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Fostering Low-Carbon Investment in Africa

The African Carbon Asset Development Facility (ACAD)

Cookstoves
(Photo: Dominic Nahr/Magnum Photos for UNEP)

The African Carbon Asset Development Facility (ACAD) was a BMU-supported partnership between the United Nations Environment Programme, its DTU and Standard Bank, which durated from 2009 to 2014. It was the initiative’s target to overcome the difficulties faced by African countries and especially African LDCs in attracting and hosting CDM projects. Lacking capacity in the finance sector to transact carbon deals and to leverage commercial debt for CDM projects formed a barrier that stunned otherwise technically and economically viable projects. This situation has constrained African countries from being able to deploy low-carbon technologies more rapidly and implement national green growth strategies. Against this background, the ACAD supported capacity-building activities for banks and investors and also provided seed funding to project developers. What made ACAD’s approach to market and capacity development different was that its investment was project-specific, practical, flexible, and highly demand-driven. 

ACAD's Three Lines of Support

ACAD activities were organised along three main lines, the first of which entailed supporting projects that were not immediately commercially viable through grants to ensure that these projects could complete critical milestones like environmental impact assessments and project validation. The ACAD Facility has been spearheading a catalytic role in sustainable finance by offering to share transaction costs with all stakeholders. Project support prioritised demand-driven projects hosted in LDCs, with replicable business models. Continued support was offered to ACAD-beneficiary projects for sustainability planning, with particular attention placed on enhancing investment access. 

The second support line focused on technical assistance for financial institutions. ACAD partnered with local financial sector actors on several capacity development activity lines: multi-faceted technical assistance to address partner institutions’ specific needs; capacity building on carbon footprint and greenhouse gas inventorying for African banks; developing proofs-of-concept as well as sectoral-based new market mechanisms. 

The third support line consisted of stakeholder outreach and methodology development. ACAD has, for example, supported the adoption and application of a standardised baseline for all grid-connected utilities operating within the Southern Africa Power Pool (SAPP). This support line also included the African Bankers’ Carbon Forum, likewise initiated by ACAD. The Forum targeted a wide range of institutions, regional development banks, private sector financial institutions, banks, insurance companies and investment funds. 

Outcomes

In the period from 2009 to 2014 the Facility supported 17 CDM projects in nine different Sub-Saharan African countries. Seven out of the 17 projects supported have reached CDM project registration. In addition, more than 320 African financial institution participants were trained. ACAD has also supported the development and registration of regional grid emission factors for both the Southern and Western African Power Pool, as well as their registration as standardized baselines with the UNFCCC. This standardized baseline was the first ever registered that now covers 30 nations. The Facility is also a reference model for the CDM Loan Scheme implemented by the UNFCCC

Contracted Organisation

United Nations Environment Programme

Other Organisations Involved

UNEP Risoe Centre on Energy, Climate and Sustainable Development, Standard Bank

Project Duration

2009 - 2014

Contact

Françoise d’Estais
Email: francoise.destais@unep.org
Miriam Hinostroza
Email: milh@dtu.dk