Ghana loses out on Clean Development Mechanism

Business News of Saturday, 12 December 2015


Refuse TruckFile photo

Just when Ghana was to benefit from the Clean Development Mechanism (CDM) through the Accra Compost and Recycling Project (ACARP), price for the carbon trading has slumped from as high as $12 per ton to an all-time low of $0.50 cent.

The United Nations Framework Convention on Climate Change (UNFCCC) registered the country’s flagship CDM project, the ACARP in 2010 but it was not until 2012 that the project through its recycling and composting begun the carbon trading.

Zoomlion Ghana Limited, an integrated waste management company in the country invested about $10 million into building the CDM infrastructure at Adzen Kotoku in the Ga West District of the Greater Accra Region.

It has according to the Head of Research at Zoomlion, Dr George Rockson so far sold 68000 tons, but was yet to make any claims giving the fact that it was now selling at $0.50 cent.

Prior to this, other countries particularly China, had registered a number of projects, which ensured that they benefitted immensely from the CDM, a major decision to fight climate change in the Kyoto Protocol.

The Kyoto Protocol is an international agreement of the UNFCCC, which commits its Parties by setting internationally binding emission reduction targets.

The protocol recognised that developed countries were principally responsible for the current high levels of Green House Gas (GHG) emissions in the atmosphere as a result of more than 150 years of industrial activity. It therefore, placed a heavier burden on those nations under the principle of “common but differentiated responsibilities.”


To allow such developed nations to continue to pollute, developing countries including Ghana were encouraged to embark on CDM projects so they could trade carbons with industrialised countries, which could not meet their carbon emission targets.

The CDM allows emission-reduction projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one tonne of carbon dioxide (CO2).


The UNFCCC said “the mechanism is seen by many as a trailblazer been the first global, environmental investment and credit scheme of its kind, and providing a standardized emissions offset instrument for developed countries.

But, , Dr Rockson disagrees.

” The significant fall of trading prices under the CDM is a major setback and it will negatively affect the payback time of projects under the CDM expecting cash flows from the carbon credit”.

According to him, the current situation would also discourage those in the private sector from embarking on climate change adaptation and mitigation projects since the start-up capitals are high and the risk enormous.

An official at the Ministry of Environment, Science, Technology and Innovations (MESTI), Mr Peter Dery attributed the price dip to the dynamics of supply and demand.

Mr Dery who followed the CDM project closely for the MESTI state “Too many companies from all over the world got involved in CDM projects so all too soon, there was too much carbon for trading, which the developed countries no longer needed”.

Mr Dery, also explained that those countries that started the CDM projects early benefitted from the project.

Absorbing the shocks

Dr Rockson said African leaders should influence negotiations into this and other mitigation projects that required huge funding hinged on carbon trading to ensure that its countries also benefited from such international projects.

The irony

The dip in carbon price would negatively affect many other African countries, who are beginning to grasp the benefits of carbon finance and now seem ready for more much, a document on the ‘Progress and Potential of CDM reform and post-Paris market mechanisms for Africa’ stated.

It’s fact sheet indicated that 94 per cent of African countries had established their designated National Authorities to approve CDM projects, 71 percent of CDM loans were approved for African carbon projects on an overall of 73 CDM loan scheme approved for a total commitment of USD 64 million and also, 30 African countries have at least a CDM activity registered.

Globally, Asia and Pacific have benefited more from the CDM projects registering 80 per cent as against 32 per cent for Africa, 17 per cent for Least Developed Countries among others.