (CDM) that was finally negotiated might be seen as a compromise solution between the AIJ and Clean Development Fund. The CDM maintains the GHG trading mechanism of the AIJ program, but also requires that any CDM project assist the host country attain sustainable development. As a result of these negotiations, the CDM has the “twin goal” of promoting sustainable development in project host countries and mitigating climate change. This is clearly expressed in paragraph 2 of Article 12 of the Kyoto Protocol:

“The purpose of the clean development mechanism shall be to assist Parties not included in Annex I [non-industrialized countries] in achieving sustainable development and in contributing to the ultimate objective of the Convention, and to assist Parties included in Annex I [industrialized countries] in achieving compliance with their quantified emission limitation and reduction commitments under Article 3.”

This “twin goal” distinguishes the CDM from the other flexibility mechanisms—Emissions Trading and Joint Implementation—which do not have the notion of sustainable development as clearly defined.

1.4. The CDM in the Context of Future Climate Change Negotiations It should be appreciated that the CDM has been negotiated in a context where only industrialized

countries have emission reduction targets established. The notion of limits for non-industrialized

Table 1 : Different types of GHG credits generated under the three different flexibility mechanisms of the Kyoto Protocol

Flexibility Mechanism GHG Credit Scope Emission Trading (ET) Assigned Amount Units (AAUs) Emission allowance trading between

industrialized countries Joint Implementation (JI) Emission Reduction Units (ERUs) Project development between

industrialized countries Clean Development Mechanism (CDM)

Certified Emission Reductions (CERs) Project development between industrialized and non-industrialized countries


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countries for the period after the first commitment period (ie, post-2012) is very much a matter of debate (Baert et al. 2000). The undertaking of any CDM project should be done with this consideration in mind. For instance, if non-industrialized countries are also prescribed emission reduction targets in any possible post-2012 period, then it might be to their advantage to ensure that the implementation of CDM projects is made in anticipation of this eventuality.

In other words, it is important to ensure that projects initiated under the CDM are able to be replicated and transfer technology and know-how in regards to climate change mitigation. That is, CDM projects should promote sustainable development rather than simply pick the easiest projects or “low-hanging fruit”. Najam et al. (2003) cautions that the CDM might allow industrialized countries to harvest these, saving the more costly GHG mitigation projects for developing countries to implement themselves, when they are eventually assigned an emissions reduction target. As shall be discussed in Section 5.2.1, consideration should be granted to the future of climate change negotiations through its inclusion as a part of MDG 8.

Figure 1 : The Greenhouse effect (UNEP 2004)


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2. F2. F2. F2. FOCUS AND OCUS AND OCUS AND OCUS AND AAAAIM OF THE IM OF THE IM OF THE IM OF THE RRRREPORTEPORTEPORTEPORT The aim of this report is to build capacity in Cameroon in regards to the CDM, with a particular

focus on the links between the CDM and development priorities in Cameroon. Poverty in Cameroon is particularly concentrated in the rural sector; thus, the main question posed in this report is: what is the potential for rural development in Cameroon through the CDM?

2.1. Poverty in Cameroon: a concentration in rural areas The focus of the report is on the rural sector because results presented in the 2003 Poverty Reduction Strategy Paper (PRSP) show that poverty in Cameroon is clearly concentrated in rural areas (Table 2). Results presented in the PRSP from extensive household surveys carried-out in 2001 show that the incidence of poverty is nearly 50% in rural areas while 22.1% in urban areas. When accounting for different rural regions, Forested regions have the highest incidence of poverty (55.4%) followed closely by High Plateaus regions (50.7%). Some good news is that the PRSP notes a decrease in the total incidence of poverty: from 53.3% in 1996 to 40.2% in 2001. However, this reduction has been more prominent in urban areas as opposed to rural areas. The incidence of poverty in urban areas has declined by -19.3% from 1996 to 2001, while that in rural areas has only declined by -9.7% over the same period. Furthermore, in both rural and urban areas there are still important inequalities in how poverty is distributed: a majority poor and minority non-poor. The PRSP actually notes that “the decline in total poverty has not been followed by any narrowing of inequalities,” (p. 14). However, poverty in rural areas is more evenly distributed than in urban areas, as demonstrated by a 2001 Gini index of 0.369 in rural areas as opposed to 0.406 in urban areas. Thus, poverty is more wide-spread and, in a perverse sense, more equitably distributed in rural areas while in urban areas there are concentrations of wealth in contrast to a poor majority.

What does this all indicate about economic trends between 1996 to 2001? PRSP results do show that there has been a definite, overall reduction in the incidence of poverty in Cameroon over the period 1996-2001. However, this reduction has occurred mostly in urban areas, and here mostly for only a segment of the population. Similarly, in terms of basic infrastructure services including electrification, the distinction between urban and rural areas is key (despite overall improvements from 1996 to 2001). PRSP results (p. 28) regarding access to electricity amongst poor and non-poor in rural regions is within the same magnitude (14.9% and 29.0%, respectively) and considerably less than in urban areas (68.2% and 91.0%, respectively).

In conclusion, the rural poor have benefited least from economic development between 1996 to 2001. This difference might be attributed to the different ways economic progress penetrates into these different regions. While poverty reductions in urban areas might be attributed roughly equally to both growth and redistribution effects (-9.0% and -8.4%, respectively), in rural areas it is only the growth effect which has contributed to poverty reductions (-13.3%). The PRSPS results demonstrate that redistribution has actually not contributed to reduction of poverty in rural areas. The reader is cautioned however that this conclusion simplifies very much the debate between the “growth effect” and “redistribution effect”, which is perhaps at the crux of current development issues, and is referred to consult the literature on this issue for further insights (for example: Bevan et al. 1999, Kirby 2002, Swyngedouw 2004).

What is most promising about the CDM however is its potential to avoid this debate through the pursuit of what might be called “redistributed growth”. As shall be discussed regarding the advent of “bundling” procedures for small-scale projects, the CDM can ostensibly allow smaller, disaggregated projects to be combined under a single administrative procedure in order to achieve an economy of scale that is competitive on the market. However, the rules for these small-scale projects have just recently been agreed to and the feasibility of their implementation is largely unknown.

Table 2 : Incidence of Poverty (%) by Region (Source: Cameroon 2003 PRSP: 12 & 13)

1996 2001 Total Change

Growth Effect

Redistribution Effect

Rural Areas 59.6 49.9 -9.7 -13.3 +1.7 Urban Areas 41.4 22.1 -19.3 -9.0 -8.4 Total 53.3 40.2 -13.1 -11.8 -1.8


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2.2. Objectives and Methodology This report has been undertaken to improve Cameroon government and non-governmental

understanding of the CDM in order to ensure that foreign investment through the CDM promotes clean, sustainable development in the rural sector. It is intended to compliment another programme being promoted by the World Bank-UNEP to build capacity in sustainable energy through the CDM; however, the focus here is on the rural sector and non-energy-related activities such as forests and agriculture. More specifically, the report seeks to achieve the objectives set out in Table 3.

The methodology used has been to combine a literature review—including up-to-the-minute references to relevant websites—with stakeholder interviews, an email survey with the DNA and Kyoto Protocol officials in 12 other African countries as well as field work in conjunction with an on-going community forest implementation project. Resources consulted have been the Canadian CDM/JI Office, the website of the United Nations Framework Convention on Climate Change, the UNEP sponsored Capacity Development for CDM, the International Institute for Environment & Development, the World Bank’s Carbon Finance Helpdesk, Point Carbon as well as scholarly papers accumulated during the author’s recently completed Master’s degree.

It should be noted that it was sought to contact the DNAs and Kyoto Protocol National Focal Points of 12 countries in Africa including: (Benin, Kenya, Madagascar, Mali, Mauritius, Morocco, Niger, Senegal, Sierra Leone, South Africa, Uganda, Zambia). Only six (in bold) indicated their willingness to participate in the survey of which three finally completed the survey: Benin, Mali and

Morocco. All email addresses were obtained from the website of the UNFCCC.13 This report was initiated at the request of the Cameroon Kyoto Protocol National Focal Point of

the Cameroon Ministry of Environment and Nature Protection (MINEP). The request came during a meeting in early April 2005 between GyreSustainable socioenvironmental consulting and the Focal Point regarding the possibility of implementing small-scale reforestation and renewable energy projects under the Clean Development Mechanism (CDM) of the Kyoto Protocol. The intention was to include these small-scale CDM projects into a community-forest implementation project being carried-out in collaboration between the Tali-Bara communities of Manyu Division of South West Province, a Cameroonian NGO named the Regional Centre for Development and Conservation (RCDC) and with the voluntary cooperation of GyreSustainable. Funding for the initial stages of this community forest implementation project have come from the Green Grants Funds and Rufford Small Grant Funds. Following subsequent negotiations on the part of GyreSustainable with both MINEP and the Canadian High Commission in Yaoundé, funding was secured in June for a report and seminar. Preliminary results of this report were presented at a seminar on August 9, 2005 held at the Palais des Congres in Yaoundé, where a number of break-out groups treated questions of CDM governance and project feasibility.

Table 3 : Objectives of the report

• to present an overview of the CDM, CDM projects and project cycle • to explore the linkages between climate change and development policy in Cameroon and highlight

areas that need further attention in order to promote sustainable development in the rural sector • to summarize the lessons other African countries have learned in the implementation of the CDM • to summarize the governance structure of the CDM, indicating areas requiring the participation of

government and civil society o to make recommendations for the structure of the Designated National Authority (DNA) such

that transaction costs are reduced and small-scale projects which might benefit the rural poor are implemented

o to identify an initial set of criteria for sustainable development which could form the basis of the CDM project approval process carried-out by the DNA, with particularly consideration to the challenges faced by the rural sector

• to build the capacity of government, NGOs and private sector in implementing CDM projects, particularly small-scale reforestation and improved woodstove efficiency projects

• to conduct a survey of the carbon market including project trends, prices and potential buyers

13 UNFCCC (2005) DNA Contact Addresses. Website : http://cdm.unfccc.int/DNA (accessed June 8, 2005)


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3. CDM P3. CDM P3. CDM P3. CDM PROJECT ROJECT ROJECT ROJECT CCCCONDITIONSONDITIONSONDITIONSONDITIONS, P, P, P, PROJECT ROJECT ROJECT ROJECT CCCCYCLE AND YCLE AND YCLE AND YCLE AND

PPPPROJECT ROJECT ROJECT ROJECT TTTTYPESYPESYPESYPES As discussed earlier, the CDM has the twin goal of promoting sustainable development in project

host countries and mitigating climate change. In order to ensure that this twin goal is achieved, any CDM project is required to meet a number of conditions and undergo a complicated project cycle. The government of Cameroon plays an important, initial role in this process at the level of National Approval of CDM projects.

3.1. Special Conditions of the CDM There are a number of conditions which any CDM project needs to meet, which might be divided

between the two aspects of its twin goal (see Table 4). In terms of sustainable development, each CDM host country is required to develop its own criteria for assessing a CDM project’s contribution to sustainable development. Similarly, all funds flowing into a CDM project must be independent of an industrialized country’s Official Development Assistance (ODA). In terms of the second goal of mitigating climate change, the DNA must also assess whether a project meets two further conditions. First, any CDM project must result in “real, measurable and long-term benefits related to the mitigation of climate change”. This is understood as the condition of measurability. Second, any CDM project must result in “reductions in emissions that are additional to any that would occur in the absence of the certified project activity.” This is known as the condition of additionality, which requires that any CDM project carried-out must reduce GHGs in a way that is in addition to that which would have otherwise occurred. For instance, if the Cameroon government had initiated a programme distributing more efficient woodstoves to communities, an industrialized country such as Canada could not claim carbon credits for assisting in funding such a project. In order to gain carbon credits, Canada would have to fund the project fully or demonstrate that in its absence the project would not go ahead. Finally, a project must account for leakage. Leakage results during a project when reductions in GHG emissions achieved in one area lead to emissions in another. An example would be a reforestation project that plants trees on farmlands, only forcing a community to increase pressure on other forests in another area for farming.

Table 4 : Conditions of the CDM

• Sustainable Development Condition o Sustainable development: each CDM host country is required to develop its own criteria for

assessing a CDM project’s contribution to sustainable development o Non-ODA Funds: funds flowing into a CDM project must be independent of an industrialized

country’s Official Development Assistance (ODA).

• Climate Change Mitigation Condition o Measurability: any CDM project must result in “real, measurable and long-term benefits

related to the mitigation of climate change” o Additionality: any CDM project must result in “reductions in emissions that are additional to

any that would occur in the absence of the certified project activity” o Avoid Leakage: leakage results during a project when reductions in greenhouse gases

achieved in one area lead to emissions in another

3.2. CDM Project Cycle In order to ensure that all of the above conditions are met, a complex project cycle must be

followed (see Figure 2). The first step is Project Design which includes (i) an estimation of emission reductions (both within and outside of the project boundaries to address leakage), (ii) an emission monitoring plan, and (iii) an investment plan and financial analysis of the expected GHG credits the project will generate. This stage culminates in a Draft Project Design Document, which is required by the CDM Executive Board in order to ensure that all information relevant to the project is well presented (see Table 5).


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Figure 2: CDM Project Cycle

Pre-Implementation of Project During Implementation

2) National Approval *Project Proponents -EIA -Stakeholder Comments *Designated National Authority -Letter of Approval

3) Validation *Designated Opertional Entity A -Stakeholder Comments -Validation Report -Finalized Project Design Document

5) Project Financing *Unilateral or Bilateral Investments or Contractual Payments

1) Project Design *Project Proponents -Draft Project Design Document

6) Monitoring *Project Proponents

7) Verification *Designated Operational Entity B

4) Registration *CDM Executive Board

8) Certification *CDM Executive Board

9) Issuance of CERs


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Table 5: Requirements of Draft Project Design Document

A General Description of Project Activity B Baseline Methodology C Duration of Project Activity/Crediting Period D Monitoring Methodology and Plan E Calculation of GHG Emissions by Sources F Environmental Impacts G Stakeholder Comments Annex 1 Contact Information of Project Participants Annex 2 Information Regarding Public Funding Annex 3 New Baseline Methodology Annex 4 New Monitoring Methodology Annex 5 Table of Baseline Data

Upon completion, the Draft Project Design Document is sent to the host country’s DNA for National Approval. This entails a preliminary evaluation of whether a project will mitigate GHGs in the country, requiring a certain degree of technical capacity. More importantly, the DNA will determine whether the proposed project meets criteria for sustainable development and confirm whether an EIA was successfully carried-out. MINEP has stated that any CDM project will require an EIA for approval. National approval comes in the form of a letter of approval being granted by the DNA. Also at this stage, the project proponents are required to seek stakeholder comments for the project. If approved by the DNA, the Finalized Project Design Document including the DNA’s letter of approval and stakeholder comments is passed on for Validation. Validation is done independently by a third-party Designated Operational Entity (DOE) in order to assess if all the components of the Project Design Document are satisfactory, including the letter of approval from the DNA. The DOE is required to make the validated project available for additional stakeholder comments for a 30 day period, which is made possible through the website of the UNFCCC. If successful, the project is then passed on to the CDM Executive Board for Registration which should be achieved within eight weeks. It should be noted that there is a registration fee, which depends on the size of the project (Table 6).

Table 6 : CDM project registration fees (Lee 2004: 46)

Annual CO2eq Reduction (Tonnes) Fee in USD < 15,000 $5,000 15,000 – 50,000 $10,000 50,000 – 100,000 $15,000 100,000 – 200,000 $20,000 > 200,000 $30,000

Once registered, a proposed CDM project is made available to receive funds from investors/buyers at the stage of Project Financing. It is only after this stage that the project begins implementation—when investments or other sources of funds are allowed to flow into the project for the generation of GHG credits. This might occur as an investment or contractual payment between a project proponent and investor/buyer based on the estimated amount of GHG credits (ie, CERs in the case of the CDM) to be generated. There are two forms of project financing. In the first, bilateral projects, a project is initiated by a non-Cameroonian organization who takes the risk to initiate and develop the project in Cameroon to generate GHG credits for their domestic market. This was the type of financial scenario originally envisioned by the CDM—that industrialized countries would take the lead in developing CDM projects. In this case, the project developer takes a risk that project might fail, but with the general understanding that he has a buyer secured for the GHG credits to be generated. But it has recently been confirmed that unilaterally projects are valid (Aalders and Haites 2005). That is, a CDM project can be initiated without the participation of an industrialized country partner. In this case, funds to carry-out and register the Project Design Document are treated as an investment. Unilateral projects however might only get as far as registration before awaiting an investor/buyer for the GHG credits. That is, a buyer for the GHG credits is not secured. But for both


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bilateral and unilateral projects, financial transactions at the registration stage should be considered as speculative purchases/investments for CERs that have yet to be verified (or in some cases, even produced) and thus entail a certain degree of risk. Caution should be used since the information contained in the Project Design Document can effectively make the project proponents liable for any undelivered CERs.14 Proper risk management techniques should be applied in order to assess the likelihood of a project delivering on its projected CERs.

In order to ensure the actual project meets the expectations of the Project Design Document, the sixth stage of the project is implemented—Monitoring. This entails the systematic review of the actual greenhouse gas mitigation achieved during the course of a project’s lifetime. Monitoring results are inspected periodically by a DOE during the course of the CDM project cycle, Verification. It should be noted that for normal CDM projects, a different DOE is required for the validation and verification stages. Once a project is successfully verified, it is submitted to the CDM Executive Board for Certification, requesting that it officially issue the required GHG credits—officially known as CERs under the CDM. These are granted to the project proponent (if also the sole project investor) or distributed amongst project proponents as stated in the purchase contract. In the case of a unilateral project, these might be sold on the “spot market” to industrialized countries seeking to meet their Kyoto commitments.

3.3. Types of CDM Projects

3.3.1. Overview of CDM project types

The CDM Executive Board has identified 15 CDM project sectors (Table 7). Broadly speaking, these might be divided amongst two CDM project categories: (i) those projects that will reduce GHG emissions and (ii) those that “sink” GHGs (particularly carbon) in trees, commonly known as Land-use Change and Forestry (LULUCF) projects. In the first category, project sectors that may be of interest to rural development are those in Sector 1: Energy industries; Sector 3: Energy demand; Sector 13: Waste handling and disposal; Sector 15: Agriculture. In the second category there is Sector 14: Afforestation and reforestation. It is also noted that rules for small-scale have been recently developed which might be more conducive to rural development, which are discussed in detail in Section 6.1.

For large-scale projects, these methodologies need to be developed on a case-by-case basis. Methodologies may be developed and submitted to the CDM Methodology Panel15 for approval. In general, one can initiate a project and develop one’s own methodology, following the submission requirements enshrined in the Project Design Document. Simply because methodologies for a project sector are lacking from those listed in Table 7 does not mean that a project cannot be developed. For small-scale projects, the CDM Executive Board has already defined a number of methodologies to facilitate their implementation,16 except for the LULUCF sector. It is noted that methodologies for small-scale afforestation/reforestation projects are currently being discussed by the CDM Small-Scale Working Group.17

In addition, Lee (2004: 36) notes that credits for averted deforestation are permitted under current CDM rules if it can be shown that alternative energy projects (i.e., more efficient wood stoves or fuel switching) will reduce deforestation pressure. It is noted that fuelwood projects are not considered as a part of the Energy sector but, rather, as falling under the scope of afforestation/reforestation

14 For instance, if a project is unable to deliver the amount of GHG credits it promised in the Project Design Document then the project proponents might be liable, depending on the contract. The party investing/buying the GHG credits might be entitled to collateral on the project in the form of project land or assets (Baker & McKenzie Law 2004: 187). This could be particularly worrisome for sinks projects, where the collateral might be exacted in the form of trees or land.

15 UNFCCC (2005) Baseline and monitoring methodologies. Website: http://cdm.unfccc.int/methodologies (accessed August 1, 2005)

16 UNFCCC (2005) Methodologies for small scale CDM project activities. Website: http://cdm.unfccc.int/methodologies/SSCmethodologies (accessed August 1, 2005)



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Table 7 : CDM project Sectors and corresponding approved methodologies18

Sector Approved Methodologies ? Approved DOEs19 GHG Emission Reduction Projects

Large- Scale

Small- Scale

1. Energy industries (renewable/non-renewable sources)

Yes *Electricity generation by the user *Mechanical energy for the user *Thermal energy for the user *Renewable electricity generation for a grid *Supply side energy efficiency improvements (generation) *Switching fossil fuels

JQA/ DNV-CUK /SGS-UKL/ TUEV-SUED/ TUEV-RHEIN/ JACO/ AENOR/ BVQI/ KPMG

2. Energy distribution

Not yet *Supply side energy efficiency improvements (transmission and distribution)


3. Energy demand Yes *Demand-side energy efficiency programmes for specific technologies *Energy efficiency and fuel switching measures for buildings *Energy efficiency and fuel switching measures for agricultural facilities and activities


4. Manufacturing industry

Yes *Energy efficiency and fuel switching measures for industrial facilities

JQA/ DNV-CUK/ SGS-UKL

5. Chemical industries

Yes JQA/ DNV-CUK/ SGS-UKL

6. Construction Not yet JQA/ DNV-CUK/ SGS-UKL 7. Transport Not yet Yes JQA/ DNV-CUK/ SGS-UKL 8. Mining/mineral

production Not yet None

9. Metal production Not yet None 10. Fugitive emissions

from fuels (solid, oil and gas)

Yes Yes JQA/ DNV-CUK/ SGS-UKL

11. Fugitive emissions from production and consumption of halocarbons and sulphur hexafluoride

Yes JQA/ DNV-CUK/ SGS-UKL

12. Solvent use Not yet JQA/ DNV-CUK/ SGS-UKL 13. Waste handling

and disposal Yes -Methane recovery

-Methane avoidance JQA/ DNV-CUK/ SGS-UKL/ TUEV-SUED/ JCI

15. Agriculture Yes -Being developed DNV-CUK/ TUEV-SUED Land-use Change and Forestry Projects

14. Afforestation/ Reforestation

-Being developed

-Being developed

18 The present list of CDM project sectors is drawn from a document entitled “Methodologies linked to sectoral scope” obtained from the UNFCCC website: http://cdm.unfccc.int/DOE/scopes.html (accessed August 1, 2005)

19 List of DOEs: JQA (Japan Quality Assurance Organization); DNV-CUK (Det Norkse Veritas Certification Ltd.); SGS-UKL (SGS United Kingdom Ltd.); TUEV-SUED (TUV Industrie Service GmbH TUV SUD GRUPPE); TUEV-RHEIN (TÜV Industrie Service GmbH, TÜV Rheinland Group); JACO (JACO CDM Ltd.); AENOR (Spanish Association for Standardisation and Certification); BVQI (Bureau Veritas Quality International Holding S.A); KPMG (KPMG Sustainability B.V.); JCI (Japan Consulting Institute). Note that there is no African DOE at present.


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projects as “renewable biomass” and, at the time of writing this report, agreement has not yet been reached on their methodology.20

3.3.2. Special provisions for forest projects

3.3.2.i. Eligibility of lands for afforestation/reforestation

For reasons discussed in Section 4.1.1.iii.b, afforestation/reforestation projects are the only valid project types of LULUCF projects under current CDM rules. Afforestation projects include the establishment of forest on lands that have not had forest cover for at least the last fifty years. Reforestation means the establishment of forest on lands that have been deforested since before 1990. In practice, the two can be treated the same (i.e., any land that has been deforested since 1990 qualifies). However, this does require the eligibility of lands to be determined, which poses another degree of complexity to forest projects.

3.3.2.ii. Special provisions for project cycle and treatment of the issue of permanence

Further ecological complexities in demonstrating measurability and additionality for afforestation/reforestation projects requires that they undergo a slightly more complicated project cycle than other sectors (Table 8). One solution made at COP9 in 2003 in order to address the issue of permanence of forest carbon sequestration has been a varied crediting system. Project proponents can opt for either temporary or long-term GHG credits: temporary credits (t-CERs) which expire after 5 years but can be renewed and long-term credits (l-CERs) which represent an agreement between the buyer and seller for a period of 60 years (IISD 2003, World Bank 2003). The problem is that t-CERs are predicted to have little to almost no value on the market (i.e., no buyers), only the l-CERs (Locatelli and Pedroni 2003).

Table 8 : Special provisions for LULUCF projects

• The exact location of the project, a list of the carbon pools selected, the present environmental conditions, the legal title of the land, the current land tenure and the right of access

• There must always be an analysis of the environmental & socio-economic impact • The DOE which validates the CDM project must make the PDD available for public comments

in a period of 45 days (30 days for normal CDM projects)

3.2.2.iii. Definition of “forest” under the CDM

One final issue important for forest projects is the definition of “forest” in the context of the CDM. The definition is actually not fixed, but set to fall between a range of values (minimum area of land, tree crown cover, height). The specific choice of the definition is to be decided by the host country.

“Forest” is a minimum area of land of 0.05-1.0 hectares with tree crown cover (or equivalent stocking level) of more than 10-30 per cent with trees with the potential to reach a minimum height of 2-5 metres at maturity in situ. A forest may consist either of closed forest formations where trees of various stories and undergrowth cover a high proportion of the ground or open forest. Young natural stands and all plantations which have yet to reach a crown density of 10-30 per cent or tree height of 2-5 metres are included under forest, as are areas normally forming part of the forest area which are temporarily unstocked as a result of human intervention such as harvesting or natural causes but which are expected to revert to forest. Within the ranges given in this definition, each host country shall fix its values for minimum land area, crown cover and minimum height at maturity in situ that will apply for the first commitment period.

The definition adopted by Cameroon will have important implications for CDM projects, because a definition with low threshold values will increase “forested” areas and decrease “deforested” areas. This will decrease lands available for reforestation and afforestation projects, particularly degraded forest lands which may be somewhere within the range presented in the definition above.

20 UNFCCC (2005) See Section K Report of the 16th Meeting of the CDM Methodologies Panel. Website: http://cdm.unfccc.int/Panles/meth/Meth16_rep_ext.pdf (accessed August 1, 2005) Note: this report is reproduced as Appendix B in this report.


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Conversely, high threshold values will decrease “forested” areas and increase “deforested” areas and thus the lands eligible for afforestation/reforestation.

3.4. Global Warming Potentials: a consideration for project implementation

Up until now we have been discussing project activities assuming a common GHG. However, the Kyoto Protocol has specifically been designed to address six different greenhouse gases: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride (SF6). These six gases were chosen not only because of their sheer mass in the atmosphere, but also for their global warming potentials (Table 9).

Global warming potential describes the contribution of different GHGs to climate change, but does so in a way that allows for easy comparison between gases. This is accomplished by describing each gas’s effect on global warming in terms of CO2-equivalents. For instance, one tonne of CH4 has the effect of twenty-one tonnes of CO2 and so its global warming potential is expressed as twenty-one tonnes CO2-equivalents (Table 9). This has important implications for project feasibility. For instance, a project that reduces only 50 tonnes of CH4 is more profitable than one reducing 50 tonnes of CO2. This is because the value of the CH4 project is 1050 tonnes CO2-equivalents. This has implications for the GHG market, where we find a concentration market flows going into the HFC destruction which result in the generation of large amounts of GHG credits. Small volumes of HFC destruction result in large gains in terms of CO2-equivalents because of the high GWP of HFC’s (ranging from 140 to 11,700 depending on species). Currently, such projects account for 25% of total volume of GHG credits exchange on the “carbon” market (Lecocq and Capoor 2005: 24). However, the contribution of such projects to rural development is questionable.

Table 9: Global warming potential (GWP) of greenhouse gases measured in CO2eq (source: Lee 2004: 61)

Species Chemical Formula

100 Years GWP

Species Chemical Formula

100 Years GWP

Methane CH4 21 HFC-43-10 C5H2F10 1,300 Nitrous Oxide N2O 310 HFC-125 C2HF5 2,800 Sulphur hexafluoride SF6 23,900 HFC-134a CH2FCF3 1,300 Perfluoromethane CF4 6,500 HFC-143a C2H3F3 3,800 Perfluoroethane C2F6 9,200 HFC-152a C2H4F2 140 Perfluorobutane C4F10 7,000 HFC-227ea C3HF7 2,900 HFC-23 CHF3 11,700 HFC-236fa C3H2F6 6,300 HFC-32 CH2F2 650 HFC-245ca C3H3F5 560

3.5. Policy Recommendations for managing and promoting CDM projects

Recommendations

• Track Developments in CDM Methodologies (particularly afforestation/reforestation and fuelwood): methodologies for project development are open to public comment through the UNFCCC website.21 It is important to follow these developments as they provide insights into how to (and how not to) formulate CDM projects. Relevant current methodologies being considered now are small-scale afforestation/reforestation methodologies as well as fuelwood methodologies (known as “non-renewable biomass” by the CDM Executive Board). The next few months should see important developments on the treatment of these projects.

• Recognize the informational nature of the CDM: The CDM might be promoted in the rural sector by recognizing the informational nature of CDM projects. Given computing power and the Internet, trade in GHG market should be made more open to management through the use of information technology that can be dispersed through the rural sector.

21 UNFCCC (2005) CDM Methodology Panel Website: http://cdm.unfccc.int/methodologies (accessed August 1, 2005)


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4. T4. T4. T4. THE HE HE HE PPPPOTENTIAL OF THE OTENTIAL OF THE OTENTIAL OF THE OTENTIAL OF THE CDM CDM CDM CDM FOR FOR FOR FOR SSSSUSTAINABLE USTAINABLE USTAINABLE USTAINABLE RRRRURAL URAL URAL URAL

DDDDEVELOPMENT EVELOPMENT EVELOPMENT EVELOPMENT

4.1. African Participation in the Emerging GHG Market The three flexibility mechanisms of the Kyoto Protocol, including the CDM, are establishing a new

global market—one for GHG credits. It is a market that many hope will put the world’s economy onto a more sustainable path. However, the participation of Africa in the GHG market that has been opened up by the Kyoto Protocol22 has been slow, particularly in sub-Saharan Africa. The latest figures show that the sales of GHG credits originating from projects in Africa is in the range of 0-3% of total volume (Figure 3), with these mostly restricted to projects in South African and northern Africa (Lecocq and Capoor 2005: 22). The lack of significant participation of African countries in the emerging GHG market has raised concerns about the equity of the CDM market and its promise for sustainable development (CDM Watch 2004, Lecocq and Capoor 2005: 23). As Lecocq and Capoor observe, the CDM market is following market patterns consistent with the general flow of Foreign Direct Investment. That is, CDM investments are being made in projects where a return on investment is most secure: projects in countries on the cusp of industrialization such as India, Brazil and China.

So is the emerging GHG market an example of globalization? It may better fit an alternative version of global economic change: “glocalization”. Coined by Swyngedouw (2004), this is a term used to describe a noticeable trend in the global integration of market economies whereby, instead of capital being distributed evenly around the globe, it actually only touches down in a few geographically localized areas, channelled between them through networks offered by high speed transportation and communications. The question then may be, can the GHG market be steered in a direction to counter-act this trend and favour the integration of the rural poor into a more evenly distributed global market. In order to do so it, it is important first to understand what has determined the current distribution of the GHG market.

Figure 3 : Location of emission reduction projects (in share of volume supplied), Jan 2004 – April 2005. Note this represents volumes of GHG credits from all three flexibility mechanisms of the Kyoto Protocol (ET, JI & CDM) as well as those (albeit) smaller amounts from the voluntary GHG emission market (Lecocq and Capoor 2005: 22)

Rest of Latin America

22%

Brazil

13%

Rest of Asia

14%

India

31%

Africa

0%

Transition Economies

6%

OECD

14%

4.1.1. Determinants of the GHG market

There are a number of explanations for the current lack of African participation on the GHG market. Broadly speaking, we might divide these between:

22 Note that there is a market for GHG credits outside the formal market established by the Kyoto Protocol. Visit organizations such as Klimabalance (www.klimabalance.de) and MyClimate (www.myclimate.org) to learn more. However, in relation to volumes of GHG credits anticipated to be sold through the Kyoto Protocol’s flexibility mechanisms, the contribution of these schemes appears small (representing between 0.1 and 0.4% of total volume of GHG credit transactions (Lecocq and Capoor, 2005: 20)). But they might better address lapses in the equitable distribution of CDM projects.


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(i) political ambiguities surrounding the coming into force of the Kyoto Protocol; (ii) a corresponding lack of awareness and capacity on the part of Africa governments for the

promotion of CDM activities; (iii) structural issues regarding

a. transaction costs associated with CDM b. the controversy surrounding the use of forests

i. politics ii. uncertainties in the measurement, verification and permanence of forests as

GHG sinks c. political economy of the Kyoto Protocol itself

4.1.1.i. Political Ambiguities in Climate Change Policy

At the level of the UNFCCC, there was much uncertainty about the viability of the Kyoto Protocol, especially when the United States withdrew in 2001. In order to come into force, the Kyoto Protocol required ratification by 55 countries, the total emissions of which needed to equal or exceed 55% of global GHG emissions. Because of this, the coming into force of the Protocol hinged on the ratification by either the United State or Russia. Thus when Russia ratified in 2004, the Kyoto Protocol was finally able to come into force in early 2005. This delay has slowed however the development of the CDM, including the initiation of CDM projects (Mortimer 2005) as well as the implementation of the main governance structure at the UN level: the CDM Executive Board (Buen 2005). Together, these have translated into a major operational difficulties with the CDM. To date, no CDM GHG credits (ie, CERs) have officially been issued by the CDM Executive Board and all purchases have been made through contractual arrangements prior to their issue. As noted by Lecocq and Capoor (2005: 11), this significantly increases the risk of CDM transactions vis-à-vis the purchase of GHG credits in the form of emissions allowances through Emissions Trading (ie, AAUs). While these procedural ambiguities of the CDM still need to be ironed out, there is an understanding that the main obstacle has been overcome with the coming into force of the Kyoto Protocol.

4.1.1.ii. Climate Change Policy Awareness and Capacity in Africa

Likely because of uncertainties about climate change policy at the international level, there has been a general lack of awareness about climate change and climate change policy in Africa. In Cameroon, this is reflected in important government policies such as the 2003 Poverty Reduction Strategy Paper (PRSP) and its 2004 Progress Report, where neither climate change nor the possibility of foreign investment in clean, sustainable development projects through the CDM are discussed. The issue of awareness also arose during interviews held with Cameroon stakeholders as a part of this consultation. It was found that the issues of climate change were simply not well known, often considered a problem of northern countries or that potential impacts were too far-off to warrant more direct attention. Similarly, the benefits of engaging in climate change policy more directly were believed also not to be well understood.

When discussing Cameroon government capacity in climate change policy, it should be noted at the on-set that, following Cameroon elections in 2004, there have been major changes in the Ministerial arrangements in the country. Prior to elections, the policy of environmental protection was managed by the Permanent Secretariat for the Environment (PSE) under the Ministry of Environment and Forests (MINEF). Since elections, MINEF has been divided into the Ministry of Forests and Fauna (MINFOF) and Ministry of Environment and Nature Protection (MINEP). However, Cameroon did ratify the Kyoto Protocol in 2002 (required in order to participate in the CDM) and has already established a Kyoto Protocol National Focal Point at the Ministry of Environment and Nature Protection (MINEP) and earlier this year published its First National Communication on GHG inventories this year (as required by the UNFCCC) and has already started the process for establishing the governance structure for the CDM—the Designated National Authority. However, there are no CDM projects currently being developed in the country.

4.1.1.iii. Structural Issues in Climate Change Policy

In addition to uncertainties in international climate change policy negotiations and low awareness and capacity on the part of African governments for implementing such policy, there are three other structural issues that can help us interpret the current state of the emerging GHG market: transaction costs, the controversy surrounding the role of forests in climate change policy and the political economy of the Kyoto Protocol itself.


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4.1.1.iii.a. Transaction Costs

First, is the issue of transaction costs. Transaction costs are understood as the costs of obtaining information required for economic interactions (Furubotn and Richter 1998). Traditional neoclassical economical theory has assumed zero transaction costs and perfect information between buyers and sellers, largely ignoring the role of institutions (North 1995, Furubotn and Richter 1998). According to New Institutional Economics (NIE) theory, only in a hypothetical world where transactions are costless, are markets able to work efficiently (Coase 1962, cited in North 1995). Institutions, which are defined as “humanly devised constraints that structure human interaction” (North 1995: 23), reduce uncertainty and thus reduce transaction costs. Recall from the history of the CDM described in Section 1.3, that it was brokered as a compromise solution between the AIJ and the Brazilian proposal for a Clean Development Fund. It maintains GHG trading as in the AIJ program, but seeks to ensure that projects promote sustainable development. However, this has not really addressed the issue of transaction costs for the establishment, verification and monitoring of CDM projects. Rather, the transaction costs of the AIJ program have been compounded by the CDM’s twin goal of both promoting sustainable development and mitigating GHGs which ushers in another transaction cost—the assessment of whether sustainable development is achieved. As a result, transaction costs have become much more prominent in the CDM than in the other flexibility mechanisms (Michaelowa and Jotzo In Press). Such costs for an average CDM project are in the range $70,000 - $200,000 USD (Lee 2004: 44 & 67). Smith and Scherr (2003: 2152) note the following transaction costs:

• cost of providing information about carbon benefits to potential buyers (such as costs of

establishing additionality; measuring incremental carbon benefits; auditing; certifying and marketing projects)

• cost of communicating with project partners (identifying and negotiating with project participants; building capacity)

• cost of ensuring parties fulfil their contracted obligations (such as contract development and enforcement; legal costs and insurance)

This has had important implications for the distribution of CDM projects in the emerging GHG market. Because of high transaction costs associated with the CDM, large-scale often industrial projects are more feasible because they have lower transaction costs per unit emission reduction. The response to the problem of transaction costs has been to simplify the administrative procedures surrounding small-scale projects (as discussed in Section 6.1); however, only recently agreed to, it is unclear yet if small-scale projects will have a significant impact on the market.

4.1.1.iii.b. Controversy Surrounding the Use of Forests

It should be noted that the 1997 Kyoto Protocol has scaled-back accreditation for land-use change and forestry projects. These controversial decisions however have reduced potential CDM projects in countries such as those in Africa which are based on a largely rural economy that ironically lacks the industrial pollution to attract CDM projects. The reasons for scaling back the role of forests in the Kyoto Protocol and CDM in particular is due to political differences and issues related to uncertainties in the measurement, verification and permanence of forests as GHG sinks (see Box 1). As a result of both politics and uncertainties regarding forest projects, COP6b in 2001 saw the role of forests in the Kyoto Protocol greatly reduced. Although Articles 3.3 & 3.4 of the Kyoto Protocol permit industrialized countries to generate GHG credits domestically from direct human-induced land-use change activities including afforestation, reforestation and deforestation, at COP6b it was agreed that during the first commitment period the amount of GHG credits that could be


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generated though such domestic activities would be limited to approximately 15% of total GHG credits (Pohjola et al. 2003). One other significant outcome of COP6b was that Japan and Canada—countries with an interest in forests—were granted relatively larger sinks rights that other industrialized countries. In terms of the CDM (Article 12 of the Kyoto Protocol), decisions made at COP6b restricted valid LULUCF projects to only reforestation and afforestation—eliminating activities that result in the avoidance of deforestation as eligible CDM projects. Furthermore, it was agreed that for each year of the first Kyoto commitment period (2008-2012), afforestation/reforestation CDM projects could only be used to account for 1% of an industrialized country’s base year GHG emission reduction target.

23 In response to the question of permanence, a decision was made at COP9 in 2003 to permit the choice between two types of credits for afforestation/reforestation projects: temporary CERs (t-CERs) which expire after 5 years but can be renewed and long-term CERs (l-CERs) which represent an agreement between the buyer and seller for a period of 60 years.

Box 1 : Politics and Uncertainties surrounding the role of forests in the CDM

Politics

Disagreement on the role of forests as carbon sinks almost wrecked climate change negotiations at COP6a in 2000 regarding the implementation of the Kyoto Protocol, forcing an extraordinary COP6b in early 2001. The issue of forest sinks at COP6a pitted an “umbrella group” of countries including the United States, Japan, Russia, Canada, Australia, and New Zealand against the European Union (EU). The position of the EU might be interpreted as one of an alignment of interests between environmentalists and nationalist politics (Fearnside 2001). On one hand, the practice of reforestation has often criticized as an escape mechanism which allows industrialized countries to avoid making the difficult but necessary changes in their fossil-fuel dependent economies, which are largely responsible for the problem of climate change (Lohmann 2001). Many reforestation projects initiated have been criticized as large-scale plantations, consisting of monocultures that are managed in order to maximize carbon intake and benefit from economies of scale for the global carbon market—inherently becoming carbon plantations (Lohmann 2000)—and that generate few social benefits (for example, see Box 7 in Orlando et al. 2002). But as argued by Niles (2002) and Fearnside (2001), there was a clear motivation for the EU to restrict the use of forest carbon sequestration: to nullify the potential of the US to use its forests as a carbon sink and gain a competitive advantage. Due to the abandonment of agricultural land, forest regrowth in the US would have had the potential of offsetting a good deal of its carbon emissions. One estimate puts the amount of carbon that would be sequestered by American forests in a business-as-usual scenario during the first Kyoto commitment period (2008-2012) at 0.288 Gt C, roughly 40% of the US emission reduction target under Kyoto (Bernow et al. 2002: 206). When the US lost interest in the Kyoto Protocol with the Bush Administration coming to power, a consortium of countries led by the EU was able to push through an agenda which focused on reducing emissions at source and excluding forests. Uncertainties in the measurement, verification and permanence of forests as GHG sinks Another reason that the role forests can play in the CDM has been reduced is because of uncertainties in measurement and verification of forest carbon pools (Pohjola et al. 2003). Many forest ecologists will avow that forest ecosystems are highly variable in their capacity to sequester carbon (Houghton 2003), even at the stand level, which complicates the accounting required under the CDM. The response from proponents of forest projects has been to advocate statistical approaches to forest carbon sequestration accounting which provide a conservative estimate of forest carbon sequestration over the project area (MacDicken 1997, Vine et al. 2001). However, forests are subject to change and disturbances which do not guarantee the permanence of emission reductions, as other CDM projects do. Indeed, climate change over the next century could reverse current trends and the world’s forests could become a net source of carbon. In the tropics, global warming may lead to conditions in West Africa which are too dry for the maintenance of rainforests, leading instead to the establishment of ecosystems that retain less biomass (such as savannahs) and the release of CO2 (Malhi and Phillips 2004).23


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One estimate of the total amount of carbon this represents is 0.61 Gt CO2 (Bernoux et al. 2002: 380). It can be concluded however that the controversy surrounding sinks has greatly reduced the role that forests might play in generating revenue in the rural sector.

4.1.1.iii.c. The Political Economy of the Kyoto Protocol

A final point report regarding the participation of African countries in the emerging GHG market deals with the Kyoto Protocol itself, particularly the emission reduction targets established for developed countries. Lohmann (2001: 5) argues that the targets should be understood as the attribution of atmospheric property rights to developed countries. This is because emission targets represent a percent reduction relative to historical, 1990 emission levels. For instance, Canada is required to mitigate its GHGs by six percent below their level in 1990. As Baert et al. (2000: 2287) argue, this system actually promotes unequal rights to pollute because it “rewards historically high emitters and penalizes low emitters.” One problem with basing the GHG market on historical emissions is that non-industrialized countries have little to trade with.

For instance, Africa’s consumption of global energy sources amounts to only 2-3% and its emissions are correspondingly low (Agarwal 2002: 386). In contrast, countries such as Russia and the Ukraine have been assigned emission targets based on 1990 levels, despite sharp declines in their economies over the course of the 1990s (with corresponding reductions in GHG emissions). As by the time the 1997 Kyoto Protocol was negotiated there economies had slowed, this paradoxical situation has led to these countries to be granted “hot air”—emissions credits created by virtue of the Kyoto Protocol itself. Despite having far less per capita GHG emissions than either of these countries, Cameroon does not enjoy any of the advantages of hot air.

Such inconsistencies of the Kyoto Protocol have far-reaching implications for the future of the emission reductions targets for developing countries which, while important, are quite beyond the scope of the present consultation (see the papers described in this section as well as Najam et al. (2003). However, it is warranted to bring such questions of equity regarding the Kyoto Protocol to the discussion on the Millennium Development Goals, particularly MDG 8 (Develop a global partnership for development), as is discussed in Section 5.2.1. Ultimately, Cameroon and other African countries will need to take a stronger role in negotiations regarding the implementation of the Kyoto Protocol. Progress in this regard could be made through a delegation to attend the next meeting of the Conference of Parties (COP) to the UNFCCC, December 2005 in Montreal, Canada.

4.2. Development and Climate Change Policy in Cameroon Recalling the twin goal of the CDM and in order to assess how the CDM might contribute to

sustainable development in Cameroon as well as to gather insights for the promotion of CDM projects in the rural sector, it is necessary to explore the country’s development priorities. Probably the most useful policy for doing so is Cameroon’s 2003 Poverty Reduction Strategy Paper (PRSP)24 carried out with the assistance of the World Bank and other international donors. It best describes the current character of poverty in Cameroon and the government’s priorities and strategy for reducing it. In turn information from the 2003 PRSP have been related to Cameroon’s main climate change document—its First National Communication under the UNFCCC, published in early 2005.

4.2.1. Development Priorities and Strategies Identified in the 2003 PRSP

The “ultimate objective” of the 2003 PRPS is to “achieve a sustainable and visible improvement in the standard of living of Cameroon’s populations that would come from tackling the very roots of poverty,” (p. 31). This will result from (i) implementing policies designed to create the conditions for strong, sustainable economic growth and (ii) aligning its poverty reduction policies with the UNDP’s Millennium Development Goals (MDGs). To this end, the 2003 PRSP identifies seven strategic priorities for its growth and poverty reduction strategy. An over-arching theme of the PRSP is that future economic growth in Cameroon will depend on the diversification of the economy, particularly

24 The Cameroon 2003 PRSP is available free on the World Bank website: http://poverty.worldbank.org/files/Cameroon_-_PRSP1.pdf (accessed August 1, 2005)


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Table 10 : Policies and programs identified under PRSP Strategic Priorities which may benefit from better integration with the CDM and Kyoto Protocol

Programs Link to CDM Note Priority 1: Promotion of a stable macroeconomic framework Priority 2: Strengthening growth through economic diversification • Integrated Rural Development Strategy

o Community Development Support Program (PADC) PRSP Progress Report notes this is “entering concrete phase of execution”

o Rumpi Project o National Participatory Development Program (PNDP) PRSP Progress Report notes this is “entering concrete phase of execution”

� Rural Community Development Support Fund (FADCR)

Could open up a credit scheme that promotes the development of CDM projects, particularly unilateral small-scale projects

� Forest and Environment Sector Program (PSFE) • National Forestry Development Agency

(ANAFOR) • Fuelwood Master Plans Subprogram

PSFE might serve to coordinate reforestation and fuelwood CDM projects

PSFE implementation has been slowed down by the division of MINEF into MINFOF and MINEP

• Community Telecentres Project Could contribute in an important manner to the “bundling” of small-scale projects, serving as regional centres for managing project portfolios

PRSP sought to equip 92 communities with information and communications technology centres. PRSP Progress Report notes 16 centres have begun construction but completion of others depend on disbursement of funds

Priority 3: Empowering the private sector • Small-Medium Enterprises/Industries Could promote business skills and imparting practical

professional knowledge in regards to the CDM as well as the development of business cluster or network development programs for the “bundling” of small-scale CDM projects

Ministry of Small-Medium Enterprises created in 2005

• National Microfinance Program Support Project (PPMF)

Could open up a credit scheme that promotes the development of CDM projects, particularly unilateral small-scale projects

• Strengthening the Organization for the Harmonization of Business Law in Africa (OHADA)

Could focus on strengthening the business, investment and taxation legal and regulatory frameworks to promote the CDM

Priority 4: Developing basic infrastructure and natural resources in an environmentally sustainable manner • Rural Electrification Agency (AER) AER should be invited to develop programs and policies to

promote rural electrification through the CDM PRSP sought 130 rural electrification projects; 85 localities for both decentralized rural and conventional projects

• 1996 Framework Law on Environmental Management which contains provisions for Environmental Impact Assessment (EIA)

Will facilitate the use of EIAs, as required in CDM project cycle

Modalities for implementation of 1996 law have been adopted as of February 2005


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Priority 5: Accelerating regional integration within the CAEMC framework • COMIFAC COMIFAC has the mandate of harmonizing forest policy

amongst Central African countries Has produced working papers on forest policy vis-à-vis the CDM

• Other Cameroon might use its influence with CAEMAC to promote a harmonized climate policy amongst Central African states

Priority 6: Strengthening human resources, bolstering the social sector, and promoting the integration of vulnerable groups into the economy • Rural Employment Development Support Program CDM could be a novel form of rural employment

Priority 7: Improving the institutional framework, administrative management, and governance The issue of governance and the CDM is treated in its own

right in this report, where the structure of the DNA and criteria for sustainable development which should form the basis of its decision-making procedure are discussed.


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in the non-oil sector. It is noted that Cameroon’s oil reserves have been in a steady state of decline over recent years. However, the PRSP also clearly demonstrates that poverty in Cameroon is concentrated in rural areas and suggests that “policies and strategies for reducing poverty should place particular emphasis on the countryside,” (p. 12). The focus then of economic diversification is on the rural sector and industrialization, as well as producing support services with high value-added. Programs and policies under the seven PRSP strategic priorities and their potential links to the CDM are presented in Table 10. Most of the potential linkages occur at the level of Strategic Priority 2 (Strengthening growth through economic diversification), Strategic Priority 3 (Empowering the private sector), and Strategic Priority 4 (Developing basic infrastructure and natural resources in an environmentally sustainable manner).

4.2.2. Climate Change Policy Priorities Identified in the 2005 National Communication

In Cameroon, GHG emissions are clearly associated with the rural sector. Data on the three primary GHGs (CO2, CH4 and N2O) assembled in the recently published First National Communication under the UNFCCC show the Land-use, Land-use Change and Forestry (LULUCF) sector and Agriculture to be the principle sources (Table 11). Amongst these three primary GHGs, CO2 is emitted primarily (89%) from activities in the LULUCF sector, representing 21,979 Kt CO2eq (Figure 4a). This is primarily due to deforestation and the clearing of land for agriculture (26,795 Kt) as well as biomass burning (1,400 Kt). However, carbon sequestration by forest regeneration on abandoned lands (6,015 Kt) and soils (200 Kt), respectively, reduces this emission impact. In terms of CH4 and N2O, these two gases are primarily emitted from activities in the Agricultural sector (Figure 4b & c). In terms of energy consumption, the Cameroonian profile again underscores the importance of the rural sector: of the 1994 total energy budget of 3,744 million tonnes oil equivalents (TOE), biomass energy sources (including fuelwood, charcoal and other sources of biomass) constitute the primary energy source, representing 67.2% of total energy consumption (p. 27). Fuelwood alone accounts for 61.2% of total energy consumption. Similarly, the majority of energy consumed is for household use (70.2%) of which the vast majority (86.8%) is estimated to be fuelwood consumption.

While the LULUCF and Agricultural sectors are clearly the largest emitters of GHGs in Cameroon, one should not discount the importance of the Energy, Industrial and Waste sectors. While their share of total GHG emissions is small, in terms of actual quantities of GHGs emitted they are still important, responsible for 3239, 387, and 1740 Kt CO2eq, respectively. As Table 11 also shows, in a hypothetical scenario where one-quarter of emissions from these sectors is reduced through CDM activities, these sectors combined might generate $6.7 million USD combined (at an estimated market price of $5 tonne CO2eq). However, a similar reduction in the LULUCF and Agricultural sectors might hypothetically generate $48.3 million USD combined. (However, it should be borne in mind that in terms of the CDM, fuelwood is considered a project category under LULUCF and not the Energy sector.)25 The Cameroon National Communication also identifies a number of sectors where GHG emission reductions could be achieved (Table 12): Forest (LULUCF), Waste, Agriculture, Energy and Industrial Sectors. Their potential to be aligned with the CDM is clearly anticipated.

4.2.3. Synthesis of Climate Change and Development Policy

It remains to be seen how the above climate change mitigation measures will be articulated with development policy. Climate change policy does not appear to figure prominently within current development policy in Cameroon. Both the 2003 PRSP and 2004 PRSP Progress Report are devoid of reference to climate change policy, the Kyoto Protocol and the CDM. While a number of possibilities for integrating the CDM into rural development policies described in 2003 PRSP have been identified (Table 10), these policies are dispersed under a number of strategic priorities. Of course, the PRSP and its Progress Report have been elaborated prior to the publication of

25 This has important implications for the feasibility of such fuelwood efficiency projects, since methodologies for switching from renewable to non-renewable fuelwood sources (referred to as biomass by the CDM Executive Board) have not yet been agreed to. This issue is currently being addressed by the CDM Methodology Panel (See: UNFCCC (2005) See Section K Report of the 16th Meeting of the CDM Methodologies Panel. Website: http://cdm.unfccc.int/Panles/meth/Meth16_rep_ext.pdf (accessed August 1, 2005) Note: this report is reproduced as Appendix B in this report.)


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Cameroon’s First National Communication on its GHG emissions. It would be important that MINEP consolidate a plan of action for better integrating these two policies.

4.3. Policy Recommendations for realizing the potential of the CDM for sustainable rural development

Recommendations • Cameroon delegation to COP11 in Montreal: Cameroon should increase its participation and

could take a leadership role in promoting African interests vis-à-vis the Kyoto Protocol and CDM. The next meeting of the UNFCCC’s Conference of Parties (COP) which governs the Kyoto Protocol is December 2005 in Montreal, Canada. Funding will be necessary.

• Coordinate existing programs with the potential of linking climate change policy and rural development policy: MINEP should promote linkages between activities under the PRSP, particularly programs such as the Integrated Rural Development Strategy, Small-Medium Enterprises program, the National Microfinance Program Support Project, and the Rural Electrification Agency with the Community Telecentres Project in terms of promoting, managing and “bundling” small-scale project portfolios. MINEP should seek clarification on investment and property right law in regards to the CDM amongst OHADA and seek to promote a regional climate change policy through CAEMC.

• Development and Climate Change Plan of Action: MINEP should consolidate a plan of action to better link existing government development programs with its climate change strategy. Note: this has links to the criteria for sustainable development that need to be developed for the CDM.


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Table 11 : 1994 GHG Emissions in Kilotonnes CO2eq (source: First National Communication: 34) and a hypothetical reduction scenario (1/4 reduction by sector generating GHG credits of a value of $5 USD per tonne)

GHG Emitted (Kt CO2eq) Hypothetical Scenario Sector

CO2 CH4 N2O Total

(Kt CO2eq) %

¼ Reduction (GHG credits Generated)

Value $USD

Energy 2,216 859 164 3,239 7.4% 810 $ 4,048,750 Industry 387 0 0 387 0.9% 97 $ 483,750 Agriculture 0 8,828 7,607 16435 37.4% 4,109 $ 20,543,750 LULUCF 21,979 188 19 22,186 50.4% 5,547 $ 27,732,500 Waste 0 1,275 465 1,740 4.0% 435 $ 2,175,000 Total 24,583 11,149 8,255 43,987 10,997 $ 54,983,750

% 55.89% 25.35% 18.77%

Figure 4 : Distribution of 1994 GHG emissions by sector as reported in Cameroon’s First National Communication under the UNFCCC in terms of (a) only CO2; (b) only CH4; and (c) only N2O

(a) CO2

Land-use Change and Forestry (LULUCF): 89.0%

Agriculture: 0.0%

Energy: 9.0%

Waste: 2.0%

Industry: 0.0%

(b) CH4

Land-use Change and Forestry: 2.0%

Agriculture: 79.0% Energy: 8.0%

Waste: 11.0% Industry: 0.0%

(c) N2O

Land-use Change and Forestry: 0.0% Agriculture: 92.0% Energy: 2.0% Waste: 6.0% Industry: 0.0%

Table 12 : Measures to reduce GHG emissions identified in Cameroon’s First National Communication (p. 71-81)

Forests Sector • Reduce emissions due to land-use

change • Biomass consumption • Soils • Improve forest policies program in

regards to climate change

Energy Sector • Reforestation for fuelwood energy sources • Hydroelectricity • Fluorescent lighting introduction • Industrial energy efficiency program • Household appliance energy efficiency program

Waste Sector • Biogas • Recycling • Methane capture Agriculture Sector • Riziculture • Livestock • Fertilisers

Industrial Sector • This sector envisages a number of different programs:

o Encourage value-added product and service industries that create jobs which help reduce poverty

o Elaborated in the context of the 1996 National Environmental Management Framework and thus create projects that have minimal impact on the ozone layer


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5. T5. T5. T5. THE HE HE HE CDM GCDM GCDM GCDM GOVERNANCE OVERNANCE OVERNANCE OVERNANCE SSSSTRUCTURETRUCTURETRUCTURETRUCTURE

5.1. CDM Designated National Authority As noted in Section 3.2, the CDM project cycle requires that any draft Project Design Document

be evaluated and approved by a Cameroon national government body—the Designated National Authority (DNA). It is responsible for ensuring that any project is voluntary, that it will mitigate GHGs and most importantly that the project meets criteria for sustainable development—criteria themselves which need to be defined by the Cameroon government in a participative manner. The extent to which the DNA is able to give such confirmations will depend on how it is constituted within the Cameroon government and what powers it is granted.

The DNA thus forms an integral part of an already complex CDM process—it is one of three regulatory phases of the CDM, the others being the validation and verification by DOEs (see Figure 2). To avoid unnecessary bottlenecks and high transaction costs, its efficient functioning is necessary to ensure that projects that promote the twin goal of GHG mitigation and sustainable development are able to be implemented. In order to assist MINEP to develop such a DNA, this section presents an overview of the roles of the DNA and various models for its structure. In an effort to relate the structure of the DNA to the Cameroon context, questions regarding its structure were a part of stakeholder interviews and the subject of break-out groups on during a seminar in August 2005 in Yaoundé organized as a part of this consultation.

5.1.1. Overview of the Roles of the DNA

From the AIJ pilot phase during the mid-1990s, it was learned that CDM projects which had some degree of coordination from a central government body were more successful and viable. For this reason, host countries are required to establishment a DNA in order to participate in the CDM. But aside from requiring a letter of approval from the DNA affirming that a project assists in achieving sustainable development,26 the exact functioning of the DNA is not prescribed. This allows for the exact functioning of the DNA to be tailored to the specific context of the country involved.

Most analysts agree that a DNA’s primary role is that of project evaluation and approval. By establishing a transparent process based on well-defined criteria and indicators for sustainable development, the DNA should (following Castro et al. 2002):

(i) increase the likelihood that any project will eventually be validated and certified as a real CDM project,

(ii) steer projects towards national development priorities (iii) reduce real and perceived risks for potential project investors.

In addition to its regulatory role, some countries have used the DNA as a focal point for building capacity in regards to the CDM and marketing CDM projects to potential buyers/investors. These three roles of the DNA are presented in Table 13 and are discussed in more detail below. While the regulatory role is essential for the DNA, it will need to be a collective decision whether the other two roles are to be assumed by the Cameroon DNA.

Table 13: Three possible roles of the DNA

Role 1: Evaluation and Approval Potential Role 2: Capacity-Building *Adopt International Criteria *Project Identification and Formulation *Develop National Criteria *Assistance in Baseline Definition *Establish Guidelines for the Presentation of Projects *Quantification of Emission Reductions

*Monitoring Project Performance

Potential Role 3: Marketing CDM Projects

*Establish National Procedures for the Evaluation and Approval of Projects - Screening and Staffing - Transparency - Tracking and Reporting *A conflict of interest?

26 2001 Marrakech Accords CDM Modalities (Decision 17/CP.7), Modalities and Procedures for a Clean Development Mechanism, Annex G, paragraph 40(a)


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5.1.1.i. Role 1: Evaluation and Approval

The role of the DNA in project evaluation and approval might be decomposed into five areas (Castro et al. 2002): (i) ensuring international project conditions are met, (ii) developing national criteria for sustainable development, (iii) establishing guidelines for the presentation of projects, (iv) establishing national procedures for the evaluation and approval of projects and (v) tracking projects that have been approved and rejected. Perhaps the heart of the DNA’s approval process are national criteria for sustainable development. Given their importance, these criteria are discussed in Section 5.2. Similarly, the international conditions and CDM project needs to meet (sustainable development criteria, measurability, additionality and leakage) have been discussed previously in Section 3.1. We focus therefore on DNA project evaluation and approval process: establishing guidelines for the presentation of projects and ensuring a transparent procedure.

Establish Guidelines for the Presentation of Projects

The DNA should ensure that the information required in order to obtain approval for any CDM project is clearly indicated to project proponents prior to the development of a project. Most of the CDM project conditions are integrated into the format of the Project Design Document as defined by the CDM Executive Board. As noted earlier, this document requires (i) an estimation of emission reductions (both within and outside of the project boundaries to address leakage), (ii) an emission monitoring plan, and (iii) an investment plan and financial analysis of the expected GHG credits the project will generate. However, the DNA might require that additional information be presented in its approval process, perhaps in line with nationally developed criteria for sustainable development. These should be clearly indicated at the outset.

Transparent Evaluation and Approval Procedure

Perhaps the most important role the DNA has to play is to define clearly the evaluation and approval procedure. Castros et al. (2002) suggest a two level screening process: primary and secondary screening. Primary screening is intended to assess the completeness and adequacy of the intended project, an evaluation which does not require technical expertise in the project area. As such, it might be carried out by non-technical staff. These authors also note that some countries have found it useful to use a simplified Project Design Document for the purposes of primary screening, to evaluate if the costs of producing the full Project Design Document are justified. However, these authors note that in order to pass a project onto the Validation/Registration stage, a full Project Design Document will be necessary. Thus the secondary screening phase must be sufficiently detailed to meet the conditions of the full Project Design Document. This will require the technical evaluation of whether a project will promote sustainable development and mitigate climate change. As such, secondary screening will require the attention of expert staff.

What type of expert knowledge should these experts have? Spread amongst staff working at the level of secondary screening should be individuals with (Castro et al. 2002: 70):

• Understanding of all the criteria for CDM projects that are defined by the Bonn and Marrakech Agreements and by forthcoming guidance from the CDM Executive Board

• Knowledge of the relevant national development priorities and the ability to determine if proposed CDM projects meet or support these priorities

• Technical expertise to determine if a proposed project is technically sound and well designed • Environmental impact assessment (EIA) expertise in order to assess the acceptability of

proposed CDM projects against national and local environmental concerns • Technical and economic expertise in evaluating the associated baseline for the proposed CDM

project and determining the emissions of the project • Financial expertise for assessing the financial viability of proposed CDM projects • Legal and regulatory expertise to evaluate the corresponding aspects of proposed CDM

projects and ensure that the projects are consistent with established national and local laws and regulations

However, it is unlikely that all such experts are located within a single Ministry alone. Clearly, the range of projects and their implications in terms of property rights and international trade will require expertise from other sectors including other Ministries, the private sector and NGOs.

Castros et al. (2002) emphasize that the entire project evaluation and approval procedure be transparent—of utmost importance to the establishment and maintenance of a positive investment


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climate. This will not only ensure that projects will be treated fairly, but also permit project proponents to design their project with the procedure and criteria for sustainable development in mind. In addition, if a project is rejected the reasons for its rejection should be explained to project proponents. One way of achieving these goals would be to publish the decision-making procedure and sustainable development criteria on the Internet. It will also require staff with sufficient access and capacity in the use of the Internet in order to ease the administrative flow of information, particularly through the use of email, and reduce transaction costs.

Finally, as a part of its role in evaluating and approving CDM projects, the DNA is responsible for tracking CDM activities, as required by the UNFCCC. Castros et al. (2002) suggest the establishment of a electronic registry for all projects and amounts of CERs generated. The authors also note that in the near future, a standardized reporting format for tracking CDM activities will be required and the early development of a tracking system now will facilitate transition to this later.

5.1.1.ii. Role 2: Capacity-Building

Aside from its regulatory role, the DNA may choose to assist in building capacity in regards to CDM projects. This could involve the training of project developers already working in CDM project sectors but who are currently unfamiliar with the CDM nor the capacity for GHG mitigation through projects they are already undertaking. This could be in the form of simple sensitizations as well as the development of tools and training sessions to simplify the calculation of project baseline scenarios, expected emission reductions and organize monitoring schemes. Castros et al. (2002) emphasize that much time and money is wasted in the improper development of these components of a Project Design Documents, costs which could be avoided if training sessions and example projects were made available to project developers—particularly those in Cameroon intending to develop projects unilaterally. It should be recalled that the approval of baseline and monitoring methodologies is not the decision of the DNA, but of the Methodology Panel at the CDM Executive Board.

5.1.1.iii. Role 3: Marketing CDM Projects – a conflict of interest?

Finally, the DNA might also choose to assist in the marketing of CDM projects. This is a service that the DNA can offer to projects that have been approved. Such a strategy might be particularly useful in the development of unilateral CDM projects. The DNA might also wish to build a portfolio of different projects which it can market to interested buyers/investors. However, as noted in Cigaran and Iturregui (2004), the goal of both approving and marketing CDM projects presents a conflict of interest. Such a dual role might be necessary at the initial stages of the DNA when it is necessary to develop awareness about CDM projects both domestically and on the GHG market. But as in the case of Peru though, once the initial phase is surmounted it might be better to transfer the marketing responsibilities to another government agency responsible for promoting foreign direct investment.

5.1.2. Potential Structures of the DNA

5.1.2.i. Existing DNA Models

As the Modalities and Procedures for a CDM that forms the Annex to the 2001 Marrakech Accords are rather silent as to the structure of the DNA, it can be tailored to fit the needs of the host country. From experiences in Latin America where the AIJ and CDM were pioneered, a number of models have been identified which differ in legal structure, sources of technical and financial support, and purpose for the DNA (Figueres and Olivas 2002)—see Table 14.


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Table 14 : Potential legal structures, sources of financial support and purposes of the DNA

Legal Structures • Mixed Entity: where private, government and NGO sector participate equally • Fully Governmental • Private sector institution under the governance of a multi-sectoral board • Non-governmental Organization • Non-profit Private Organization Sources of Technical and Financial Support

• National Government Funding • National Government Funding with Additional Support from Multilateral and Bilateral Sources • Private sector Purpose of the DNA • CDM Project Evaluation and Approval • CDM Capacity-Building • CDM Project Marketing and Promotion • Climate Change Policy

5.1.2.ii. Suggestions for DNA Structure from Stakeholder Interviews

Almost all stakeholders interviewed suggested an inter-ministerial and inter-sectoral structure for the DNA, recognizing that MINEP is best placed to lead its coordination. However, concern about bottlenecks under this structure were voiced by a number of stakeholders, though with different strategies for minimizing this. One strategy was to ensure that the DNA has a good focal point. This person needs to (i) have adequate education, (ii) experience working in a multi-sectoral environment, and (iii) good communication skills. Indeed, communication skills were often cited as being of utmost importance for moving information through the project evaluation and approval procedure. As for the rest of the DNA, it would be comprised of an ad-hoc committee of experts that would be assembled for specific project evaluations. One interviewee found it most important to get the DNA functioning and improve it through a learn-by-doing approach.

A second strategy suggested that the evaluation and approval process would be more efficient if well-defined decision-making procedures were developed first. These could be defined in an inter-ministerial fashion, but then transferred to one body for implementation. It was noted that power in Cameroon is very much dispersed amongst various ministries and government bodies, making it difficult to gather all the authorizations necessary to organize for multi-sectoral issues that any CDM project might touch upon. In addition, it was suggested that these procedures could be stream-lined for small-scale projects, much the same as has been done at the level of the CDM Executive Board. Finally, a few stakeholders suggested examining existing governance models similar to that proposed for the DNA, such as an already established inter-ministerial commission focusing on sustainable development and the governance structure for the Montréal Protocol for substances that deplete the ozone layer.

During the course of interviews it was learned that MINEP has already taken initial steps to implementing the DNA. As of July 2005, a CDM interim National Committee has been established, based on an inter-ministerial and inter-sectoral structure. Its next main task will be to develop procedures for evaluation and approval, including criteria for sustainable development. In terms of these procedures, all CDM projects will be subject to EIA. This is facilitated by the fact that the modalities for the application of the 1996 Framework Law on Environmental Management (which contains the EIA clause) have been officially implemented as of February 2005. As for administrative capacity at MINEP for the evaluation and approval process, it was noted that MINEP will soon have its own website created (there is already one existing for MINFOF) and Internet access will soon be installed in all government offices. There are 279 staff devoted entirely to MINEP (located both in Yaoundé and regionally) with another 798 divided between MINEP and MINFOF due to the recent division of MINEF. While it was noted that the current MINEP budget was extremely limited, staff were optimistic about the future. Along these same lines, a number of stakeholders suggested that the DNA be financially supported by outside multinational and bilateral donors.


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Stakeholders voiced a number of concerns regarding the DNA. One stakeholder observed that the structure of the DNA was really not as important as the rules for selecting individuals who will partake in this structure. This selection procedure needs to be transparent. Similarly, other stakeholders emphasized it was necessary to establish a complaint mechanism into the DNA. Others still saw a conflict of interest between the role of approving projects and marketing them. It was suggested that the role of marketing a CDM project portfolio might be better allocated to another government ministry, though ensuring access there to environmental experts. Finally, while the multi-sectoral approach was most often suggested as the best DNA structure, some noted that in many cases the private sector is stronger than government and can easily take the lead in decision-making. Finally, a common criticism of government institutions was that they look quite good conceptually, but suffer from poor implementation.

5.1.2.iii. DNA Structures of Other African Countries

Surveys carried-out with three other African countries (Mali, Benin and Morocco) show a similar pattern in the structure of their DNAs (Table 16). The DNAs are all situated in their country’s equivalent to the Ministry of Environment. The DNAs of Mali and Morocco make use of a pre-existing government structure; Benin’s is completely new and formed along with the Kyoto Protocol National Focal Point. All three are multi-sector government bodies, with distinct councils and executive bodies/permanent secretariats. All are financed from their national budgets, though Mali and Morocco cite capacity-building assistance from international donors (UNEP/UNDP/World Bank). The decision-making process for Mali and Benin is not well articulated; however, that of Morocco entails a defined dual-screening process. The duration of the decision-making process is described as 1-3 weeks for Mali and 6 weeks for Morocco (2 weeks for primary screening; 4 weeks for secondary screening). Created in January 2005, Benin admonishes that its DNA is just starting-up and needs to gain experience.

5.1.2.iv. Recommendations from Seminar

At the seminar held in Yaoundé on August 9 where preliminary results of this report were presented, a number of recommendations for the DNA were made (Table 15).

Table 15 : Recommendations for DNA structure issuing from seminar

• Autonomous organisation under the leadership of MINEP • Decentralized structures at the regional/provincial level (regional offices) • Personnel recruitment follow well defined profiles • Terms of reference for the above profiles elaborated by an independent body


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Table 16 : DNA structures of Other African Countries

Country Established Role Activities Basic Structure Financing Decision-making Process

Duration

Mali September 2002: created by decision of the Secretary General of the Ministry of Environment and Sustainability

CDM project approval

*Regulatory: endorses CDM projects by verifying their conformity to National Environmental Policy Protection and National Development Priorities *Promotional: promotes investments in the CDM along with other national bodies

Situated within the Ministry of Environment and Sustainability, a pre-existing government body; consists of a focal point, Permanent Technical Secretary, and Committee (not yet formed, but to be composed of public and private organisations)

National budget; also benefiting from capacity building program of the World Bank

No distinction between screening processes

1-3 weeks

Benin January 2005 : as the result of a consultative process that culminated in a national workshop on the CDM

CDM project approval

*Regulatory: endorses CDM projects by verifying their conformity to National Environmental Policy Protection and National Development Priorities *Promotional: along with other government bodies, it promotes investments in the CDM

CDM National Council and an Executive Office; situated in the Ministry of Environment along with Kyoto Protocol Focal Point; comprised of National Council on Climate Change as well as other key ministries and a number of non-governmental organizations

National budget Qualified persons are invited to make observations and recommendations; no distinction between screening processes

No reply

Primary Screening: completion of a project note available

2 weeks Morocco 2002: by an independent ministerial decree

*Represents government in all CDM relations with national organizations *Interacts with international CDM organisations *Delivers CDM project letter of approval

*Regulatory: establishes the rules for the evaluation and approval of CDM projects *Promotional: promotes investments in the CDM through capacity building and marketing

CDM National Council (17 seats: 11 governmental, 6 non-governmental/ professional) and a Permanent Secretary (PS), the latter of which is located within the Ministry of Territorial Management, Water and Environment (MTMWE). Only the National Council was created new for the DNA; the PS existed before as a part of the MTMWE. MTMWE is also the Kyoto Protocol National Focal Point.

MTMWE budget; also benefiting from UNEP/ UNDP capacity-building project

Secondary Screening: requires CDM Project Design Document. Requires documentation on results of local-level public consultation regarding project to be included as well as results of EIA.

4 weeks


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5.2. Criteria for Sustainable Development The basis of the decision-making process used by the DNA for the approval of any CDM project

are criteria for sustainable development. Recall, that it is the responsibility of any CDM project proponent to demonstrate how the project being developed contributes to sustainable development. But what constitutes sustainable development is a sensitive issue, reason for which the Kyoto Protocol has left its definition to host countries themselves. However, the final choice of criteria will depend on their measurability and objectivity of interpretation. They should thus be designed with measurable indicators in mind and be meaningful at the CDM project level. Well designed criteria will communicate to project proponents the requirements of a CDM project before it is undertaken, thus reducing time and costs.

This section thus presents three complimentary approaches to developing these criteria. The first is suggested by the UNEP Riso Centre, which is to link criteria for sustainable development with existing national development strategies such as the MDGs and the PRSP (Olhoff et al. 2004). The second approach is to paint a portrait of different definitions of sustainable development and criteria for its assessment gathered from stakeholder interviews. The last is to examine the criteria developed by other African countries for the purposes of the CDM, which have been attained for this consultation through result of email surveys with the DNAs of African countries.

5.2.1. Cameroon Development Priorities and the MDGs

The first approach to developing criteria is to look at national development priorities. As has been explored in Section 4.2.1, the “ultimate objective” of the 2003 PRPS is to “achieve a sustainable and visible improvement in the standard of living of Cameroon’s populations that would come from tackling the very roots of poverty,” (p. 31). This will result from (i) implementing policies designed to create the conditions for strong, sustainable economic growth and (ii) aligning its poverty reduction policies with the UNDP’s Millennium Development Goals (MDGs). The MDGs might thus form the basis for criteria for sustainable development.

There are however to problems with this approach. First is the observation that direct reference to the Kyoto Protocol is missing from the MDGs, likely because of uncertainties regarding the coming into force of the Protocol. As Olhoff et al. (2004: 27) observe, the MDGs tend to be only indirectly related to issues of environment and energy:

• The major focus is poverty reduction. Goals 1-5 have a direct impact on poverty and all the other goals also contribute to poverty reduction. This links of course strongly to the social dimension of sustainability.

• There is little direct relationship to the economic dimension of sustainability and the MDGs • In the environmental dimension, there is an indirect concern with protecting resources for the

future (e.g. land area under conservation and climate change), but most of the attention is on the impacts of the environment on health and quality of life.

It is possible however to link CDM projects better with the MDGs as is suggested in Table 17. In terms of MDG 7, there are already a number of relevant indicators under Target 9 (Land Area Under Forest, Land Area Protected, Kg Oil Equivalent/$GDP, CO2 Emissions Per Capita, Proportion of Population Using Solid Fuels). However, there is also potential to link the CDM with MDG 1 (Poverty and Hunger Eradication), MDG 3 (Gender Equality), and MDG 8 (Global Partnership for Development), though achieving this integration will require work at both the Cameroon and UN levels. Indeed, as discussed in Section 1.4, the issue of equity in climate change negotiations should be given special attention under MDG 8. However, the link between the PRSPs Strategic Priorities and the MDGs is not clear. Indeed, criteria for measuring progress on the PRSP Strategic Priorities do not readily present themselves. The 2004 PRSP Progress Report mentions that the statistical mechanism for the follow-up and evaluation of the PRSP implementation is “gradually being put in place,” (Chapter 3: 25). Once established, this will form the basis of Cameroon’s commitments concerning the MDGs and follow-up and evaluation indicators for the PRSP. Altogether, the PRSP is found wanting in criteria for measuring progress on poverty reduction. This points to the need to more comprehensively develop criteria for poverty reduction and sustainable development, which might then form the basis of criteria for CDM projects. It is noted that for two of the African countries surveyed, the development


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Table 17 : The Millennium Development Goals and their relation to 2003 PRSP development targets for 2015 (source: 2003 PRSP: 31) and recommendations for their better alignment with the CDM

Target MDG Target PRSP Recommendations vis-à-vis CDM

Goal 1: Eradicate extreme poverty and hunger Target 1: Halve, between 1990 and 2015, the proportion of people whose income is less than less than one dollar a day

Eradicate extreme poverty and hunger, by halving the proportion of Cameroonians living below the poverty line

Target 2: Halve, between 1990 and 2015, the proportion of people who suffer from hunger

Eradicate extreme poverty and hunger, by halving the proportion of Cameroonians […] suffering from hunger

Promote small-scale CDM project as an alternative source of income for low-income individuals and communities in the rural sector, where poverty is concentrated

Goal 2: Achieve universal primary education Target 3: Ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling

Achieve universal primary education by ensuring that all children are able to complete primary education;

Goal 3: Promote gender equality and empower women Target 4: Eliminate gender disparity in primary and secondary education, preferably by 2005, and in all levels of education no later than 2015

3. Promote gender equality and empower women, by eliminating gender disparities in primary and secondary education, if possible at all levels;

Promote small-scale renewable fuelwood CDM projects which have the potential to directly benefit women, who now are primarily responsible for fuelwood collection and cooking and exposed to adverse health conditions resulting from smoke inhalation

Goal 4: Reduce child mortality Target 5: Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate

4. Reduce by two-thirds the mortality rate at birth and among children under five;

Goal 5: Improve maternal health Target 6: Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio

Reducing the maternal mortality rate by three-quarters

Goal 6: Combat HIV/AIDS, malaria and other diseases Target 7: Have halted by 2015 and begun to reverse the spread of HIV/AIDS

6. Combat and stop the spread of HIV/AIDS

Target 8: Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases

Control the incidence of malaria and other major diseases, and reverse the spread of these pandemics;

Goal 7: Ensure environmental sustainability Target 9: Integrate the principles of sustainable development into country policies and programmes and reverse the loss of environmental resources

[Ensure environmental sustainability by] integrating sustainable development principles in national policies, and reverse the current degradation of environmental resources

MDG Indicator 25. Proportion of land area covered by forest MDG Indicator 26. Ratio of area protected to maintain biological diversity to surface area MDG Indicator 27. Energy use (kg oil equivalent) per $1 GDP (PPP) MDG Indicator 28. Carbon dioxide emissions per capita and consumption of ozone depleting CFCs (ODP tons) MDG Indicator 29. Proportion of population using solid fuels

Promote the environmental conditions—particularly in terms of energy, air pollution, housing practices and forest management—through the CDM that will form the basis for sustainable development


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Target 10: Halve, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation

Ensure environmental sustainability by reducing by half the proportion of people without access to safe drinking water

Target 11: By 2020, to have achieved a significant improvement in the lives of at least 100 million slum dwellers

[Ensure environmental sustainability by] achieving a significant improvement in housing

Goal 8: Develop a global partnership for development Target 12: Develop further an open, rule-based, predictable, nondiscriminatory trading and financial system Includes a commitment to good governance, development and poverty reduction – both nationally and internationally

Target 13: Address the special needs of the least developed countries Includes: tariff and quota free access for the least developed countries' exports; enhanced programme of debt relief for heavily indebted poor countries (HIPC) and cancellation of official bilateral debt; and more generous ODA for countries committed to poverty reduction

Target 14: Address the special needs of landlocked developing countries and small island developing States

Recognize that the CDM and Kyoto Protocol represent a new, much more concrete global partnership for development than has previously been available. Cameroon government and the UNDP should focus on playing a more active role in ensuring equity in future climate change negotiations and working with regional partners to promote African interests and access to markets that are possible through the CDM, particularly in terms of small-scale LULUCF and agricultural projects

Target 15: Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term

Target 16: In cooperation with developing countries, develop and implement strategies for decent and productive work for youth

[Create a global partnership to] implement policies and strategies that offer decent and productive work prospects to Cameroon’s youth

Target 17: In cooperation with pharmaceutical companies, provide access to affordable essential drugs in developing countries

Target 18: In cooperation with the private sector, make available the benefits of new technologies, especially information and communications

Create a global partnership to develop information and communications technologies and to implement policies

of their CDM criteria for sustainable development has been the responsibility of government bodies devoted of devoted to sustainable development.

5.2.2. Portrait of Cameroon Stakeholder Interpretations of Sustainable Development and Criteria for its Assessment

In terms of sustainable development, definitions recorded during stakeholder interviews might be grouped under six headings (Table 18). Common to all is a consideration for the social aspects of


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development, though to varying degrees. At one level we find the well-established definition of sustainable development as defined in the 1987 land-mark policy document, Our Common Future (WCED 1987): (1) Integration of social, economic and environmental aspects of development and (2) Intergenerational consideration of resource management. Other definitions accentuate the social aspects of development that ensure its sustainability: (3) Enhanced Participation, (4) Capacity-Building and (5) Social Improvement. One final innovative definition is (6) the Consideration of Scale in defining sustainable development. This definition in particular lends itself well to the criteria for assessing the sustainable development of CDM projects because it can form the basis of an evaluation matrix.

In terms of criteria for ensuring that their definition of sustainable development was attained, the stakeholders presented a range of criteria (Table 20). In keeping with the classic definition of sustainable development, these criteria might be grouped between those dealing with Economic aspects of sustainable development: (1) Non-monetary economic benefits, (2) Economic value-added and (3) Benefits distribution; Social aspects: (4) Technology transfer, (5) Capacity-building, (6) Enhance participation; and Environmental aspects: (7) Conservation and appropriate use of the environment and biodiversity. However, a number of criteria were also identified that are best understood in relation to project management: (8) Clear project methodology, (9) Professional capacity of project proponents, (10) Transparency in project management and (11) Environmental Impact Assessment. Finally, simple criteria for assessing sustainability at multiple scales were suggested (12). Stakeholders present at the seminar in Yaoundé on August 9 identified themselves eight criteria (Table 19).

5.2.3. Sustainable Development Criteria of Other African Countries

In relation to other African countries, some of their experiences lend themselves to the development of criteria for sustainable development in Cameroon (see Table 21). Perhaps most important is the observation that the development of sustainable development criteria in both Mali and Morocco has been the responsibility of a special government body devoted to sustainable development. The process is currently underway in Mali, though in Morocco the development of criteria might be traced as far back as 1992. The initial inspiration of the Moroccan criteria was Agenda 21 and its indicators for sustainable development, which were further refined through a special Mediterranean Commission on Sustainable Development and later tested in Morocco through a project with France. The resulting 65 indicators have then been simplified in a participative manner through a UNEP/UNDP project for the purposes of the CDM. In Benin, with the most recently established DNA (Jan 2005), the current criteria are essentially those of the MDG.

Thus of the countries that responded to the survey, only Morocco has viable sustainable development criteria. To compliment Morocco’s criteria, they are shown in juxtaposition to Kenya’s criteria as presented in a CDM guidebook prepared by the Pembina Institute (2003: 57). When comparing Morocco’s and Kenya’s criteria there is a strong sense that while there is much overlap between the two, Morocco’s criteria are more comprehensive with links from the macro-socioeconomic to the micro-economic levels. Also, by making recourse to a National Strategy for Sustainable Development, the more subtle and context specific issues of sustainability are affronted in an objective manner, made even more feasible through the use of an evaluation matrix.


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Table 18 : Portrait of stakeholder definitions of sustainable development

1) Integration of social, economic and environmental aspects of development • The transformation that take into consideration the environment and the human being • The use of a resource that does not lead to its destruction; the protection of nature and advancement of people; that

resources last as long as possible, but evolving and getting better; it is the organization of society that brings about development, so all of society must be involved.

• The capacity of a policy to integrate and permit the linkage of environment and economy, the social and poverty • To facilitate socio-economic development while taking into consideration the environment

2) Intergenerational consideration of resource management • To plan development today, but take into consideration questions of development that will present themselves tomorrow all

the while taking into account the limitations of resources and other issues related to the economy • The capacity to have resources to satisfy today’s needs (and improve future conditions) without compromising the

availability of resources in the future. It is development that is managed for present generations without compromising those of the future

• The rational and efficient use of resources so that future generations will also benefit in order that resources last the longest possible time

• The maintenance of what one has found and, where it no longer is, to restore it for future generations • A forum for improving the living conditions of people that values natural resources and the environment in terms of

exploitation and use but which assures—in cultural, quantitative and qualitative means—that these resources will continue to exist all the while replenishing their natural functions for the benefit of future generations

3) Enhanced participation • It’s development that is tailored to the specific needs of local people; thus, a single definition cannot apply. • Resolving a real problem that has been identified itself by beneficiaries as a problem and its solution-seeking process

together in order to ensure proper implementation of the solution so that the solution becomes sustainable

4) Capacity-building • Development processes that are designed to be able to perpetuate themselves when various assistances have been

withdrawn. To perpetuate development, capacity-building is needed. Sustainability needs to be built into a project right from the beginning.

• Follow the axiom: “Don’t cure a sickness by making another.”

5) Social improvement • Assure the improvement of people’s social situation over the long-term

6) Consideration of scale • Sustainable development is a question of scale. It needs to be sustainable at all levels: global, national, local as well as

social, ecological and economic

Table 19 : Criteria for sustainable development issuing from seminar

Recommendations for Sustainable Development Criteria

1. Improvement in living standards (education, water, revenue, etc.) 2. Good governance: transparency, equity, justice 3. Sustainability 4. Participatory management and monitoring 5. Conformity with laws and regulations 6. Conformity with development priorities 7. Rational management of natural resources 8. Technology transfer


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Table 20 : Portrait of stakeholder criteria for assessing the contribution of a CDM project to sustainable development

Economic 1) Non-monetary economic benefits Project results in non-monetary benefits: time gained, education, improved nutrition, health care, etc. Project provides employment or reduction in unemployment 2) Economic value-added Project will not engender a reduction in the value of land (ie, the price of land before and after project) The project is the best economic alternative amongst various possible options 3) Benefits distribution Project shows clearly how it will help local people attain their definition of sustainable development Project generates short-term benefits in order to be a catalyst for adoption over the long-term The project results in a sustainable source of revenue and entails a transparent mechanism for distributing this to local beneficiaries Results of project should be visible to local populations

Social 4) Technology transfer The project has resulted in transfer of new and appropriate technologies and techniques 5) Capacity-building Capacity/knowledge of local people to sustain projects has been increased The project allows for an incubation period with project experts to ensure that those charged with maintaining a project will able to maintain the project, particularly its sustainable development impacts Project can be replicated The project is designed to be a source for education in the future 6) Enhance participation The project entails participation and participatory analysis and monitoring Information regarding the project and its anticipate outcomes has distributed and made accessible to those who will be affected Local peoples have participated in elaborating project Project is based on the needs of the community The project combines traditional and modern values and know-how

Environmental 7) Conservation and appropriate use of the environment and biodiversity Minimise negative impact on the environment and biodiversity (including genetic resources) Project results in greater environmental protection and the reduction of emissions

Project Management 8) Clear project methodology The project is designed with a clear methodology for the collection, organization and presentation of data for monitoring 9) Professional capacity of project proponents The project is carried-out by adequately trained people/organizations 10) Transparency in project management The identity and affiliation of those carrying-out a project are made known The origin of the different components of a project are clearly indicated 11) Environmental impact assessment Project has completed an EIA and environmental management plan Forecast the future impact of the project, both socially and economically

Scalar 12) Sustainability at multiple scales Do no harm: no negative impact for the majority of the six levels of sustainability (global, national, local, economic, social environmental) Do something good: project will have a positive impact on each of the six levels of sustainability (global, national, local/economic, social and environmental)


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Table 21 : Sustainable development criteria from other African countries and the process of their development

Country Criteria Evaluation Matrix Method of Development Mali Not yet developed Not available Criteria to be developed by the National

Sustainable Development focal point to conform with the National Policy on Environmental Protection and the country’s plan for social and economic development

Benin Essentially the MDGs Not available Collaboration with UN bodies and specialists using development documents in conjunction with a participative approach

Morocco 1) Project must conform with the development priorities identified in the National Strategy for Sustainable Development

2) Project must conform with all laws in force; EIA must be conducted in conformity with laws

3) Project must build Morocco’s energy potential/ diversity or extend it in terms of renewable energy/ optimize energy use

4) Project must promote appropriate and clean technologies and not dated ones

5) Project must have a tangible positive impact on local populations

6) Project activity enhance the level of competitivity of the industries concerned

7) Project may also assist Morocco combat or adapt to the effects of climate change

Project must contribute to: 1) Mitigation of GHG 2) Local environ.

sustainability 3) Net job creation 4) Equilibrium balance

of payments 5) Macro-economic plan 6) Cost effective 7) Technological

autonomy 8) Sustainable use of

natural resources

Criteria were derived initially from those identified in the 1992 Agenda 21, which were then adapted to Mediterranean conditions through Mediterranean Commission on Sustainable Development to retain 130. These were then tested in conjunction with a bilateral project with France, which led to the retention of 65 indicators in a 2003 report. This list was simplified through a project with the UNEP/UNDP for the purposes of the CDM through a participatory process involving stakeholders from various sectors.

Kenya 1) Demonstrate a firm and tangible contribution to sustainable development 2) Be supportive of and consistent with national development priorities and be

linked to poverty reduction 3) Implement technologies that are locally appropriate, environmentally friendly,

and energy efficient; have necessary precautions in place to avoid dumping of substandard technologies

4) Contribute to the enhancement of national institutional and human capacity building

5) Accord highest priority to activities that generate maximum economic, social, and environmental benefits

6) Address community needs and priorities through effective public participation in project design, planning, and implementation to ensure equitable distribution of sustainable development benefits

7) Contribute to global efforts to achieve stabilisation of greenhouse gas concentrations in the atmosphere in accordance with Article 2 of the Convention

8) Ensure that CDM financial inflows are over and above the existing Official Development Assistance (ODA)

9) Be consistent with the objectives of Agenda 21 and relevant environmental conventions (Convention on Biological Diversity, the Ramsar Convention on Wetlands, and the Convention to Combat Desertification) as well as with local and national environmental management laws

Not described in Pemibina (2003); neither was their an Evaluation Matrix


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5.3. Policy recommendations for CDM governance structure Recommendations for the Structure of the DNA • Keep the DNA small, focused and efficient: it is important to reduce bureaucratic processing

time by keeping the DNA small and focused with a limited yet balanced number of sectors involved.

• Develop detailed evaluation and approval procedures: It is noted that power in Cameroon is dispersed amongst a number of different ministries and government bodies which might prove difficult to coordinate vis-à-vis the CDM. To surmount this, the DNA should have well-drafted and detailed procedures to follow, based on an extensive and transparent, inter-governmental and inter-sectoral consultations.

• Clear rules for the selection of participants to the DNA: participation in the DNA and in the drafting of its decision-making procedures should be based on a number of objective criteria and explanations for the selection of individuals to the National Committee should be made available.

• Eventual transfer of CDM project promotion to Ministry of Commerce: while the DNA might initially promote CDM projects, the conflict of interest this might present warrant that this role be transferred to another ministry, the Ministry of Commerce being the best suited.

Recommendations for Sustainable Development Criteria • Criteria should be developed by a sustainable development commission: a government

body or commission with a mandate to promote sustainable development should be assembled (if it does not already exist) to draw-up sustainable development criteria required for the CDM. Such an approach is justified from the example of Morocco which had the most comprehensive sustainable development criteria and appeared to have invested a great deal of time in developing them. It is also noted that CDM criteria in Mali are also being drafted by the sustainable development focal point.

• Adoption of 12 criteria for sustainable development: eleven criteria have been identified (mostly through the interviews carried-out with Cameroon stakeholders) comprising Economic, Social, Environmental and Project Management criteria for CDM projects. An additional criterion related to the promotion of an equilibrium balance of payments has been included from the Moroccan example in order to ensure that projects also promote macro-economic stability

• Promotion of the use of a scalar evaluation matrix: perhaps the most important result of the stakeholder interviews was the identification of the need to consider criteria for sustainable development at different scales: local, national and global. Thus the criteria above should be evaluated at different scales through the use of a scalar evaluation matrix (see Table 22).


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Table 22 : Proposed Scalar Evaluation Matrix

Scale Local National Global 1) Non-monetary economic benefits

2) Economic value-added

3) Benefits distribution

Economic

4) Promotion of equilibrium balance of payments

5) Technology transfer 6) Capacity-building

Social

7) Enhance participation

Environmental 8) Conservation and appropriate use of the environment and biodiversity

9) Clear project methodology

10) Professional capacity of project proponents

11) Transparency in project management

Project Management

12) Environmental impact assessment


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6. S6. S6. S6. SMALL IS MALL IS MALL IS MALL IS BBBBEAUTIFULEAUTIFULEAUTIFULEAUTIFUL: S: S: S: SMALLMALLMALLMALL----SSSSCALE CALE CALE CALE PPPPROJECT ROJECT ROJECT ROJECT PPPPOTENTIALOTENTIALOTENTIALOTENTIAL

6.1. Introduction: transaction costs and the move towards small-scale projects

As has been discussed in Section 1.3, the twin goal of the CDM both distinguishes it from the other two flexibility mechanisms (Emissions Trading and Joint Implementation) but also increases project transaction costs. Such costs arising from pre-operational costs, implementation/ operating costs, trading and administrative costs are high, and simply running a typical CDM project might cost well over $70,000 - $200,000 USD (Lee 2004: 44 & 67). While these costs might be insignificant for large projects, they inhibit the development of small-scale projects which are argued to better promote sustainable development, particularly amongst low-income communities or individuals most in need of alternative energy and sources of finance. Indeed, the tendency for the CDM to favour large-scale projects is a long-standing criticism of the CDM (see: CDM Watch 2004).

One response to these criticisms has been to simplify procedures for small-scale CDM projects (Table 23). This is intended to reduce administrative burden and make such projects more feasible at the community level. For instance, total administrative costs for a small-scale project are estimated to be able to be reduced to $23,000 (Lee 2004: 44). Of the simplified procedures, perhaps the most innovative is the ability to “bundle” projects. This allows project activities to be dispersed between different communities and brought together under a common administrative procedure, thus reducing transaction costs. In this way, project activities can be scaled down to a level that is manageable yet also feasible for working with low-income communities while still producing enough GHG credits to be competitive on the market. Because of the small size of community forests in Cameroon (5000 ha maximum), projects resulting in GHG emission reductions will almost certainly requires some type of project bundling. Another novelty of small-scale projects to reduce transaction costs is the approval of predefined and simplified methodologies (Table 24). To date, the CDM Executive Board has defined a number of methodologies to facilitate small-scale projects.27 It is noteda that methodologies for small-scale afforestation/reforestation projects are currently being discussed by the CDM Small-Scale Working Group.28

It is important to bear in mind that there are limits on the size of these projects, designed to ensure that such projects remain (true to their name) small. Small-scale CDM greenhouse gas reduction projects are limited in terms of the size of the project as well as annual emissions. Small-scale reforestation and afforestation projects are limited in the annual CO2-eq reductions per year they can sequester (8 Kt CO2eq/yr). In addition, small-scale afforestation/reforestation projects “should directly benefit the low-income community and individuals that are project participants.”29

In this report we focus on small-scale projects under the CDM because they are a better means of introducing the CDM to Cameroon. They can serve as a learning experience before pursuing more sophisticated projects in the future that require higher investment. Furthermore, because the rules for small-scale CDM projects have been agreed only recently, it is necessary to determine thresholds amounts of GHG credits necessary for establishing environmentally and financially viable projects.

27 UNFCCC (2005) Methodologies for small scale CDM project activities. Website: http://cdm.unfccc.int/methodologies/SSCmethodologies (accessed August 1, 2005)


29 See the preamble of the “Simplified modalities and procedures for small-scale afforestation and reforestation under the clean development mechanism in the first commitment period of the Kyoto Protocol and measures to facilitate their implementation” in the COP10 Decision (Decision -/CP.10)


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Table 23 : Simplified Modalities and Procedures for Small-Scale CDM Project Activities

• Baselines methodologies by project category are simplified to reduce the cost of developing a project baseline;

• Monitoring plans are simplified, including simplified monitoring requirements, to reduce monitoring costs;

• The same operational entity may undertake validation, verification and certification • Projects may be bundled under a collective administrative procedure as long as the total project

size is below the limits for small-scale projects

Table 24 : Small-scale emission reduction project types and methodologies

Small-Scale Greenhouse Gas Emission Reduction Projects • Renewable energy project activities with a maximum output capacity equivalent of up to 15

megawatts (or an appropriate equivalent); o Electricity generation by the user o Mechanical energy for the user o Thermal energy for the user o Renewable electricity generation for the grid

• Energy efficiency improvement project activities which reduce energy consumption, on the supply and/or demand side, by up to the equivalent of 15 gigawatt hours per year;

o Supply side energy efficiency improvements – transmition and distribution o Supply side energy efficiency improvements – generation o Energy efficiency and fuel switching measures for industrial facilities o Energy efficiency and fuel switching measures for building

• Other project activities that both reduce anthropogenic emissions by sources and directly emit less than 15 thousand tonnes (kt) of carbon dioxide equivalent annually.

o Agriculture o Switching fossil fuels o Emission reductions by low-greenhouse gas emission vehicles o Methane recovery o Methane avoidance

Small-Scale Land-use Change and Forestry (LULUCF) Projects • That a small-scale afforestation or reforestation project will result in net anthropogenic greenhouse

gas removals by sinks of less than 8 kilotonnes of carbon equivalents per year o Project activity “should directly benefit the low-income community and individuals (LICI) who

are direct project participants”

6.2. Tali-Bara Small-scale CDM Project Feasibility Case Study Preliminary results that might be used towards the implementation of a small-scale project in

Cameroon are presented in here in regards to a community forest implementation project with the Tali and Bara communities of South West Province, Cameroon (Figure 5). Comprised of three communities (Tali 1, Tali 2 and Bara), the proposed community forest project involves 124 households representing an estimated population of 582 people.30 The reason for focusing on a community forest is simple. Recall that small-scale reforestation projects require a low-income community or individual as a project partner. Community forests established under Cameroon’s 1994 Forest Law represent a project partner required for small-scale projects.

Two forms of CDM projects have been considered: improved woodstove efficiency and reforestation. The first, is intended to address a cross-cutting gender, health and environmental issue: the amount of time and effort women need to collect fuelwood as well as the adverse health conditions associated with chimney-less hearths (UNDP 2005). Women in the Tali-Bara

30 Note that this community forest project is currently being implemented and the exact constitution of the community forest governance structure has not yet been formulated.


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communities generally cook over a three-stone open fire, either outside or inside a kitchen area with little or no ventilation. Yet there are simple stove designs which could reduce smoke and, arguably, GHG emissions. The second project type explored has been reforestation. Communities can benefit from reforestation projects if such projects lead to the establishment of agroforest systems that have non-timber values (ie, fruit or soil nutrients) that can be cultivated along with greenhouse gas sequestration (ie, carbon in wood). It should be emphasized that the methodologies used here for determining baselines for the two project types described here still need validation from the CDM Executive Board. The results presented here should not be interpreted as being officially recognized as legitimate estimates of GHG credits that might be obtained—they are only an introduction to such a process. Indeed, the precautionary principle should be invoked by requesting that these results be corroborated by experts before proceeding further with project elaboration. There are also important methodological issues that still need to be resolved regarding fuelwood projects. It is acknowledged at the outset that fuelwood consumption in forested areas is only indirectly linked to deforestation. Thus, simply by reducing fuelwood consumption does not ensure that forest carbon sinks are retained, particularly if other land-use pressures (clearing land for agriculture) are involved.

6.2.1. Improved Woodstove Project

6.2.1.i. Introduction

The goal of the fuelwood survey was to identify the amount of fuelwood consumed by households in the Tali-Bara communities in order to estimate GHG emissions for the purposes of the CDM. This had two objectives: (i) to obtain data that could be used to establish a baseline emission scenario and (ii) to install a prototype improved woodstove in order to estimate emission reduction potential and (ii) estimate CDM potential in terms of GHG credits. A secondary goal was to determine social customs of fuelwood harvesting and use, which is summarized in (Purdon 2005). For the complete methodology used for this report, please see Appendix C.

Figure 5: Location of the proposed Tali-Bara community forest (circled in red) in Southwest Province, Cameroon. The proposed area stands at approximately 3,500 ha between the Banyang-Mbo Wildlife Sanctuary (to the South) and FMU 11-002 Wijma (to the North).

6.2.1.ii. Results

6.2.1.ii.a. Factors Affecting Fuelwood Consumption

As reported in Purdon (2005), 36% of households interviewed cooked occasionally for market sale as well as for their families. This could significantly increase fuelwood consumption because, as one woman indicated, cooking for market might comprise two-thirds of total fuelwood used. However, almost all women cooked for market only infrequently. Because of this infrequency, only seven times


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were households sampled on a day they were cooking for sale (Table 28 in Appendix C). The smoking (drying) of items such as bush mango and fish also consumes fuelwood. This activity’s fuelwood consumption was also difficult to measure because of its infrequency. However, nearly all women did report they smoked some food items each week. For items such as fish and meat, smoking might occur each week though not on a regular basis. Non-timber forest products such as njansang and bush pepper might be smoked occasionally in season. Both of these types of smoking consumed a quantity of fuelwood equal to or less than that used for cooking. For this reason, they were not distinguished from normal cooking in the fuelwood survey dataset. However, bush mango reportedly consumes a greater amount of fuelwood than that used for cooking alone. Unfortunately, the bush mango season was very poor this season (2005) and no bush mango smoking was recorded in the data presented here.

6.2.1.ii.b. Estimates of Current Fuelwood Consumption and CDM potential

♦ Average daily fuelwood consumption and the importance of cooking for market Results from the Kruskal-Wallis test (not shown) demonstrate that women whose cooking included

that for market sale consumed more fuelwood (14.79 kg) than those cooking only for domestic consumption (8.81 kg)—see Figure 6a and Table 25. This represents a 68% increase in fuelwood consumption compared to domestic cooking alone, consistent with interviews. The variation introduced by the fact that some women cook occasional for market complicates the estimation of GHG budgets. What these data do allow to be determined with confidence is the average domestic-only level of fuelwood consumption (not cooking for market sale).

However, to account for variation at this level, it is further recommended to use the lower bound of the 95% confidence interval: 7.99 kg which corresponds to 0.015 tonnes CO2eq (Table 25). This should form the basis of any baseline scenario under the CDM because it is a conservative value that will prevent over-committing potential GHG emission reductions and increasing the risk of GHG liabilities. Evidence that 7.99 kg is an apporporiate estimate can be seen from Figure 6b, which shows week-long fluctuations in fuelwood consumption amongst six households. Thus a conservative estimate of annual GHG emissions from domestic cooking is 5.46 tonnes CO2eq.

Finally, results from regression analysis with household size demonstrates a discernible increase in fuelwood consumption with household size for those cooking for domestic-consumption-only, while those who also cooked for market sale show no real discernible pattern (Figure 7). This again indicates the large variation and infrequency of cooking for market, justifying a focus on domestic-only fuelwood consumption.

♦ Extrapolating Average Annual GHG emissions to the Village Level

There are two methods of extrapolating the conservative estimate of 5.46 tonnes CO2eq for annual GHG emissions from domestic cooking to the village level, which consists of 124 households:

(i) applying the estimate to the total number of households in the Tali-Bara community or (ii) applying the estimate to the equation derived from the regression of GHG emissions with

household size to each of the 124 households, accounting for the size of each. According to the first method, the conservative estimate of average annual GHG emissions of 5.46 tonnes CO2eq/yr leads to 677.0 tonnes CO2eq/yr for the entire Tali-Bara community of 124 households. According to the second method, we obtain a significantly smaller amount: 579.7 tonnes CO2eq/yr. Household size thus does appear to be an important factor in predicting GHG emissions. Again, a conservative approach is adopted here and the estimation of 579.7 tonnes CO2eq/yr retained.


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Table 25 : Average daily fuelwood consumption and GHG emissions (in kilograms), its conversion into GWP Emissions by individual GHG and Total GWP Emission (in tonnes CO2eq), and approximate market value of Total GWP Emissions (in $USD). Note this value is based on a market price estimate of $5 USD per tonne CO2eq.

FW

Consumed GHG

Emission

Global Warming Potential (GWP)

Emissions

Total GWP

Emissions Value CO2eq

CH4 N20 CO2 CH4 N20 CO2

Kg Kg Tonne CO2eq

Tonne CO2eq $ USD

All Households

Mean 9.37 0.056 0.000 17.188 0.001 0.000 0.017 0.018 0.092Sample standard deviation 4.37 0.026 0.000 8.009 0.001 0.000 0.008 0.009 0.043

Standard-error 0.51 0.003 0.000 0.931 0.000 0.000 0.001 0.001 0.005

Lower bound Mean CI 8.36 0.050 0.000 15.333 0.001 0.000 0.015 0.016 0.082

Upper bound Mean CI 10.38 0.062 0.000 19.043 0.001 0.000 0.019 0.020 0.102Cooking for Market Sale

Mean 14.79 0.089 0.001 27.145 0.002 0.000 0.027 0.029 $0.15Sample standard deviation 7.93 0.047 0.000 14.556 0.001 0.000 0.015 0.016 $0.08

Standard-error 3.24 0.019 0.000 5.943 0.000 0.000 0.006 0.006 $0.03

Lower bound Mean CI 6.87 0.041 0.000 12.600 0.001 0.000 0.013 0.014 $0.07

Upper bound Mean CI 22.72 0.136 0.001 41.690 0.003 0.000 0.042 0.045 $0.22NOT Cooking for Market Sale

Mean 8.81 0.053 0.000 16.163 0.001 0.000 0.016 0.017 $0.09Sample standard deviation 3.35 0.020 0.000 6.138 0.000 0.000 0.006 0.007 $0.03

Standard-error 0.41 0.002 0.000 0.750 0.000 0.000 0.001 0.001 $0.00

Lower bound Mean CI 7.99 0.048 0.000 14.666 0.001 0.000 0.015 0.016 $0.08

Upper bound Mean CI 9.62 0.058 0.000 17.660 0.001 0.000 0.018 0.019 $0.10

♦ Estimating CDM Project Scenario The woodstove introduced to the community has thus far only produced a limited amount of data on fuelwood consumption (3 days). These data may be compared to those for fuelwood consumption at this household when the traditional stove was used. It is noted that the exact household size was similar in both cases (8-10 people partook in meals when the traditional stove was sampled while 11 people did when the improved stove was used). Despite the limited size of the data set, results demonstrate a significant difference in fuelwood consumption and CO2eq emissions between the two stoves.31 The improved woodstove emitted on average 0.0115 tonnes CO2eq compared to 0.0187 tonnes CO2eq for the traditional stove, representing a reduction of 38.5%. These results are even more robust given that the actual number of people who partook in the meals cooked was greater than during the days when the improved woodstove’s consumption was measured.

If all 124 households would adopt the improved woodstove technology, it is possible that the total emissions from the Tali-Bara community estimated earlier at 579.7 tonnes COeq/yr could be reduced by 38.5% to 356.5 tonnes CO2eq/yr (Figure 8). Thus a gross estimate of GHG credits that could be generated through the improved woodstove CDM project is 223.2 tonnes CO2eq/yr. Assuming a five year crediting period, this could generate 1116 tonnes CO2eq. Assuming that one tonne will have a market value of approximately $5, the Tali-Bara woodstove CDM project

31 Komologorov-Smirnov Test (see Table 29 in Appendix C)


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Figure 6 : (A) Fuelwood consumption (Kg) and Total CO2eq emissions (tonnes) for households whose cooking included cooking for market and those households which only cooked for domestic consumption and (B) Weekly fuelwood consumption patterns for six households of the Tali 1 community. Note the following instances when the households below were found to cook for market sale: Victorin Tanyitiku (Saturday); Lucy Taboko (Saturday and Sunday); Alice Batuo (Tuesday, Friday, Saturday).

(A) Comparison of cooking and not cooking for market (B) Weekly fuelwood consumption patters

Cooking for Market

Fu

elw

oo

d (

kg

)

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CO2eq (tonnes)

NOT Cooking for Market

Sunda

y

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Tuesd

ayW

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Alice Batuo

Alice Eneke Ekpew Elizabeth Tabe

Lucy Taboko

Rose Ayissi

Victorin Tanyitku

Figure 7 : Linear and 2nd order polynomial regression of GHG emissions (in tonnes Total CO2eq) fuelwood consumption and household size for households that (A) Cooked for only Consumption and (B) Cooking for Domestic Consumption and Market Sale

(A) Cooking only for Domestic Consumption (B) Cooking for both Domestic Consumption and Market Sale

GHG emissions (in tonnes CO2eq) for Households which Did Not Cook for

Sale: Regression Models with Total People Who Partook of Food

Linear Regression

y = 0.0005x + 0.0126

R2 = 0.3033

Non-linear Polynomial Regression

y = -1E-05x2 + 0.0012x + 0.0075

R2 = 0.3432

0

0.005

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(to

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GHG emissions (in tonnes CO2eq) for Households which Did Cook for Sale:

Regression Models with Total People Who Partook of Food

Non-Linear Polynomial Regression

y = -0.0074x2 + 0.1552x - 0.7727

R2 = 0.2395

Linear Regression

y = -0.0039x + 0.0706

R2 = 0.0821

0

0.01

0.02

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8 9 10 11 12 13

Total People

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2eq

(to

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has the potential of generating $5,580 USD over a five year crediting period. What’s the market strength of this project? To assess this, the total annual number of credits from the project was compared to the maximum allowed for small-scale afforestation/reforestation project (8,000 CO2eq/yr), which is assumed to be a competitive project size. This limit is used because fuelwood projects are considered as afforestation/reforestation projects by the CDM Executive Board. Results from the comparison demonstrate that approximately 35 improved fuelwood projects of the same size might be bundled together to reach an economy of scale that is competitive on the market.

Figure 8: estimated annual CO2eq emissions from the Tali-Bara Community

CO2eq Emissions from the Tali-Bara Community: Business-As-

Usual vs CDM Project Scenario

0

100

200

300

400

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Business-As-Usual CDM Project

To

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es C

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/yr

6.2.2. Reforestation Project

6.2.2.i. Introduction

As discussed in Section3.2.2.ii, two crediting schemes are possible under the CDM: temporary- and long-term GHG credits (t-CERs and l-CERs). The latter are valid for 5 year periods, subject to renewal, while the l-CERs are for a 60 year period. The strategy used for the Tali-Bara project was to assess the potential of implementing a reforestation project based on t-CERs. In a comparative study of community forests elsewhere in West Africa, it was learned that communities favour the temporary crediting scheme because it reserves more flexibility in terms of future land-use and reduces liabilities involved with the long-term crediting scheme (Purdon 2004).

6.2.2.ii. Project Methodology

6.2.2.ii.a. Determination of land eligibility

The first strategy for reforestation project at Tali-Bara was to determine land available for reforestation. As such, aerial photos at MINFOF and satellite images at Global Forest Watch (GFW) were consulted. However, a major handi-cap to the reforestation project was the identification of eligible lands. Recall that lands eligible for reforestation under the CDM need to have been deforested continuously since prior to 1990. Aerial photos from 1991 were found at MINFOF, but only enough to cover approximately one-third (804 ha) of the proposed community forest territory (3500 ha). Of this reduced area, photo interpretation carried out by MINFO indicated with confidence 32 ha available for reforestation. There is an additional 124 ha of long-term fallows, which may qualify as deforested areas once a definition of “forest” under the CDM is agreed upon. It proved difficult to assess the current status because aerial photos of the area have not been retaken. For this reason, satellite images from Global Forest Watch (GFW) were consulted. However, satellite images from 2003 available at GFW were not of a high-enough resolution to carry out photo


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interpretation of present conditions to assess which areas are still eligible for reforestation. This might be circumvented by ground-truthing the 1990 aerial photos with a GPS or different, higher-resolution satellite images.

6.2.2.ii.b. Estimating carbon sequestration capacity of agroforest species

The second step was to estimate carbon sequestration that might result from the inplanting of agro-forest species. Data on the early growth stages (years 2-4) and thus carbon sequestration potential of two agro-forest species was obtained from the ICRAF, the World Agroforestry Centre (Table 26).32 These results indicate that by their fourth year, new plantings of Njansang (Rhicininodendron heudelotii), Plum (Dacroides edulis) and their combination will sequester 3.60, 0.13 and 3.73 tonnes CO2eq/ha at a planting density of 10m x 10m (100 per ha). Assuming a GHG value of $5 USD per tonne, this translates into $18, $0.65, and $18.65 USD per hectare. These values are considerably higher when planting at a density of 400 trees per ha, but might not be as compatible with traditional farming practices. Finally, it should be noted that this value will increase into the future as the trees grow.

6.2.2.iii. Results

Reforestation potential at Tali-Bara is limited to the 32 ha of farmland identified from the 1991 aerial photo. A conservative estimate of amounts of CO2 credits that might be generated over a initial four-year period is estimated from the implanting of Njansang and Plum trees, as described above. Because of the difficulty in identifying eligible lands for reforestation (limited to 32 ha), the amounts of CO2eq that might be sequestered are quite small (Table 26): ranging from 119 to 474 tonnes by the fourth year, depending on planting density. With an estimated value of CO2eq on the market of $5 USD per tonne, this translates into $597 to $2,371 USD.

Again, the question of how competitive these results are is posed. Depending on planting density, 67 (density: 100 trees/ha) or 17 (density: 400 trees/ha) of such projects might be realized and still be under the threshold of 8 Kt CO2eq per year. Clearly the prospect of bundling such a large number of projects is challenging and it remains to be seen if the bundling of such a large of number of small-projects would be logistically feasible. In this case it might be important to seek clarification on the definition of “forest” under the CDM and determine if the 124 ha of long-term fallows might also be eligible for reforestation. However, the agroforest species generate non-GHG-credit value in terms of fruit and shade which might make them still an attractive option for farmers.

Another consideration for the results presented here is their alignment with the community forest project. It is important to understand that farmlands and forest lands are subject to different types of communal land management. While community forest lands would become the responsibility of the community forest management committee once the community forest is officially implemented, farmlands still remain the property of individual farmers. It will be important for the communities of Tali-Bara to clarify ownership rights in regards to the inplanting of agroforest species on farms, farms that will still be used for producing traditional foods but also benefit from the environmental services and added-value from the agroforest inplantings.

32 Asaah, E. (2005) Presentation for this seminar: Reforestation Potential of Agroforestry Species for Livelihood and Environmental Services. Email: [email protected]


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Table 26 : early growth (years 2-4) CO2 sequestration potential of two agroforest species, its application to potential land eligible for reforestation at the Tali-Bara community forest (32 ha) and estimated market value (estimating CO2eq value of $5 per tonne)


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6.3. Feasible rural CDM project ideas issuing from the seminar At the seminar held on August 9, 2005 a number of recommendations for feasible project ideas were made based on the preliminary results of this report. These are found in Table 27 below, while final recommendations for this report are found below.

Table 27 : Recommendations for feasible CDM projects issuing from the August 9 seminar

Energy • Improve stove for energy efficiency in the rural sector of Cameroon

a. Fuelwood b. Charcoal

• Demonstration and valorization of improved fish smoking ovens • Biogas electrical energy from organic household and animal waste (can allow for use of

electrical stoves) Reforestation • Integrating high value tree species (nutrition medicine and environmental services) in the

existing farm systems, forest mosaic, protected area landscapes and community forests [focus on farms and young fallows]

• Small-scale fuelwood plantation with fast growing species in degraded lands • Afforestation of degraded land with high value species for social, economic and environmental

services • Afforestation of degraded landscapes with high value species for the sustainable

implementation of CDM Improved agricultural practices • Improved agricultural practices • Soil conservation agriculture with soil fertilizing species • Promotion of mixed farming systems that mitigate slash and burn agriculture • Promotion of fodder banks establishment to mitigate bush fires for pasture regeneration [in

sudeo-sahalien zones]

6.4 Policy Recommendations for CDM Fuelwood and Reforestation Projects Recommendations • Coordinate research to develop fuelwood and reforestation methodologies: the

government of Cameroon and international research centres could assist with resolving uncertainties regarding fuelwood and reforestation methodologies by focusing research in this domain.

• Adopt a definition of “forests” under the CDM that maximizes reforestation potential: a definition of forests with a minimum crown density of 30% and height of 5m (ie, as large as possible given the range permitted under the definition of forest by the UNFCCC) will make it more feasible to include degraded forest lands as eligible for reforestation (thus as not being forest).

• Facilitate procedures for obtaining aerial and satellite images: the process of obtaining and interpreting aerial photos and satellite images might prove complicated. It would be important that MINFOF establish clear procedures while GFW might seek to procure higher-resolution satellite images.


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7. S7. S7. S7. STATE OF THE TATE OF THE TATE OF THE TATE OF THE GHG MGHG MGHG MGHG MARKETARKETARKETARKET The latest version of the World Bank’s State of the Carbon Market (Lecocq and Capoor 2005) attests to the importance of the coming into force of the Kyoto Protocol, with the market picking up. It cannot be stressed enough that the CDM is a part of new market based on GHG credits. As any market, it will have its own cast characters—buyers and sellers, brokers, speculators, angel investors. But the CDM is not business-as-usual. It has the twin goal of both reducing GHGs in the atmosphere and promoting sustainable development. In this section, attention is paid to the state of the GHG market in particular to identifying obstacles and potential for realizing small-scale projects. At the outset it should be emphasized again that unilateral projects are possible through the CDM. As described in Section 3.2, CDM projects can be initiated without the participation of an industrialized country partner, with the host country project proponents assuming most of the risk (Aalders and Haites 2005). This development might kick-start CDM entrepreneurial activity countries such as Cameroon which have been passed over in the CDM bilateral market.

7.1. Main Players in the GHG Market Currently, European entities are responsible for most purchases—though an important share of these transactions are handled by the World Bank. Canada’s role as a market buyer is marginal (less than 5% of total volumes purchased recently), despite the fact that Canada is currently 26% above its emission reduction target under the Kyoto Protocol. This suggests that Canada will be seeking to purchase a large number of GHG credits to meet its Kyoto commitments.

However, the biggest player on the market is the World Bank. From January 2004 to May 2005, the World Bank was responsible for 22% of purchases on the GHG market (Lecocq and Capoor 2005: 22). This heavy presence has not gone without comment, with some critics arguing that the World Bank is able to use its position to keep the value of GHG credits purchased through the CDM low (see Wysham 2005). In response, the World Bank has maintained that it has taken a number of risks in pioneering the GHG market. It is also noted that private entities engaging in the GHG market are not required to disclose the price they purchased credits at, unlike public institutions like the World Bank.

It would be important for Cameroon to become more familiar with the buyers described above and other potential buyers. In order to facilitate this, a list of funds seeking to invest in CDM projects from the May 2005 issue of the Carbon Market Update for CDM Host Countries (p.4-5), published by the UNEP Riso Centre and IETA is reprinted in Appendix D.

7.2. Prices for GHG credits through the CDM In terms of price, prices for GHG credits are currently rising, which might be interpreted as an

indication that demand is greater than current supply (Lecocq and Capoor 2005). The official GHG emission credit generated under the CDM (Certified Emission Reductions (CERs)) have been trading between $3 to $7 USD per tonne CO2eq. This is significantly less than prices for GHG credits generated through Emissions Trading (particularly on the EU Emissions Trading System) which in May 2005 were selling at €15 EURO per tonne CO2eq. The main reason for this price differential are the risks inherent in project-based transactions such as the CDM, which are usually based on forward contracts for yet undelivered credits. The DNA could increase the value of CDM projects by reducing some of these risks. Similarly, Cameroonian entrepreneurs might develop projects unilaterally, thus accepting risk themselves but perhaps being able to sell any GHG credits generated for a higher price.


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7.3. Recommendations for the role of the DNA in the GHG market Recommendations

• Bring down risk of CDM transactions: as noted Aalders and Haites (2005), the DNA might reduce risks inherent in CDM transactions by providing clear guidance on the evaluation and approval of CDM projects as well as for the transfer of GHG credits generated through the CDM to buyers/investors

• Foster the Cameroon CDM entrepreneurial sector: unilateral projects under the CDM are now officially allowed which may allow some entrepreneurial Cameroonians to enter the GHG market directly in the hopes of selling fetching a higher price for any GHG credits generated, though assuming the risks if they do not


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8. C8. C8. C8. CONCLUSIONONCLUSIONONCLUSIONONCLUSION The aim of this report has been to build capacity in Cameroon in regards to the CDM, with a

particular focus on the links between the CDM and development priorities in Cameroon. Noting that poverty in Cameroon is particularly concentrated in the rural sector, the main question posed in this report has been: what is the potential for rural development in Cameroon through the CDM? The results of this report indicate that there is potential for promoting “redistributed growth” in the rural sector through the CDM. However, while CDM projects feasible in the rural sector such as afforestation/reforestation and agriculture have the potential to generate more GHG credits than other sectors, they entail greater risks than projects in the energy and industrial sectors. However, the impacts on poverty reduction in the rural sector of these latter projects is low and there is the possibility that such CDM activities will become “glocalized” in urban regions—that is concentrated in sectors that might contribute to climate change mitigation but less in terms of sustainable development in Cameroon.

This report has indicated there are a number of strategies for reducing the risks associated with projects in the rural sector in a manner that promotes sustainable development. Most importantly, it is necessary to have resolved a number of technical issues at the level of the UNFCCC and CDM Executive Board which will permit for clear direction in terms of project feasibility in the rural sector. Cameroon should become more involved in negotiations at this level in order to influence decisions in favour of rural activities—particularly issues regarding the role of forests in the CDM as well as fuelwood projects. Indeed, the possibility to reorientate the CDM on the rural sector is possible through small-scale afforestation/reforestation projects, yet more attention is needed to developing viable methodologies. GyreSustainable is committed to helping Cameroon resolves these issues by taking the Tali-Bara reforestation and fuelwood project described in this report to the next stage of implementation.

MINEP has an important role to play in reducing risks associated with CDM projects in the rural sector. First, it should recognize the informational nature of the CDM and promote the use of information technologies such as the Internet to facilitate the development of small-scale CDM projects in the rural sector, thus linking climate change policy with development policy. Second, by establishing an efficient and transparent DNA, MINEP will be able to ensure an attractive investment climate for CDM projects. Third, MINEP should take the lead in the establishment of a commission on sustainable development that will refine criteria for sustainable development described in this report. Indeed, through the adoption of criteria presented in this report—particularly through the use of a scalar evaluation matrix—it will be possible to reduce uncertainties amongst project developers about what types of projects in Cameroon are able to contribute to sustainable development. Finally, MINEP should promote awareness about the potential contributions the CDM can make to sustainable development in Cameroon—particularly the possibilities for entrepreneurial activity through unilateral CDM projects.

It can be concluded that the CDM has potential for promoting sustainable development in the rural sector, but it is complicated by political and technical issues. What should be stressed however is that the political and the technical in the CDM are entwined—one influencing the other. It is important therefore that Cameroon and other African countries be more involved in the political negotiations involved in the CDM. As a final note, an important step forward in this regard would be made by a Cameroon delegation attending the next COP, which will be held in December 2005 in Montreal, Canada.


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9. 9. 9. 9. RRRREFERENCESEFERENCESEFERENCESEFERENCES Aalders, E., and E. Haites. 2005. Non-Annex 1 industry participation in the CDM without Annex 1

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Schneider, A. Rosencranz, and J. O. Niles, editors. Climate Change Policy: a survey. Island Press, Washington, D.C.

Baert, P., J. Harte, and B. Haya. 2000. Equity and greenhouse gas responsibility. Science 289:2287. Baker & McKenzie Law. 2004. Legal Issues Guidebook to the Clean Development Mechanism. UNEP

Riso Centre, Roskilde, Denmark. Bernoux, M., V. Eschenbrenner, C. C. Cerri, J. M. Melillo, and C. Feller. 2002. LULUCF-based CDM: too

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11110. A0. A0. A0. APPENDICESPPENDICESPPENDICESPPENDICES

Appendix A: Kenyan Government Guidelines on the CDM (source: Pembina Institute 2003) In order to ensure that CDM projects are environmentally effective and lead to sustainable development as well, they must be based on principles of equitable allocations and be directed to projects focused on non-greenhouse gas emitting technologies, especially renewable energy technologies. Consequently, for developing countries like Kenya to derive maximum benefits from CDM projects, a number of issues must be taken into account, including, but not limited to, the following: Project Criteria All CDM projects must satisfy the following requirements: • demonstrate a firm and tangible contribution to sustainable development; • be supportive of and consistent with national development priorities and be linked to poverty

reduction; • implement technologies that are locally appropriate, environmentally friendly, and energy efficient;

have necessary precautions in place to avoid dumping of substandard technologies; • contribute to the enhancement of national institutional and human capacity building; • accord highest priority to activities that generate maximum economic, social, and environmental

benefits; • address community needs and priorities through effective public participation in project design,

planning, and implementation to ensure equitable distribution of sustainable development benefits;

• contribute to global efforts to achieve stabilisation of greenhouse gas concentrations in the atmosphere in accordance with Article 2 of the Convention;

• ensure that CDM financial inflows are over and above the existing Official Development Assistance (ODA);

• be consistent with the objectives of Agenda 21 and relevant environmental conventions, such as the Convention on Biological Diversity, the Ramsar Convention on Wetlands, and the Convention to Combat Desertification, as well as with local and national environmental management laws.

Share of Proceeds The sharing of proceeds from CDM activities is a crucial issue of interest to Kenya, like any other Party to the UNFCCC. However, the share of proceeds shall be based on a formula to be agreed on by the international community under the auspices of the Conference of the Parties/Meeting of the Parties (COP/MOP). The proceeds to be shared will include the emissions reduction or offset credits. CDM projects must include a nominal levy (adaptation levy) of the savings accruing to the investing country Party, the percentage of which will be determined by COP/MOP. Kenya will support such an agreement on the share of proceeds provided that a significant portion of the shares remain behind.

Methodological Issues The methodological issues that deal with operation of CDM projects at the national level should take the following into consideration:

Baselines Baselines need to be developed on a project-by-project basis during the initial phases of CDM. Sectoral baseline arrangements should be avoided as they could result in “free-riding” projects that claim emissions reductions that either would have happened anyway or that in reality do not accrue. Moreover, any project proposed under CDM must result in lower emissions than the current business-as-usual scenario. The prevailing business-as-usual scenario will serve as the basis for determining the level of CERs accruing from project implementation.


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Project Validation Every CDM project must be thoroughly assessed to determine whether the proposed action conforms to the criteria identified above before it is validated by the CDM National Clearing House (NCH). Verification and Certification Verification and certification will take place at two levels. At the national level, the National Climate Change Focal Point (NCCFP) will appoint a panel of local experts to verify the CERs accruing from all CDM projects while, at the international level, a body designated by the COP/MOP will perform certification and verification of all CDM projects.

Project Monitoring and Evaluation (M&E) Once a CDM project implementation gets underway, a mechanism for regular M&E will be developed. The purpose of M&E is to ensure that the project implementation conforms to the set criteria throughout the project lifecycle.

Project Financing The financing arrangement will be agreed upon by a host entity and the Annex I Party investor. Once an agreement has been reached, the project proposal will be submitted to the respective governments for approval and any other necessary action.

Land Use, Land Use Change, and Forestry (LULUCF) There are still far too many scientific uncertainties associated with carbon sequestration by forests and land use changes. These uncertainties are compounded by the lack of capacity to quantify these changes in Kenya. CDM forestry projects are long term by nature and it would be difficult to deny Kenyans the use of forest products and services reserved for CDM when the Kenyans need them. Moreover, there is minimal or no technology transfer in the afforestation programs as stated in the CDM. While the demand for forestry products is growing nationally and internationally against the background of a dwindling forestry resource base, there is no doubt about the need for forestry projects in Kenya. Forestry projects should continue within other frameworks, such as the UN Convention on Biodiversity and the UN Convention to Combat Desertification, as well as through other bilateral or multilateral arrangements. Decisions on LULUCF projects under CDM should be suspended until scientific uncertainties and other outstanding issues are resolved at the COP/MOP level.


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Appendix B: Treatment of biomass in CDM project activities33

32. The Meth Panel and the afforestation and reforestation working group (AR WG) had a joint discussion on definitions of biomass. The panel notes that due to time constraints, the discussions on issues relating to biomass were not concluded. In particular the Meth Panel will, at its seventeenth meeting, in collaboration with the AR WG and Small-Scale Working Group (SSC WG), further consider:

(a) A definition of biomass that is used in a sustainable manner by a CDM project activity; (b) The treatment of references to “renewable” and “non renewable biomass” in the simplified

methodologies for small-scale CDM project activities. (i) Definition of biomass: 33. The Meth Panel recommends using the following definition of biomass when referring to biomass in relevant baseline and monitoring methodologies: Biomass means non-fossilized and biodegradable organic material originating from plants, animals and micro-organisms. This shall also include products, by-products, residues and waste from agriculture, forestry and related industries as well as the nonfossilized and biodegradable organic fractions of industrial and municipal wastes. Biomass also includes gases and liquids recovered from the decomposition of non-fossilized and biodegradable organic material. Of which, biomass residues are biomass by-products, residues and waste streams from agriculture, forestry and related industries. (ii) Consideration of changes in carbon pools in other project activities than afforestation and reforestation project activities 34. The Meth Panel and the AR WG had an initial discussion on the consideration of changes in carbon pools due to CDM project activities. The Meth Panel continued to consider this issue and suggests the following general approach towards potential changes in carbon pools34:

(a) Where a project activity, which does not seek to obtain tCERs or lCERs from afforestation or reforestation project activities, may directly or indirectly results in a net decrease of carbon pools compared to what would occur in the absence of the project activity, such changes should be taken into account in the calculation of emission reductions subtracting the corresponding quantities from emission reductions

(b) Where a project activity, which does not seek to obtain tCERs or lCERs from afforestation or reforestation project activities, may directly or indirectly results in a net increase of carbon pools compared to what would occur in the absence of the project activity, this increase should not be taken into account in the calculation of emission reductions.

(c) Where a project activity does seek to obtain tCERs or lCERs from afforestation or reforestation project activities, this activity should be treated as a separate project activity and shall fulfill the modalities and procedures for afforestation and reforestation activities under the CDM.

(d) When proposed new methodologies may have implications for carbon pools it is recommended that the AR WG would also be consulted with regards the validity of the methodology.

35. The Meth Panel seeks guidance from the Board whether it should follow this approach.

33 Section K of the report of the 16th Meeting of the CDM Methodologies Panel. UNFCCC Headquarters, Bonn, Germany, 14-17 June 2005. Website: http://cdm.unfccc.int/Panles/meth/Meth16_rep_ext.pdf (accessed August 1, 2005)

34 When referring to carbon pools the Meth Panel refers to carbon pools as refined in the modalities and procedures for A&R activities under the CDM (paragraph 1)


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Appendix C: Fuelwood Project Methodology

Estimation of Baseline Emission Scenario

The methodology used in the Tali-Bara proposed community forest was to visit individual households in order to obtain data on fuelwood consumption. Fuelwood surveys were conducted as semi-structured interviews with the woman of the house, upon the completion of which each woman was asked how much fuelwood she anticipated using the following day. This was weighed using a coco scale and its species identified when possible. The following day, the remaining fuelwood was weighed again. The amount of fuelwood consumed was therefore the difference between initial and the following day’s amounts.

Three sampling efforts were made in 2005: the first March 12-15, the second from April 12-15 and the third July 4-10. During the first sampling effort, only eleven households were visited. Realizing that these data were insufficient for analysis, during the second trip a concerted effort was made to interview an additional thirty women. However, these first two sampling efforts were simple one-day estimates. The third sampling effort revisited six households over a one-week period in order to assess weekly fluctuations in fuelwood consumption. A total of 39 households were thus visited resulting in seventy-five daily estimates of fuelwood consumption (Table 28). During all sampling efforts, information on household size (the number of people who partook in food cooked that day) type of food prepared and whether food that was cooked (in part) for market sale or not was recorded. Note that all sampling efforts were carried-out with a paid assistant from the community, Mr Nelson Mbu.

Table 28: Sampling effort and success at obtaining key data for fuelwood data analysis

Sampling Effort

Dates Type of Sampling

No. of Households

Daily Fuelwood Consumption

Household size

Cook for Sale?

No Yes 1

st Sampling

Effort March 2005

1 Day 8 8 3 8 0

2nd

Sampling Effort

April 2005

1 Day 25 25 24 24 1

3rd Sampling Effort

July 2005

7 Consecutive Days (one week)

6 42 42 36 6

TOTAL 39 75 69 68 7

Estimation of CDM Project Scenario

In order to estimate emission reductions, a prototype woodstove was constructed. Designed by Dr. George Eyabi35 with IRAD - Batoke, the woodstove was constructed in Limbe (South West Province) using locally available labour and materials. Note that in order to transport the stove from a Limbe to Tali, lightweight metal plating was used for its construction. However, materials such as clay or mud bricks (materials readily available in the Tali-Bara communities) might be used as substitute materials, though the chimney will still require metal plating. The stove was delivered to the community of Tali 1 on 2 July 2005, followed by a brief demonstration. One woman agreed to try the stove for daily cooking over a period of one week in order to assess its rate of fuelwood consumption rates. This was also an opportunity to identify aspects of the stove that could be improved upon to suit local needs and preferences.

Statistical Treatment of Data

Fuelwood Survey Statistical Analyses

Data from the 39 households sampled were analyzed to determine average daily fuelwood consumption and, with results from the week-long study, to determine fluctuations in fuelwood consumption. A number of statistical analyses were applied to these data (Table 29); in particular, the generation of a fuelwood consumption regression model was used to predict fuelwood

35 Dr George Eyabi, Email: [email protected]


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consumption from household size. If sufficiently robust, the regression model permits for estimation of fuelwood consumption for the rest of the entire Tali-Bara community from the rather simple measurement of household size rather than measuring fuelwood consumption directly. All statistical analyses were carried out with MS Excel using a statistical add-in called XLStat version 7.5.2.

Table 29 : Statistical analyses conducted on fuelwood survey data

Question/Information Sought Statistical Analysis • Average fuelwood consumption per household and

its variation • Descriptive statistics, including mean,

standard deviation, standard error and 95% confidence intervals

• To determine if cooking food for market sale significantly increased fuelwood consumption

• Kruskal-Wallis test: a non-parametric test analogous to ANOVA. A non-parametric approach was necessary as the fuelwood consumption data were not normally distributed.

• To determine how average fuelwood consumption changed with the number of people who partook in meals prepared in the household

• Linear and non-linear (second-order polynomial regression)

• To determine if fuelwood consumption was significantly less when using the improved woodstove as opposed to the traditional stove

• Komologorov-Smirnov test: non-parametric test analogous to a simple t-test

Conversion of Fuelwood Biomass into estimations of GHG emissions

Fuelwood biomass might be converted to GHG emissions using procedures outlined in the Reference Manual (Volume 3) of the Revised 1996 Guidelines for National Greenhouse Gas Inventories (IPCC 1996). The Reference Manual provides a compendium of information on methods for the estimation of emissions for a broad range of GHG and a complete list of source types for each. For the purposes of the fuelwood survey, woody biomass was converted into three GHGs: CH4 (methane), N2O (nitrous oxide) and CO2 (carbon dioxide). The method of their derivation is based on the understanding that estimates of trace gas emissions can be based on emission ratios to the total carbon released during burning as presented in Chapter 5 of the Revised Manual. The exact methodology to do so is presented in (Table 30), which is described for each measure of fuelwood consumption. It should be noted that the Revised Manual treats all species of wood the same—despite their being preferences between women’s preferences for certain species indicating different thermal capacities (Purdon 2005).


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Table 30 : Procedure for Converting from Woody Biomass to GHG credits

1) Measure of Biomass (in Kilograms) An estimation of fuelwood consumption from the field work (in Kg) 2) Conversion of Biomass to Carbon Content By multiplying biomass by 0.5 one arrives to an estimate of carbon content, the total of which is assumed to be released during burning. That is, woody biomass is estimated to consist nearly half of carbon. This is a largely agreed upon factor from the literature (IPCC 1996: Chapter 5, p. 30, Husch et al. 2003). It is recognized that this likely misses variation in carbon content between different tree species, but still gives a reliable estimate. 3) Special Conversions for N 2O: estimation of nitrogen content To calculate emissions of N2O, the total carbon released is multiplied by the estimated N/C ratio of the fuel by weight (0.01 is a general default value (IPCC 1996: Chapter 5, p. 33)) 4) Convert Carbon/Nitrogen Content to GHG by Emission Ratios Estimates of emission ratios for CH4 and N2O are taken from the IPCC Revised Manual (Volume 3) (1996: Chapter 5, p. 33). For the purposes of calculations used for the CDM, it is recommended that a conservative value is used. Note that CO2 is estimated to have an emission of 1.0 for calculations. It is recognized that these emission ratios likely misses variation between different tree species, but still give a reliable estimate. Range Value Used for Calculations (Conservative) CH4 0.009 – 0.015 0.009 N2O 0.005 – 0.009 0.005 CO2 1

5) Convert Emission Ratios to Full Molecular Weights The results from the emission ratio conversion need to be transformed by the molecular weight of the GHG. Molecular weights have also been obtained from the IPCC Revised Manual (Volume 3) (1996: Chapter 5, p. 33). Molecular Weight Fraction Decimal Form CH4 16/12 1.333 N2O 44/28 1.571 CO2 44/12 3.667

6) Convert Kilograms of GHGs to Tonnes GHG This is simply done by dividing results from the previous step by 1000 7) Convert non-CO 2 gases into CO 2eq using Global Warming Potentials (GWPs) Recall that GHG gases have different Global Warming Potentials. For instance, one tonne of CH4 has the effect of twenty-one tonnes of CO2 and so its GWP is expressed as twenty-one tonnes CO2-equivalents (CO2eq). Thus in order to calculate the total of amount of CO2eq, which are the basis of GHG credits, CH4 and N20 need to be converted using the GWP presented below. GWP are taken from Lee (2004: 20). GWP CH4 21 N2O 310 CO2 1

8) Sum all CO 2eq The total sum of all CO2eq (in tonnes) is the basis for GHGs credits.


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Appendix D: CDM investment companies36

36 Note that this list is taken from pages 4-5 of the May 2005 issue 1 of the Carbon Market Update for CDM Host Countries, UNEP Riso Centrand the IETA which is available on the web at http://www.cd4cdm.org


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