World Bank Paying Ethiopia $68M For Carbon Trading, Green Business Development

By Mongabay Published: March 9, 2017, 1:34 pm
carbon tradingRunners on Ethiopia's Annual Wenchi Lake Trail Run. Ethiopian carbon credits sales will support local communities to develop business including eco tourism. Photo: ethiopia.travel

Two World Bank projects totaling $68 million are scheduled to begin this year in Ethiopia, aimed at restoring forests and sequestering carbon in the much fought-over Oromio region.

The Washington, D.C.-based World Bank says its goal is to reduce poverty, but all its decisions must be guided by a commitment to promote foreign investment and international trade and facilitate capital investment.

Environmentally-friendly businesses and industries in local communities, including forest tourism, are slated for development under the program.

From Mongabay. Story by Elias Gebreselassie.

Ethiopia’s massive Oromia region constitutes 34.3 percent of the country’s landmass, largely in the southwest, and holds more than a third of the country’s 100 million residents. It also harbors Ethiopia’s largest concentration of biodiversity.

The country’s most prominent program to mobilize resources toward its net-carbon-neutral-by-2025 goal, the Oromia Forested Landscape Program (OFLP), is scheduled to start this year.

The $68 million Oromia Forested Landscape Program project was established through two World Bank funds. One fund is for $18 million and is aimed at the restoration of forests on degraded land. The other is a $50 million fund for a program targeting carbon sequestration assessment and performance enhancement. Under the umbrella of the OFLP, environmentally-friendly businesses and industries in local communities, along with forest tourism, are also slated for development.

The Oromia Forested Landscape Program will receive payments of up to $50 million for verified carbon credits against an agreed forest reference emission level from the World Bank for a decade. The forest reference emission level is part of a critical policy framework that gives countries a point to measure the results they have gained from reducing emissions from deforestation and forest degradation (REDD+ implementation.)

An additional $18 million is under a five-year grant agreement focused on developing approaches that enable sustainable land use and reducing greenhouse gas emissions through the BioCarbon Fund for Sustainable Forest Landscapes. The BioCarbon Fund works to combat greenhouse gas emissions that come from the land including deforestation and forest degradation. The project will monitor and account for forest cover reductions and deforestation.

The Oromia Forested Landscape Program program is designed to build on existing landscape protection and project approaches to reducing emissions from deforestation and forest degradation in an effort to scale up and finance improved land use across Oromia.

REDD+ is a multi-platform program established by the United Nations Framework Convention on Climate Change. It provides a way for stakeholders and involved organizations to share experiences, lessons learned, and outcomes in their work, according to the REDD+ platform website. The program addresses and monitors drivers of deforestation, national strategy, safeguards, and capacity building.

Ethiopia wants to use projects like the Oromia Forested Landscape Program to implement change while gaining financial benefit. The country’s current forest cover stands at about 11.5 million hectares, according to national estimates and the U.N.’s 2015 Global Forest Resource Assessment under the Food and Agriculture Organization (FAO).

According to the FAO, a comprehensive national inventory of Ethiopia’s forests has only been done once, between 1988 and 2004. That study assessed all of Ethiopia and classified land use. It remains the primary source of national scale forest statistics, though the African Forest Forum has planned a national-level survey of planted forests. Other available data shows that forest degradation has not slowed. Global Forest Watch numbers show that between 2001 and 2014, tree cover loss peaked and remained high compared to the first part of the sampling period.

“Reducing deforestation and improving livelihood of local communities that depend on forest resources will ensure that carbon credit can be sold to the likes of World Bank, Norway and United Nations Framework Convention on Climate Change (UNFCCC),” said Yitbetu Moges, Ethiopia’s national representative for REDD+ at Ethiopia’s Ministry of Forestry. Most of the money will be invested in rural development as part of anti-poverty, pro-forest, rural economy-oriented programs, he said.

The Oromia Forested Landscape Program will also look at studies commissioned by the Ethiopian government and World Bank that analyze drivers of deforestation and forest degradation.

Oromia has experience with reducing emissions from deforestation and forest degradation through the Bale Mountains Eco-Region Project. Bale National Park is a global biodiversity hotspot. It was the first large-scale REDD+ project in Ethiopia.

Ethiopia’s goal is to become net carbon neutral by 2025. It aims to accomplish this through efforts that include carbon trading. This would involve the country doubling its forest cover to around 30 percent of its landmass.

Ethiopia established the Clean Development Mechanism (CDM) under the Kyoto protocol, which requires countries to create carbon sinks by planting trees on degraded land. The 2,700-hectare Humbo CDM carbon project in Ethiopia’s south was envisaged as a carbon sink program through which carbon was quantified and brought to the international market for purchase, with the World Bank as the primary client.

Ethiopia has failed to make the most of Clean Development Mechanism benefits, which allow emission reduction projects in developing countries to sell certified emission reduction (CER) credits, according to Zerihun Dejene, environmental program coordinator at local Ethiopian nonprofit PHE (Population, Health, Environment). Certified emission reduction credits can be either traded or sold to progress toward emission reduction goals.

It requires a tedious procedure and substantial investment and resources to make marketable carbon credits, Dejene said. Even then, a prospective buyer might reject them.

With the price of one ton of carbon decreasing from a high of $30 to less than $1 over the last decade, the lifespan of Clean Development Mechanism naturally came to an end. Yet even though Clean Development Mechanism was phased out when the historic Paris Agreement on climate change became effective in November 2016, the Humbo carbon project remains. Registered in 2009 with a 30-year lifespan, it is the only significant carbon finance project currently active in Ethiopia.

 

Ethiopia isn’t pinning its green economy hopes solely on a carbon trade strategy, though. It is also using other schemes such as constructing electric trains and other green energy projects. The country has already built Africa’s first electric trans-boundary railway project, the 467-mile Addis Ababa-Djibouti railway, as well as the 20-mile Addis Ababa light rail project.

But proponents say the carbon trading projects can’t come soon enough.

“At the moment we’re losing five times more forest than we’re planting,” Moges said.

When reducing emissions from deforestation and forest degradation (REDD+) goes operational, revenue earned by carbon trading goes directly to the local community while helping prevent floods and droughts that regularly cause misery in Ethiopia, he said.

“If Ethiopia is strategic in protecting its environment, natural resources like abundant water can be sold just as oil,” Moges said. “The difference being the former is renewable, and through this revenue it can power its industrialization, boost tourism, boost electricity generation thereby creating a wealthy green economy.”

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