Conference/Workshop

UPLIFTing THE ENVIRONMENT:

OGUN STATE - NIGERIA GOES GREEN

Abeokuta, Ogun State, Nigeria

23 - 24 April 2013

Analytical Compendium

Compiled by Bostjan Sinkovec, KEN

Page

1. Concepts and Definitions 2

2. State of Play 4

3. International Programmes & Platforms on Climate Change 14

4. Addressing Environmental Challenges by Going Green Policies 16

5. Public Private Partnerships 22

6. Foreign Direct Investment 28

7. Awareness Building 34

8. Conclusions & Recommendations 38

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1. Concepts and Definitions

The term green economy was first coined in a pioneering 1989 report for the Government of the United

Kingdom by a group of leading environmental economists, entitled Blue print for a Green Economy

(Pearce, Markandya and Barbier, 1989). The report was commissioned to advise the UK Government if

there was a consensus definition to the term “sustainable development” and the implications of

sustainable development for the measurement of economic progress and the appraisal of projects and

policies. Apart from in the title of the report, there is no further reference to green economy and it appears

that the term was used as an afterthought by the authors. In 1991 and 1994 the authors released sequels

to the first report entitled Blueprint 2: Greening the world economy and Blueprint 3: Measuring

Sustainable Development. Whilst the theme of the first Blue print report was that economics can and

should come to the aid of environmental policy, the sequels extended this message to global problems –

climate change, ozone depletion, tropical deforestation, and resource loss in the developing world. All

reports built upon research and practice in environmental economics spanning back several decades.

In 2008, the term was revived in the context of discussions on the policy response to multiple global

crises. In the context of the financial crisis and concerns of a global recession, UNEP championed the

idea of “green stimulus packages” and identified specific areas where large‐scale public investment

could kick‐start a “green economy”. It inspired several governments to implement significant ‘green

stimulus’ packages as part of their economic recovery efforts. (A guidebook to the Green Economy,

Green Growth, and Low-Carbon Development, pg. 7)

There is no internationally agreed definition of green economy and at least eight separate definitions

were identified in recent publications. For example, UNEP has defined the green economy as “one that

results in improved human well‐being and social equity, while significantly reducing environmental risks

and ecological scarcities. It is low carbon, resource efficient, and socially inclusive” (UNEP, 2011). This

definition has been cited in a number of more recent reports, including by the UNEMG and the OECD.

Another definition for green economy offered by the Green Economy Coalition (a group of NGOs, trade

union groups and others doing grassroots work on a green economy) succinctly defines green economy

as “a resilient economy that provides a better quality of life for all within the ecological limits of the planet.”

(A guidebook to the Green Economy, Green Growth, and Low-Carbon Development, pg. 9)

The notion of “green jobs” has become something of an emblem of a more sustainable economy and

society, that aims to preserve the environment for both present and future generations and to be more

equitable and inclusive of all people and all countries.

Green jobs hold the promise that humankind will be able to face up to the following two defining

challenges of the twenty‑first century:

Averting dangerous and potentially unmanageable climate change and protecting the natural

environment which supports life on earth

Providing decent work and thus the prospect of well‑being and dignity for all in the face of rapid

population growth worldwide and the current exclusion of over a billion people from economic and

social development

The above challenges are closely linked and cannot therefore be addressed separately. Green jobs are

key to meeting both simultaneously.

Environmental degradation, including the pollution of water, land and air, the irreversible loss of

biodiversity, the deterioration and exhaustion of natural resources like water, fertile agricultural land, and

fish, is one of the most serious threats facing economic and broader sustainable development. The

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environmental and health costs already often outweigh the gains from the economic activity causing the

damage.

Such degradation will, in the future, be exacerbated by the impacts of climate change, which are already

felt in many developing countries. In the medium-to-long term, projected climate change will lead to the

serious disruption of economic and social activity in many sectors worldwide. Scientific scenarios for

avoiding dangerous and possibly unmanageable climate change require global emissions of greenhouse

gases to peak over the next 10‑15 years and then to decline by half until the middle of the century.

Stabilizing the climate will require a rapid shift to a low-carbon world economy.

The social challenge looms just as large: a staggering 1.3 billion people, over 40 per cent of the global

workforce, and their dependants are condemned to a life in poverty and insecurity because their earnings

are too low and they are relegated to the informal economy. There are 190 million unemployed and tens

of millions of young job seekers cannot find a place in society. Labour markets are vital not only for the

production and generation of wealth, but equally for its distribution. Income from work plays a prime role

in poverty reduction and in sharing the benefits of economic growth. Beyond its fundamental economic

role for countries, enterprises, families and individuals, work enables individuals to build identities, to

participate in and to contribute to society. Gainful employment and decent work are therefore also critical

for social cohesion and stability. (Green jobs: Towards decent work in a sustainable, low-carbon

world”, pg. 1)

Millions of green jobs are already in existence and in areas like renewable energy their numbers are

growing fast. While identifiable green jobs look set to be a growing source of employment and clean

development into the future, an exclusive focus on the number of direct green jobs is misplaced. The

number of green jobs already reported and expected to be created is substantial, but modest in relation to

the total size of the global labour force of over 3 billion. In addition, not all of these jobs are additional

jobs, as major gains and losses can take place in other parts of the economy. The significance of green

jobs therefore can only be appreciated by taking a broader look at the transformation to a green

economy.

The greening of enterprise and redefinition of many jobs: the most sweeping and pervasive change from

the greening of an economy will be the redefinition of many jobs across the board. From cleaners and

maintenance staff to facilities and logistics managers, from electricians to IT experts, from bricklayers to

architects, from credit clerks to investment managers – people in jobs at all levels will see the content of

those jobs change, with new performance and skills requirements. This incremental but broad shift to the

greening of most workplaces can make a substantial contribution to reducing the environmental impact

and to preventing dangerous climate change. These gains are often quick, are low‑cost or even profitable

and do not require any major investment in new technology. This potential has barely been tapped. Green

jobs and green enterprises are sustainable and therefore provide more stable and secure employment

and incomes. (Green jobs: Towards decent work in a sustainable, low-carbon world”, pg. 15)

Radiating out and greening downstream economic sectors: green technologies and green jobs also have

major impacts through forward linkages to sections of the economy and to jobs that are neither

particularly “brown” – i.e., polluting – or green. Jobs in renewable energy, for example, substantially lower

the environmental footprint of the sectors which they supply. The information technology sector, for

instance, is a still modest but rapidly growing contributor to greenhouse gas emissions. If renewable

energy powered the internet, computers in offices, mobile phones and media players, this large and

growing economic sector would be transformed into a low-impact activity and both present and future IT

employment would become more sustainable.

Dynamic changes in labour markets: to some extent newly created green jobs take the place of existing

jobs and net gains in employment are smaller than the overall numbers of direct green jobs suggest. This

is the case, for example, when jobs in renewable energy replace those depending on fossil fuels. Other

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jobs are likely to be eliminated because of the slowing demand for products and services with a high

environmental impact, such as sports utility vehicles.

The overall balance of available jobs will depend on those created and lost in the sector concerned, such

as energy, transport or buildings, the balance of jobs in sectors contributing inputs to these sectors and

on employment gained or lost throughout the economy from higher or lower consumer spending.

Renewable energy, for example, creates more jobs per dollar invested, per unit of installed capacity and

per unit of power generated than conventional power generation. Public transport generates more

employment than reliance on individual cars and trucks.

Energy and raw material efficiency, and also renewable energy, can have an induced employment effect.

Money saved on the energy bill is spent on other goods and services instead. The latter almost invariably

generate more employment than the conventional energy sector, which is very capital‑intensive.

Domestic induced job creation is particularly strong where energy imports can be avoided. This offers a

valuable solution to the problem of escalating bills for imported energy affecting many developing

countries. On balance: available studies of these labour market dynamics for both sectors and entire

economies suggest that, on balance, there will be more jobs in green economies. Not everybody will gain

from such a change, however. The typically positive job balance from greening an economy is the result

of major shifts often within sectors. While some groups and regions are gaining significantly, others incur

substantial losses. These losses raise questions of equity, which if not addressed, can make green

economy policies difficult to sustain. (Green jobs: Towards decent work in a sustainable, low-carbon

world”, pg. 16)

2. State of Play: Climate Change, Water and land degradation, Urbanization

and Vulnerability to adapt

Energy deficit

Oil: By the end of 2010, the state owned refineries operated at between 60-70 per cent refining capacity

processing a maximum 311,500 bpd leaving a local production deficit of 218,500 bpd. This is the highest

achieved in more than ten years. Poor maintenance records and several governance issues have

affected the operations of local refineries and reduced operational effectiveness. To augment this deficit,

NNPC imported about 8.1 million metric tonnes of petroleum products in 2010 representing a huge loss to

the nation’s treasury. Currently, availability of cooking kerosene at retail outlets is very limited. Supply of

the product has dropped by 66.6 per cent since April 20115 from 10 million litres per day to 3.34 million

litres, causing a deficit of 6.66 million litres. Kerosene scarcity hits poor people the most.

Electricity: Present average electricity capacity requirement in Nigeria is estimated to be more than

12,000MW while current supply stands at about 3,800MW. This leaves a deficit of more than 6,000MW,

mostly filled by private generators. In 2009, it was estimated that about 6,000MW of electricity was self

generated from petrol and diesel power generating sets.

Biomass: Biomass is becoming a scarce and expensive energy source especially in the urban centres.

The burning of fuelwood is contributing to the already heavy deforestation of Nigeria. Due to the growing

scarcity of wood, a person in the village on average has to spend 4-6 hours collecting enough wood for a

single day’s meal. According to estimates, approximately 350,000 hectares of natural vegetation and

forest are destroyed annually, and the deforestation rate is expected to increase alongside the increasing

demand for energy.

Energy poverty

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In a country of more than 150 million people with the majority living on less than a dollar a day, the

implications of the current energy crisis are severe. Over 90 million people, representing 60 per cent of

the population, have no access to electricity services. Many more depend on traditional biomass sources

for cooking. Energy poverty in Nigeria could take the form of inadequate quantity, poor quality and low

access, despite the abundant endowment of energy resources. For instance, although Nigeria is blessed

with large amounts of energy sources (both renewable and non-renewable), widespread substitution of

poor electricity supply from the utility company with highly-polluting private generating sets prevail.

Scarcity of kerosene in most parts of the country combined with its rising cost has induced greater use of

fuelwood among low and middle income groups. Shortages and high prices of diesel have also crippled

industrial activities, creating more unemployment.

Energy and industrialisation/growth

Industries contribute only 4 per cent of Nigeria’s GDP. Industrial growth in Nigeria has been largely

hindered by inadequate energy supply, especially electricity. According to the Manufacturers Association

of Nigeria (MAN), between 2000 and 2009 about 857 major firms either closed shop or suspended

operations due to poor energy supply. Nearly all major companies in Nigeria provide their own electricity

through diesel generators. The high cost of energy supply has been a key factor in limiting the

competitiveness of Nigerian industrial production, and the growth of unemployment. (“Low-carbon

Africa: Nigeria”, pg. 3)

Current low-carbon strategy

There is no clear-cut national policy or strategies for low carbon energy development in Nigeria. However,

the Federal Government has developed a number of policy documents and strategies aimed at growing

Nigeria’s energy sector along a low carbon pathway.

The National Electric Power Policy of 2001 provided for electricity supply for the rural areas (off-grid and

mini-grid systems) from renewables. It proposed joint electricity and natural gas capacity expansion in

order to utilize flared gas for electricity generation. It listed a number of strategies for achieving these

objectives, among which are fiscal and tax incentives, and capacity expansion for domestic production of

low carbon energy.

The National Energy Policy of 2001 provided for optimum utilization of the nation’s renewable energy

resources. The policy emphasised the need for adequate energy supply for domestic, commercial and

industrial utilization and provided for intensive development of joint electric power and gas supply to at

least 75 per cent of the population by 2020. Among the strategies listed for achieving these objectives

include ensuring increased indigenous participation in planning, design and construction of low carbon

systems; encouraging the establishment of necessary infrastructure for the effective gathering,

transmission and distribution of gas nationwide, etc. However, this policy has over the years not guided

government action on the energy sector.

The Renewable Energy Master Plan (REMP) of 2005 articulates Nigeria’s vision, targets and road map

for addressing key development challenges facing Nigeria through the accelerated development and

exploitation of renewable energy. It proposes programmes for developing renewable energy to ensure

that the visions and targets are realized. Some of the strategies for achieving these objectives include

adoption of a renewable portfolio standard; creation of innovative fiscal and market incentives to grow

renewable energy industries; and preferential customs duty exemptions for imported renewable energy

technology components – among others. Like the energy policy, the government has not implemented the

master plan to a reasonable level.

The main policy thrust of the National Policy and Guidelines on Renewable Electricity of 2006 is to

expand the market for renewable electricity to at least 5 per cent of total electricity generation by 2016

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and a minimum of 5TWh of electric power production, excluding large hydropower. Some of the strategies

listed for achieving this include encouraging local manufacture and assembly of renewable energy

components, provision of subsidies, establishment of technical standards for renewable energy

equipments, introducing feed-in tariffs, etc. Since the publication of this document, there are no legal

instruments to back its implementation.

The National Bio-fuels Policy of 2007 aims at firmly establishing a thriving bio-fuel industry utilizing

agricultural products as a means of improving the quality of automotive fossil-based fuels in Nigeria. The

policy stipulated a 10 per cent blending of fuel ethanol with gasoline to achieve a blend to be known as E-

10, and 20 per cent of biodiesel with conventional diesel by 2020. Like most of the government’s policy

documents on the energy sector, there has been little commitment to implement the biofuels policy.

(“Low-carbon Africa: Nigeria”, pg. 4)

Links between energy and climate resilience

Nigeria hopes to generate about 35,000MW of electricity by 2020, raising the per capita electricity

consumption to about 2000kwh per capita. Many of the most critical economic, social, and environmental

issues impacting the future development of Nigeria as a result of climate change have an energy

underpinning.

The hydrology of Nigeria’s hydroelectric dams has suffered low water levels, even during the rainy

seasons. Increased temperature and desertification in the northern parts of the country account for this.

Should climate change result in even high temperatures, the future of hydroelectric power production will

be in jeopardy.

Approximately half of Nigeria’s oil production is offshore while the rest is located along the coast of the

Niger Delta. Rising sea level and severe climatic events will pose significant danger to these investments.

As wood dominates energy demand, especially among poor families, human activities accentuated by

climate change will result in wood loses. Already, wood scarcity has been recorded in most parts of the

country, especially along the Sahelian North. Clean cookstoves may help address increasing scarcity and

cost of wood. By expanding access to clean cookstoves for poor families, the poor may become part of

the climate solution. (“Low-carbon Africa: Nigeria”, pg. 4)

Potential benefits of low carbon development

Low carbon development has a number of benefits including the following:

Energy access: Low carbon technologies can contribute to socio-economic development and enhance

energy security. Vision 2020 seeks to expand access to electricity services to about 75 per cent of the

population from 40 per cent today. Investing in low carbon energy sources will significantly promote

energy access by utilising decentralised energy options to reach remote communities.

Health: Human health could also benefit from low carbon technologies. In household energy, for

instance, it is estimated that 79,000 deaths occur annually as a result of smoke from traditional three-

stone woodstoves. Expanding the use of clean cookstoves can help address this health problem.

Carbon finance: The pursuit of low carbon development also has the potential to place Nigeria

strategically in the carbon market. This will attract the needed climate mitigation and adaptation funds to

tackle both poverty and emission reduction.

Environment: Low carbon development will be beneficial to Nigeria’s environment. The nation’s forest

cover especially in the north is fast diminishing as a result of the quest for fuelwood and agriculture. Oil

spillage and gas flaring in the Niger Delta region is threatening the ecosystem and livelihoods of the

communities. Adopting low carbon growth will drastically reduce the incidence of these occurrences.

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Transportation: According to the Vision 2020, Nigeria plans to develop transportations infrastructure that

is consistent with international standards. The Bus Rapid Transit (BRT) System in Lagos state is a typical

example of what the nation seeks to achieve. The introduction of the BRT system has promoted a cleaner

environment with a huge reduction of about 13 per cent in CO2 and 20 per cent in GHG emissions.

Improvements in the nation’s transport system and a shift towards lower carbon fuels such as

compressed natural gas enhances, sustainable biofuels, and electric transport systems will be of

immense benefits to the nation’s economy.

Green jobs: Investing in low carbon technologies can lead to significant job creation. A study by ICEED

(2010) on ‘Low Carbon Jobs in an Interconnected World’ shows that more than 600,000 jobs can be

created from investments in gas and small hydropower technologies. The job-creating potentials of these

technologies will increase should other technologies such as solar, wind, biomass and sustainable bio-

fuels receive adequate attention. This will ameliorate the growing unemployment among Nigeria’s youths.

(“Low-carbon Africa: Nigeria”, pg. 5)

Environmentally, land degradation is revisited since it is one of the threats to natural resources with

consequences on food security, poverty, and environmental and political stability. Already 46 per cent of

Africa is affected by desertification and 55 per cent of areas are either vulnerable or extremely

vulnerable, thus increasing occurrence of climate extremes influences land degradation processes,

which in turn compounds vulnerabilities to current and future climate risks. (Comprehensive Framework

of African Climate Change Programmes, pg. 4)

Agriculture is the backbone of Africa’s economy; it accounts for half of gross domestic product. Thus,

changes in temperature are likely to impact on; crop yields, arable land, length of growing seasons, yield

potential and in particular the drylands. For health, temperatures, rainfall and humidity will influence the

geographical distribution and the rates of development of vectors for malaria and dengue, thereby

reducing income significantly. (Comprehensive Framework of African Climate Change Programmes,

pg. 4)

Climate projections reported in the Fourth Assessment Report (AR4) of the Intergovernmental Panel on

Climate Change (IPCC) show that Africa is very likely to warm by 3 to 4° average during this century,

which is greater than the global average temperature increase. The effects of such changes for rural

communities are likely to be severe, with reductions in crop yields and livestock productivity (and hence

food security), shortages of drinking water (necessitating longer walking distances for woman and

children who tend to fetch water for rural households), spread of diseases such as malaria, reduced

potential for hydrogenation of electricity, large-scale migration of ‘climate change refugees’ and

subsequent civil conflicts and unrest. Other potential effects include:

(i) loss of biodiversity, which will reduce the availability of medicinal plants and impact negatively on

African tourism sectors; (ii) reduced productivity of some freshwater fisheries (e.g. Lakes Victoria, Kariba,

Malawi, Tanganyika) as a result of increases in water temperature; and (iii) loss of corals across large

areas of the Indian Ocean and the Red Sea (due to rising sea temperatures and acidification) with

consequent negative impacts on marine fisheries, tourism, and rates of coastal erosion. (Comprehensive

Framework of African Climate Change Programmes, pg. 9)

A sea level rise of 18-59 cm is predicted in the IPCC AR4. Forty percent of West Africa’s population lives

in coastal cities – more than 50 million will live along the 500 km coastline between Accra, Ghana, and

the Niger delta by 2020. Sea-level rise is expected to have a significant impact on these coastal

populations because of the concentration of poor people in potentially hazardous areas. Other impacts

include: loss of mangroves, estuaries and coral reefs, which are critical for tourism and fishing industries;

OSS 10 flooding of coastal infrastructure; and loss of coastal plantations of palm oil, coconuts, mangoes,

and cashew nuts.

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These climate change risks are additional to, and are likely to compound, existing socioeconomic

development challenges. The UNDP Human Development Report illustrated how climate shocks, such as

those predicted in Africa, can lock people into a downward cycle of poverty because the coping strategies

of the poor to manage climate risks often reinforce deprivation. For example, when climate disasters

strike, the poor are often forced to sell productive assets in order to protect consumption. When that is not

enough, households cope in other ways such as cutting meals, reducing spending on health, and taking

children out of school. Meanwhile, children born during a drought are much more likely to be

malnourished and stunted. (Comprehensive Framework of African Climate Change Programmes, pg.

9)

It is well recognised that agriculture is the backbone of Africa’s economy, providing employment to around

60 per cent of its total population while accounting for 50 per cent of gross domestic product (GDP).

Apparently, this sector is one of the sectors that are greatly affected by climate change. The higher

temperature will have direct impacts on crop yields, areas suitable for agriculture, length of growing

seasons, yield potential and in particular along the margins of semi-arid and arid zones. Recent studies

have established that many crops in Africa are grown close to their limits of thermal tolerance. Besides,

climate change in Africa is likely to exacerbate the climate extreme events such as droughts which are

expected to increase in terms of frequency and intensity. (Comprehensive Framework of African

Climate Change Programmes, pg. 12)

Challenges:

1. Uncertainty of future climate, different models give varying results, hence the challenge to design

appropriate and relevant programmes;

2. In adequate resource (financial, human and technical) hence hindering the implementation of more

consistent programmes in the mid to long term

3. Poor coordination of programmes and projects across different scales

4. Poor harmonisation of institutional structures and architecture: The governing body of COMIFAC is

made up of the Ministers in charge of Forestry in member countries. However, in that some of the

countries, separate Ministries, are in charge of Forestry and the Environment, thus overlapping, resulting

in conflicting mandates especially on climate change issues;

5. Climate change-related policy, legal and implementation functions are in some cases shared among

several national institutions with inadequately defined roles and responsibilities with inadequate human

and financial resources to effectively perform their duties and coordination mechanisms;

6. There is limited participation of the Private Sector, Civil Society/NGO and local communities in climate

change projects including the NC and NAPA processes. (Comprehensive Framework of African

Climate Change Programmes, pg. 92)

Agriculture, which provides a livelihood for about three-quarters of Africa’s population, is mainly rain-fed.

Severe and prolonged droughts, flooding and loss of arable land due to desertification and soil erosion

are reducing agricultural yields and causing crop failure and loss of livestock, which endangers rural and

pastoralist populations. This is evident in countries like Somalia, Malawi, Niger, Kenya and Zimbabwe.

Somalia is one of the countries worst affected by a drought which has hit the Horn of Africa, leaving some

11.5 million people in need of food aid (BBC, 2006). According to the International Food Policy Research

Institute (IFPRI), about 200 million people are malnourished due to agricultural crisis in Africa as a result

of climate change (Plaut, 2006). In the highlands of Ethiopia and Eritrea some land is now so degraded

that there is little prospect that it will ever produce a decent harvest. In sub-Saharan Africa soil quality

isclassified as degraded in about 72% of arable land and 31% of pasture land. soil fertility is declining by

the year through soil erosion. (Energy and Climate Change: Critical Reflection on the African

Continent, pg. 89)

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Each year, about 800 000 people die from causes attributable to urban air pollution, 1.8 million from

diarrhoea largelyresulting from lack of access to clean water supply and sanitation, and from poor

hygiene, 3.5 million from malnutrition and approximately 60 000 in natural disasters (WHO, 2008). A

warmer and more variable climate threatens to lead to higher levels of some air pollutants, increase

transmission of diseases through unclean water and through contaminated food. Climate change also

brings new challenges to the control of infectious diseases. Many of the major killers are highly climate

sensitive as regards temperature and rainfall, including cholera and the diarrhoeal diseases, as well as

diseases including malaria, dengue and other infections carried by vectors. Climate change threatens to

slow, halt or reverses the progress that the global public health community is now making against many

of these diseases. (Energy and Climate Change: Critical Reflection on the African Continent, pg.

90)

Climate change may seriously threaten political and economic stability, for example, when communities

and nations struggle to access scarce water resources or when forced migration puts previously separate

groups into conflict over the same resources. Given the history of ethnic, resource and political conflicts in

Africa, climate change could aggravate territorial and border disputes and complicate conflict resolution

and mediation processes. Conflict zones and potential Flash points in Africa, such as Darfur, the Sahel,

the Horn of Africa, the DRC and northern Kenya all have populations living in fragile and unstable

conditions making them vulnerable to climate change’s effects and the risk of violent conflict. Declining

water resources and diminishing arable land are already intensifying competition for those resources, and

creating tensions for displaced populations or those moving in search of improved livelihoods. In northern

Darfur, Sudan, precipitation has fallen by a third in the past 80 years. The resulting desertification, along

with other environmental pressures, has added to the stress on traditional agricultural and pastoral

livelihoods. By early 2008, fighting in the region had cost between 200 000 and 500 000 lives and

displaced over 2.5 million people, many of whom are living in refugee camps in precarious health

conditions. (Energy and Climate Change: Critical Reflection on the African Continent, pg. 91)

Misplacement of Africa’s Priority

Given the far-ranging adverse impacts of climate change, adaptation is considered as one of the integral

component of an effective strategy to address this critical issue, this is lacking in Africa. However, existing

adaptation mechanisms and resources under the Kyoto agreement designed to mitigate climate change’s

effects on Africa (and other developing regions) have been directed at limiting future carbon emissions,

rather than addressing the region’s vulnerability and lack of resilience to the impacts of climate change on

its economies and populations (CIGI, 2009). Africa’s concern about climate change is not mainly in terms

projections of carbon emission and future environmental damages. It is more about the links between

climate change and droughts, desertification, floods, coastal storms, soil erosion-contemporary disaster

events that threaten lives and livelihoods, and hinder the continent’s economic growth and social

progress.

Lack of Relevance of Africa in Global Negotiations

Due to the limited relevance of past and current global climate change agreements to Africa’s climate and

environmental problems, the hardest hit region has benefited least from the international climate change

regime, which relates almost exclusively to funding and investments for green, low carbon growth. For

example, Africa’s participation to date in the Clean Development Mechanism (CDM) and carbon trading

arrangements under the Kyoto Protocol has been minimal. Africa’s negligible role in previous international

climate change negotiations can be remedied by concerted action on the part of African leaders.

Access to Funding

The World Bank estimates that between 2010 and 2050 the annual cost to adapt to climate change in

Sub- Saharan Africa is $18 billion a year (Caravani, Bird, & Schalatek, 2010). In order for Africa to

develop in a low carbon, sustainable way, Christian Aid has calculated that the region will require funding

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between $510 and $675 billion between 2010 and 2030. The current model of financing through the

Clean Development Mechanism (CDM) of the Kyoto Protocol and other sources of climate finance are not

providing anywhere near this level of funding. There are lacks of commitments and unwilling attitude to

dispatch fund to the developing nation (Odinga, 2011). The reason is that recipients have had to conform

to funders’ requirements, rather than funders respecting recipients’ budget cycles, priorities and systems.

Climate change finance is poorly integrated into local budgets. This is partly a result of weak country

capacity, partly a result of not knowing how to define climate change.

Institutional and Technical Capacity Weakness

Full understanding of the issues, realities and the challenges associated with climate change in Africa at

the local level are lacking. The Political institutional framework that needs to provide political

awareness of threats is weak. Scientific & technical capacity to embark on programs to address

climate change that needed to be home grown, linking national policies and strategies, including domestic

resource mobilization, to climate change issues are weak and in most part of Africa not existing. Without

these ingredients, Africa may continue to be adversely affected by climate change. (Energy and Climate

Change: Critical Reflection on the African Continent, pg. 92)

The scientific evidence of climate change as a result of greenhouse gas emissions is becoming

increasingly obvious. Arguably, fossil fuels are the largest contributor to greenhouse gas emissions. In

South Africa, more than 90% of the electricity is generated from fossil fuels and the building sector

contributes about 23% of greenhouse gas emissions. The Integrated Resource Plan of 2010 envisages a

16% renewable energy contribution to the Country’s energy mix and a 30% reduction in ghg emissions by

2030. (Mitigating climate change through renewable energy and energy efficiency in the

residential sector in South Africa, pg. 1)

Regional integration is essential for sharing the benefits of growth more broadly. With its 54 countries,

many of them small and landlocked, Africa is the most economically fragmented continent, making it

difficult to build economies of scale and become internationally competitive. A high proportion of Africa’s

poor lives in economically marginal areas. Isolated by poor infrastructure, they may miss out on the

benefits of growth in the more dynamic regions. In recent years, African countries have made high‑level

commitments to promoting regional integration and have begun simplifying the regional economic

architecture. Intra‑African trade has more than doubled and Africa’s share of world trade is growing. To

build on this momentum, deepen regional integration and sustain he growth in African trade, the level of

investment in regional infrastructure needs to increase dramatically.

Africa still has some way to go to improve its infrastructure. A fifth of Africans live in small, scattered

communities, where the costs of providing infrastructure can be prohibitive. Less than half of the rural

population has access to all-season roads and the rural electrification rate stands at only 10%. Even in

urban centres, population growth has outstripped infrastructure development, and basic services are

twice as expensive as in other developing regions. Progress on improving water and sanitation has been

slow. In sub-Saharan Africa, only 57% of the population has access to an improved water source and

only 28% to improved sanitation facilities—an improvement of just 1% on both figures. (Annual

Development Effectiveness Review 2012: Growing African Economies Inclusively, pg. 4)

Private-sector development and investment climate

The private sector is Africa’s primary engine of growth. It generates 70% of Africa’s output, two‑thirds of

its investment and 90% of employment. Creating private‑sector jobs is the most effective and sustainable

strategy for lifting more Africans out of poverty. Private sector growth is also key to financing Africa’s

future development. A dynamic private sector enables domestic revenues to grow, reducing dependence

on aid. Combined domestic revenues across Africa are now more than ten times the value of aid flows.

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Financing development from private‑sector growth creates a virtuous circle of increased public

expectations and improved government performance.

African countries have made significant progress in improving the regulatory environment for business

and promoting competition, trade and investment. In 2011, 36 of 48 sub‑Saharan African countries

improved their business regulations. Rwanda has been an outstanding performer, demonstrating the

value of sustained reform efforts. From ranking 58th in the world for ease of starting a business in 2006, it

reached 8th place in 2011 and has been named several times among the top global reformers. Other

strong performers include Burkina Faso, Mali and Ghana. The average cost of starting a business in

Africa fell dramatically from $217 in 2006 to $77 in 2011, while the average time for business start-up

declined from 58 to 35 days.

(Annual Development Effectiveness Review 2012: Growing African Economies Inclusively, pg. 15)

There is growing interest globally in the development of agricultural carbon projects that can sequester

large amounts of carbon dioxide from the atmosphere to mitigate climate change, while contributing to

sustainable agriculture and land management for smallholder farmers. However, these projects face

numerous challenges, especially in their inherent complexity, high costs of project development, and

challenges of risk management and securing benefits for smallholder farmers.

The project-level institutions of these agricultural carbon initiatives have received little attention, and yet

were critical to the success and replication of these highly complicated projects. They involved numerous

actors, including large numbers of farmers as well as professionals in law, technology, monitoring, and

finance, whose services consumed a large share of the financial benefits of carbon that could otherwise

have gone to farmers. The costs of aggregating, consulting with, and disseminating benefits to large

numbers of smallholders also reduced the cash benefits received by farmers. Significant financing was

needed for up-front investment, yet carbon revenues were usually received only after carbon is

demonstrated to have been sequestered.

Poorer farmers and women were often excluded from decision making and benefits in these projects.

Globally, the number and scale of these projects have been small in both regulated and voluntary carbon

markets. An inventory of African agricultural carbon projects identified 81 project initiation efforts in 24

countries. In roughly one-third of these projects money had exchanged hands, and the rest were in

development (Shames and Scherr, 2010). But even in cases where projects have been established, their

size was miniscule compared to the potential for climate change mitigation and farmer participation.

(Institutional innovations in African smallholder carbon projects, pg. 6)

Outdoor ambient air pollution is a major threat to human health in most West African big cities

including Nigeria and other parts of the world. It reduces the life expectancy of people who are constantly

exposed to it. According to the global estimate made by the United Nations Environment Programme, 1.1

billion people breathe unhealthy air. This increases daily deaths and hospital admissions throughout the

world, because of its wide range of effects on human health, especially the cardiopulmonary system. It is

also estimated that, urban air pollution is responsible for approximately 800 000 deaths and 4.6 million

loss of lives each year around the globe.

Global daily death from diseases related to air pollution is put at 8000 and a yearly death toll due to air

pollution about 2.4 million. In Nigeria, various studies have indicated a high level of ambient air pollution

in most urban cities especially the Niger Delta region, of which the Uyo metropolis, the capital city of

Akwa Ibom State, is an integral part. A typical air quality assessment of this region showed that the levels

of volatile oxides of carbon, nitrogen, sulphur and total particulate matter exceed the existing Federal

Agency Standards. Common sources of air pollution in this area include: bush burning, automobile

emissions, generators emission, pipeline explosion, industrial emissions and gas flaring.

Many recent studies have shown that, people are more at risk of occupational exposure to ambient air

pollutants than other means and evidences have also shown that urban city transit operation (eg,

12

commercial motorcycling and taxi driving) are examples of such occupations that expose workers to

unusual large amount of outdoor ambient air pollutants. The work entails conveying passengers to and

from their different destinations within and even to the outskirts of the city for commercial gains. This type

of duty may take them from a less busy to a more congested and industrialized parts of the city. The city

of Uyo in recent years has witnessed a tremendous infrastructural upgrading. These result in a massive

and rapid urbanisation with an increased number of people and concomitant increase in demands for

transportation. In addition, increase in heavy-duty tractors, vehicles and motor cycles follows the growing

trend. According to statistics from the city transport authority, there is an average of 150 vehicles and 180

motor cycles to every kilometre within the metropolis. The situation is made worse as a great number of

these vehicles are old and poorly maintained, and worse still in an environment with ineffective or no

transport regulating laws. The scenario creates a high level of traffic-related ambient air pollutants, which

have been shown to constitute up to 90–95% of ambient carbon monoxide (CO) level, 80–90% of

nitrogen dioxide (NO2), sulphur dioxide (SO2), hydrocarbon and particulate matter in similar studies in

other developing countries of sub-Saharan Africa and other parts of the world. (Urban city

transportation mode and respiratory health effect of air pollution: a cross-sectional study among

transit and non-transit workers in Nigeria, pg. 2)

Biomass-based energy supply is also affected by changing climatic conditions. A lot of research has

been paid in the past to the primarily man-made and not climate-related fuelwood crisis in many African

countries. Still, about 80% of the African population rely on “traditional” biomass to cover their basic

energy needs. Reduced precipitation and warming in Africa both contribute to limited availability of plants

that are used for energetic purposes. Particular attention should be paid in this context to agricultural

production dedicated to energetic purposes. There is a lot of debate on the benefits and the possible

negative impacts of agrofuel production at the moment, with African countries also seeing economic

opportunities in investing in it, either for agricultural exports or for the substitution of petroleum imports.

The links with potential climate change impacts on agriculture are clear. For example, Sugrue discusses

how South Africa´s biofuels strategy may impact food security, combined with the expected reduction in

precipitation in Southern Africa.

Finally it has to be noted that also fossil and nuclear fuel based power plants rely on a huge amount

of water, as cooling water for nuclear power plants and condensation water to power the turbines of

conventional fossil fuel plants.

(“Adaptation of Climate Change in Africa and the European Union’s Development Cooperation”,

pg. 29)

In June 2007, the European Commission launched its communication “From Cairo to Lisbon – The EU-

Africa Strategic partnership”. It is directed towards the EU-Africa summit taking place in Lisbon in

December 2007, where the Joint EU-Africa Strategy should be adopted. The communication builds on a

policy development process, which included stakeholder consultation, other EC communications and

papers as well as contributions from African policy fora. Another important document to mention in this

context is the draft outline of the Joint EU-Africa Strategy, which is the concrete joint basis for finalising

the negotiations on the strategy throughout 2007. The outline lists four joint priority areas for action in the

context of environment and climate change:

- Work together in the global arena and international fora to effectively respond and adapt to climate

change and other global environmental challenges, such as desertification, deforestation, biodiversity,

and issues related to toxic waste.

- Assist Africa’s fight against desertification, deforestation, and the loss of biodiversity, and support efforts

to eliminate problems relating to toxic waste in Africa.

- Promote environmental sustainability and the integration of environmental considerations in the

elaboration and implementation of development policies.

13

- Strengthen cooperation and support capacity building in the management of natural resources.

(“Adaptation of Climate Change in Africa and the European Union’s Development Cooperation”,

pg. 50)

Yet Africa's ecosystems are changing faster than ever before through the combined impact of global and

local pressures. Loss of ecosystem services is compromising future security, health and well-being and

effects are being borne disproportionately by the poor.

The Living Planet Index reflects the state of the planet's ecosystems. Published for the first time in this

volume, the Africa Living Planet Index shows a reduction of 39 percent in animal populations over the 38

year period between 1970 and 2008.

Much of the pressure on ecosystems can be traced to humanity's voracious demand for goods and

services which is now exceeding the planet's capacity to regenerate resources and absorb the wastes we

produce. Humanity's demand on the world's living resources, its Ecological Footprint, has more than

doubled since 1961 and now overshoots the planet's regenerative capacity - or bio-capacity - by about 50

percent.

The Ecological Footprint of all African countries increased by 240 percent between 1961 and 2008 as

a result of growing populations as well as increased per capita consumption in a minority of countries.

The average per capita footprint in Africa in 2008 is rapidly approaching the available capacity within

Africa's borders of 1.5 global hectares per person.

Looking ahead, Africa as a whole is projected to be in biocapacity deficit, where its footprint exceeds the

biocapacity available within its borders, by 2015.

Already today, nearly 400 million people living in Africa's 36 largest river basins experience water scarcity

for at least one month each year. Many African countries compensate for biocapacity and water shortfalls

by importing goods and services from elsewhere.

The combined measures of Ecological Footprint, Water Footprint and Living Planet Index show us that

Africa is now at a crossroad in terms of its development options.

Historical trends in Africa’s Ecological Footprint (1961-2008)

(“Africa Ecological Footprint Report 2012: Green Infrastructure for Africa’s Ecological Security”,

pg. 6)

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Barriers to Renewable technology deployment, Economic barriers:

The costs of many of the RE technologies have been a major barrier to their widespread market

introduction, because they have not been economically competitive with fossil-fuelbased energy sources.

To enable market introduction, policy measures have been required to bridge the economic gap, and to

make projects profitable from a project developer’s point of view. An economic barrier is judged to be

present if the cost of a given technology is above the cost of competing alternatives, even under optimal

market conditions. Although some RE technologies are now cost competitive where resources and

market conditions are favourable, this barrier must be addressed to create a stable and profitable market

for investors and to support additional deployment. (“Deploying Renewables 2011: Best and Future

Policy Practice”, pg. 74)

Non-economic barriers

Even where the economic barriers have been addressed, a range of other non-economic barriers can

exist and can either prevent deployment altogether (no matter how high the willingness-to-pay) or lead to

higher costs than necessary or distorted prices.

These barriers can be differentiated further:

• Regulatory and policy uncertainty barriers, which relate to bad policy design, or discontinuity and/or

insufficient transparency of policies and legislation.

• Institutional and administrative barriers, which include the lack of strong, dedicated institutions, lack

of clear responsibilities, and complicated, slow, or non-transparent permitting procedures.

• Market barriers, such as inconsistent pricing structures that disadvantage RE technologies,

asymmetrical information, market power, subsidies for fossil fuels, and the failure of costing methods to

include social and environmental costs.

• Financial barriers associated with an absence of adequate funding opportunities and financing

products for RE technologies.

• Infrastructure barriers that mainly centre on the flexibility of the energy system, e.g. the power grid, to

integrate/absorb RE technologies.

• Lack of awareness and skilled personnel relating to insufficient knowledge about the availability and

performance of RE technologies as well as insufficient number of skilled workers.

• Public acceptance and environmental barriers linked to experience with planning regulations and

public acceptance of RE technologies. (“Deploying Renewables 2011: Best and Future Policy

Practice”, pg. 75)

3. International Programmes and Platforms on Climate Change

Adaptations in four sectors are considered: the water sector (water supply and inland and coastal flood

management); the construction sector; the rural land-use sector (biodiversity / conservation and

agriculture / forestry); the transport sector. Within each sector, the adaptation is described in terms of: the

range of institutional actions, outputs; classification; characteristics; the purpose; scale; and the drivers.

These examples are not necessarily exhaustive representation of adaptation in practice across North

Africa for example; they are simply indicative examples that were mapped during the exercise.

The adaptation programmes were categorized into three broad areas of work namely:

15

a) Disaster reduction and risk management: including early warning, preparedness, emergency

response and post-disaster recovery;

b) Sectorial planning and implementation: adaptation in key sectors including water, agriculture,

coastal zones, health, infrastructure, biodiversity and ecosystems, forests, energy, urban management

and tourism, taking into account the cross-sectorial implications;

c) Building economic and social resilience through the diversification of economies to reduce

dependence on climate-sensitive sectors, including through the use of indigenous knowledge and

practices and the strengthening of community organizations. (Comprehensive Framework of African

Climate Change Programmes, pg. 19)

Mitigation

a) Energy sector: Including scaling up investment to provide access to affordable cleaner energy,

especially for rural communities; development of appropriate alternative energy sources; policies and

measures to increase energy efficiency; precautionary approach to the development of renewables such

as biofuels for mitigation and energy security; b) Reduced emissions from deforestation and forest

degradation (REDD): Including the development of market-based mechanisms to reward or provide

incentives for forest conservation or the avoidance of deforestation and sustainable forest management

practices;

c) Land use, land-use change and forestry: As the primary source of emissions in Africa, this represents

one of the key areas for mitigation work in the continent, which includes best practices to enhance carbon

sequestration and reduced emissions;

d) Using and maximizing opportunities from the international carbon market: Africa is to call for

binding ambitious targets for developed countries to secure the price of carbon. Key areas of work for

Africa include reforming the rules of market mechanisms such as the Clean Development Mechanism

(CDM) to increase accessibility by African countries, the full implementation of the Nairobi Framework

and building capacity in Africa to gain access to the available financial mechanisms (the CDM, Global

Environment Facility, the World Bank and the African Development Bank, among others).

(Comprehensive Framework of African Climate Change Programmes, pg. 20)

The expert segment of the special session on climate change of the African Ministerial Conference on

the Environment held in Nairobi, Kenya in May 2009 reaffirmed the indicative conceptual outline of the

comprehensive framework of African climate change programmes to be implemented at all levels

developed at the twelfth session of the African Ministerial Conference on the Environment, held in

Johannesburg, South Africa, in June 2008. The ministerial segment adopted it and this (indicative

conceptual outline of the comprehensive framework of African climate change programmes) was

subsequently endorsed, among others, by the African Union Summit held in Syrte, Libyan Arab

Jamahiriya in July 2009. (Comprehensive Framework of African Climate Change Programmes, pg.

24)

Global adaptation initiatives list:

Advancing Capacity for Climate Change Adaptation (ACCCA/UNITAR)

Climate Change Capacity Development (C3D)

Capacity Development for Adaptation to Climate Change and GHG Mitigation (C3D+)

Global Climate Change for Africa (GCCA)

EuroAfrica-Information Communication technologies (ICT) Initiative

European Capacity Building Initiative (ECBI)

EAD DFID Climate Change Adaptive Capacity Building Project

16

Assessments of Impacts and Adaptations to Climate Change (AIACC) in Multiple Regions and

Sectors

Adaptation Learning Mechanism (ALM) Knowledge sharing project

ESA TIGER initiative

Capacity strengthening in the least developed countries for adaptation to climate change

(CLACC)

Mitigate and Assess risk from Volcanic Impact on Terrain and human Activities (MIAVITA)

African-European Georesources Observation System (AEGOS)

The Observing system Research and Predictability EXperiment

Sustainable Fisheries Livelihoods Programme (SFLP or PMEDP in French).

CLIMAG West Africa

Regional Program for the Conservation of Coastal and Marine Protected Areas in West Africa.

Comprehensive Framework of African Climate Change Programmes, pg. 32 - 39)

Regional adaptation initiatives list:

African Union (AU) Climate change adaptation programmes

o African Monitoring of the Environment for Sustainable Development (AMESD).

o Great Green Wall for the Sahara and Sahel (GGWSS) Initiative (under implementation)

o Multilateral Environment Agreements (MEA) Capacity Building Project for AU Member

States

o The Programme of Action for the Implementation of the African Regional Strategy on

Disaster Risk Reduction

Climate Change Adaptation in Africa

Comprehensive Framework of African Climate Change Programmes, pg. 39 - 41)

4. Addressing Environmental Challenges by Going Green Policies

1. Green economy: African countries have opportunities to achieve a transformation towards a greener

economy that delivers sustainable economic growth and development and promotes employment

opportunities and poverty reduction, while enhancing the continent’s natural capital and reducing

ecological scarcities and environmental risks. These opportunities can be achieved by significantly

increasing investments in sectors such as renewable energies, low-carbon transport, energy-efficient

buildings, in addition to improved freshwater provision, forest and fishery resources;

2. Sustainable management of Africa’s ecosystems and natural resource base: The conservation of

ecosystems and biodiversity is the foundation of a sustainable economy. Water, food, shelter and energy

are the building blocks on which life and economic systems are built and the resilience of Africa’s

economy is intricately linked to the state of the natural resource base. Africa’s ecosystems provide a

range of valuable goods and services, such as food, water and medicinal products, and are an energy

source, among other things. African Governments are increasingly recognizing the importance of linking

ecosystems to social and economic well-being. There is also increasing recognition of the potential

opportunities arising from efforts to adapt to climate change, for example, in promoting the sustainable

management of Africa’s forest resources, land resources and ecosystems;

3. Sustainable energy production: Africa has substantial renewable energy resources, such as solar

and wind energy. Opportunities exist to exploit these renewable energy sources and to enhance energy

efficiency to meet the continent’s energy needs, while also acting to reduce carbon dioxide emissions.

There are significant opportunities for investment in renewable energy and energy-efficiency

17

technologies. African Governments and policymakers have an important role to play in facilitating such

investment;

4. Sustainable transport: There are opportunities significantly to reduce greenhouse-gas emissions,

promote green economic growth and attain the Millennium Development Goals through measures such

as policies, regulations and investments to promote sustainable public transport. Linkages between

improved public transport, improved road infrastructure and efforts to promote air quality, for example

through standards for cleaner fuels and fuel efficiency, provide additional opportunities;

5. Carbon market: Opportunities that arise from Africa’s involvement in the carbon market should also

be considered. (Comprehensive Framework of African Climate Change Programmes, pg. 88)

Kenya’s National Climate Change Platform

This Platform sits in the Office of the President and has made significant achievements in coordinating

multiple stakeholders. However, it is constrained by limited resources and lack of DRR budgets in line

ministries. Difficulties have therefore arisen in integrating DRR in planning processes in urban and rural

areas and a lack of data on risks and vulnerabilities at different scales has been noted.

In Nairobi increasing exposure and vulnerability has resulted from a rapid expansion of poor people living

in informal settlements, with poorly built houses constructed adjacent to rivers and blocking natural

drainage areas. While data and co-ordination systems are still lacking, the Government has established

the Nairobi

Rivers Rehabilitation and Restoration Programme, designed to install buffers, canals and drainage

channels, while also clearing existing channels to reduce flood risks. The Programme targets the urban

poor with improved water and sanitation, paying attention to climate variability and environment

monitoring for flood early warning.

The government is developing a national disaster management policy. This will build resilience to hazard

events, strengthen institutional capacity, develop a well-managed disaster response system, reduce

vulnerability and integrate disaster policy with development policy taking a multi-sectoral, multi-level

approach. The draft policy published in 2009 sets out principles for effective disaster management, codes

of conduct for stakeholders, and provides for the establishment of an institutional framework that is legally

recognised and embedded within government structures. It also stresses the importance of mobilising

resources to enable implementation of the policy, with provision of 2% of the annual public budget to a

National Disaster Management Fund. In 2010 this policy had not reached Parliament for discussion and

approval.

(Managing Climate Extremes and Disasters in Africa: Lessons from the IPCC SREX Report, pg. 13)

Building longterm resilience: from incremental to transformational

If extreme climate and weather events increase significantly in coming decades, climate change

adaptation and Disaster Risk Management (DRM) are likely to require not only incremental (small, within

existing technology and governance systems) changes, but also transformative (large, new system)

changes in processes and institutions. This will involve moving away from a focus on issues and events

towards a change in culture and overall approach, elaborated in the following areas:

Partnerships: among the most successful DRM and adaptation efforts are those that have facilitated the

development of partnerships between local leaders and other stakeholders, including extralocal

governments. This allows local strengths and priorities to surface, while acknowledging that communities

18

and local governments have limited resources and strategic scope to address the underlying drivers of

risk on their own.

Leadership can be critical for DRM and climate change adaptation, particularly in initiating processes and

sustaining them over time. Change processes are shaped by the action of individual champions (including

those resisting change) and their interactions with organisations, institutional structures and systems.

Leadership can be a driver of change, providing direction and motivating others to follow.

A number of private sector organisations have demonstrated this at Chair and CEO level enabling

transformational change within their organisations. Identifying the drivers of hazard and vulnerability in

ways that empower all stakeholders to take action is key. This is done best where local and scientific

knowledge is combined in the generation of risk maps or risk management plans. Greater use of local

knowledge and local capacity can initiate enhanced accountability in integrated risk decision-making.

There is also need for better co-ordination and accountability within governance hierarchies and across

sectors.

International actors can help by providing an institutional framework to support experimentation,

innovation and flexibility, financing risk transfer and supporting funding for adaptation. Technology is an

essential part of responses to climate extremes, at least partly because technology choices and uses are

so often a part of the problem. Enhancing early warning systems is one example where technology can

play an important role in DRM, particularly in considering ‘hard’ (engineering) and ‘soft’ (social and

administrative) technology. Although technology is an essential part of our response to climate change,

responses can also be improved by addressing social vulnerability, rather than focusing exclusively on

technological approaches.

Transformation can imply loss of the familiar, creating a sense of disequilibrium and uncertainty.

Desirable or not, transformations are occurring at an unprecedented rate and scale, influenced by

globalisation, social and technological development, and environmental change. Climate change itself

represents a system-scale transformation that will have widespread consequences on ecology and

society, including through changes in climate extremes.

Responses to climate change and changes in disaster risk can be both incremental and transformational.

Transformation calls for leadership, both from authority figures who hold positions and power, and from

individuals and groups who connect present-day actions with building a sustainable and resilient future.

(Managing Climate Extremes and Disasters in Africa: Lessons from the IPCC SREX Report, pg. 39)

The organization of a generic agricultural carbon project includes the roles of field program manager

(referred to in this paper as project managers), project developer, farmer or community organization,

carbon technical capacity provider, and credit buyer (Figure 1) (Shames and Scherr 2010). This can be

compared against the organograms from the Vi Agroforestry and World Vision case studies in Figures 2

and 3, respectively.

The general structure of these projects was similar to that in Figure 1, although the scope of the roles and

the structure of the entities filling them varied. The project managers and the community groups, the key

entities in each project from an organizational perspective, were at the core of Figures 1-3. All projects

maintained systems for financial management, agricultural extension, and carbon monitoring which were

overseen by the project manager.

The community groups, which were multi-tiered structures often including small groups and larger

clusters, served as aggregators of carbon credits and representatives of the farmers’ interests. The

responsibilities and dynamics between and within the project management and community group resulted

in differences in the organization of each project, with corresponding implications for community

participation in decision-making. (Institutional innovations in African smallholder carbon projects,

pg. 12)

19

(Institutional innovations in African smallholder carbon projects, pg. 13)

20

(Institutional innovations in African smallholder carbon projects, pg. 13)

This analysis of six agricultural carbon projects indicates that new institutional arrangements are

emerging to enable smallholder farmers to benefit from carbon projects. Projects have successfully

established systems for financial management, agricultural extension, and carbon monitoring involving a

complex set of partnerships. They have established institutional relationships with farmers through small

farmers’ groups and clusters, which enables broad participation, efficient contracting, timely

communication, provision of extension services, benefit-sharing, and gender-focused activities.

Project developers and managers face significant financial obstacles due to the high upfront costs of

project establishment, the low price of carbon and the multi-year period between project establishment

and credit verification in the leading carbon crediting systems. Projects have filled financial gaps with

development and philanthropic funds. Due to the relatively small amount of money generated by the

carbon credits, projects need to manage expectations around benefits carefully, support efficient systems

of aggregation and ensure non-cash benefits for farmers. The most significant benefit of participation for

farmers is not a cash payment, but rather access to extension systems that can improve crop yields.

When cash payments are distributed, managing power dynamics within and among farmer groups – the

distribution of payments to individual farmers in many cases – is a significant challenge. (Institutional

innovations in African smallholder carbon projects, pg. 21)

A typology of adaptive responses: examples from food production and food security

21

(“Adaptation of Climate Change in Africa and the European Union’s Development Cooperation”,

pg. 26)

In 2006, OECD experts mentioned examples like crop selection, the design of highways or energy

generation facilities. But not all climate risks are systematically addressed in development planning and

decision-making. And only in rare cases are the projections on future climate change being analysed to

guide the design and implementation of development activities.

The need for a better integration of climate change adaptation into development cooperation has been

stressed by development ministers of the EU in different circumstances. For example, in April 2006

development and environment ministers from OECD countries, of which many are also EU Member

States, agreed the “Declaration on Integrating Climate Change Adaptation into Development Co-

Operation.”

This declaration attaches particular importance to identifying and using appropriate entry-points for

integration, such as country assistance strategies and long-term investment plans; assisting developing

countries to integrate climate change adaptation following the principles of the Paris Declaration on Aid

Effectiveness; and developing and applying tools to address climaterisks in development activities.

(“Adaptation of Climate Change in Africa and the European Union’s Development Cooperation”,

pg. 54)

RE technologies may not generally be cost-competitive under current pricing mechanisms, and so may

be inhibited by an economic barrier. The market expansion of RE technologies, however, has been

accompanied by cost reductions in critical technologies, such as wind and solar PV, and such trends are

set to continue. The portfolio of RE technologies, which includes established hydro power, geothermal

and bioenergy technologies is now, therefore, cost-competitive in an increasingly broad range of

circumstances, providing investment opportunities without the need for specific economic support. For

example, wind projects have successfully competed with other generation projects (including gas) for

long-term power purchase contracts in Brazil without special support measures, and solar water heating

has expanded rapidly in China due to its favourable economics. Taking the portfolio as a whole, RE

technologies should no longer be considered only as high–cost, immature options, but potentially as a

valuable component of any secure and sustainable energy economy, providing energy at a low cost with

high price stability.

22

Where technologies are not yet competitive, economic support for a limited amount of time may be

justified by the need to attach a price signal to the environmental and energy security benefits of RE

deployment, when these are not reflected by current pricing mechanisms. Support is also justified to allow

the newer RE technologies to progress down the learning curve and so provide benefits at lower cost and

in larger scale in the near future. (“Deploying Renewables 2011: Best and Future Policy Practice”,

pg. 17)

Interfaces between strategic areas of development co-operation

representing entry points for adaptation

(“Adaptation of Climate Change in Africa and the European Union’s Development Cooperation”,

pg. 55)

5. Public Private Partnerships

A good example is Living Cities, a USA-based innovative philanthropic collaboration of 22 foundations

and financial institutions that takes a comprehensive approach to improving the lives of low-income

people and revitalizing the urban areas in which they live. Living Cities works to connect city governments

and private partners to ensure that key urban issues — such as green jobs, housing, education, and

neighbourhood stabilization — are addressed in innovative ways. In another example, in Europe the

Living Labs PPP of city governments and private companies aims to create a user-driven open innovation

eco-system where users live, work, study, play and entertain.

In this real living environment, the participants—in cooperation with government institutions and

private companies—co-create, experiment, and test new ideas, new products, and new services.

Ultimately this approach is expected to lead to user-centric solutions and social innovation

processes. Crucial drivers of the Living Labs are ICT and the Internet, which are at the heart of the open

co-creation; the platforms and open connectivity, which are key facilitators; and open innovation, which is

the soul of competitiveness and new services. What is more, individual cities (e.g., Oulu in Finland,

Dubuque in the USA, and Beijing in China) are pursuing their own models for using PPPs for urban

development. The Oulu city project is using the living lab approach to win inward investment for the city;

this successful undertaking has encouraged some companies to locate research and development

resources in the city. The city of Dubuque (Iowa, USA) is leveraging a PPP to amplify the potential

benefits of the Energy Efficiency and Conservation Block Grant funding programme from the federal

government. The PPP aims at making the city ‘smart’ by reducing energy consumption and greenhouse

gas emissions, and by building up the community’s technical capacity to conduct energy-efficient retrofits

of existing infrastructure, ultimately helping to foster local job creation.

23

The city of Beijing used the PPP model in the building and operation of the city’s fourth subway line (28

kilometres long, with 24 stations), with companies from both inside and outside of China participating.

Although these efforts do help to highlight the effectiveness of the PPP model, they are hardly the rule.

The overwhelming majority of PPPs are still issue-specific, focusing on a particular area of civic

engagement such as education, healthcare, the environment, or the arts. Few such initiatives are

elevated to the level of an entire city, where all of the issues noted above and many more intersect.

However, as cities struggle to overcome economic stress and accommodate rapid population growth,

they must pursue an interconnected model of problem solving.

Innovation from the private sector can be extremely beneficial in this process by leveraging the

capabilities of ICT to make all the systems used to supply the city with services smarter, more efficient,

and more effective. Similarly, the public sector can explore models that have proven to be successful in

corporations and other enterprises. The first step in such an innovative transformation is the creation of

a city-wide strategy that allows leaders to view their cities as an interdependent system of systems,

and to assess ways in which ICT can be used to improve them all. (The Role of Public-Private

Partnerships in Driving Innovation, pg. 3)

In line with the ambitious 2050 targets, we expect that already in 2030 the entire value chain will produce

advanced systems, solutions and high value services for intelligent and sustainable buildings and

districts. The long term strategic objectives include:

Most buildings and districts become energy neutral, and have a zero C02 emissions. A significant number of buildings would then be energy positive, thus becoming real power plants, integrating renewable energy sources, clean distributed generation technologies and smart grids at district level.

Industry will employ highly skilled individuals capable of efficiently, safely and quickly carry through construction processes. This means an extended value chain and collaborative “assembly” line delivering adaptive and multifunctional energy and resource efficient buildings and districts solutions.

Unemployment is kept low as skilled local jobs will be created through an effective and dynamic matching of demand and supply. Public Private Partnerships will indeed cover the entire innovation chain, fostering performance based contracting and innovation friendly procurement practices. This will be achieved with sustainable financial incentives schemes on the demand side. On the supply side, systemic technical solutions optimised at European scale will be integrated locally.

Urban planning and smart cities implementation leverage on these novel solutions at building and district scale, creating the basis for intelligent connections between buildings and districts and all urban resources.

Such globally competitive energy efficiency industry is able to deliver new business opportunities, jobs and solutions. In terms of environmental impacts, greenhouse gas emissions are reduced to 80-95% below 1990 levels, as required by the Energy Roadmap 2050 (COM(2011) 885/2). In addition, the use of renewable energy and efficiency technologies is extended as required by the Strategic Energy Technology Plan, the energy efficiency plan and the recast of the EPBD. (Energy-efficient Buildings PPP beyond 2013 - Research & Innovation Roadmap, pg. 19)

Green technology, development and PPP are not mutually exclusive concepts: The Moroccan solar

energy case study demonstrates the tremendous potential of PPP to contribute sustainable and

environmentally conscious solutions to development-related priorities.

• Contextual understanding and responsiveness promotes stability and sustainability: The

Moroccan example suggests the need of all parties to recognise and adapt to unique situations and

circumstances of both the country and PPP context. The government acknowledged its need to subsidise

the technology its population could not afford in order to attract the private sector and ensure business

viability. The service provider used local know-how and approaches to tackle issues of overdue fees and

public scepticism inherent to the consumer market.

24

• Changes will need to be made to underlying norms of risk transfer and compensation for

PPPs to serve effectively as tools for sustainable development: This is especially important in middle- and

lower-income countries where approaches and perceptions to risks need to be different if these

investments are to bring real and sustainable development (as opposed to growth alone). For example,

the Moroccan energy ministry recognized that standard business models would not be successful in

bringing electricity to its rural low-income areas. It therefore needed to step in and subsidize the private

partner in order to create a viable PPP. (“Harnessing the Power of Public-Private Partnerships: The

role of hybrid financing strategies in sustainable development”, pg. 22)

European Commission PPP support innovation in key industries:

• ‘Factories of the Future’ (€1.2 billion), through an initiative intended “to help EU manufacturers,

especially SMEs, to adapt to global competitive pressures by increasing the technological base of

EU manufacturing through development and integration of the enabling technologies of the future, such

as engineering for adaptable machines and industrial processes, ICT (Information and Communication

Technologies), and advanced materials”;

• ‘Energy-efficient Buildings’ (€1 billion), with an initiative “to promote green technologies and the

development of energy-efficient systems and materials in new and renovated buildings with a view to

reducing radically their energy consumption and CO2 emissions”;

• ‘Green Cars’ (€1 billion), via an initiative “involving research on a broad range of technologies and

smart energy infrastructures essential to achieve a breakthrough in the use of renewable and non-

polluting energy sources, safety and traffic fluidity”. In addition, €4 billion in loans from the European

Investment Bank (EIB) will be available to support research and innovation.

The Recovery Plan also includes a front-loading of €70 million of the EC contribution for the Risk-Sharing

Finance Facility (RSFF), the guarantee fund for research, development and innovation which has been

set up by the EIB and the European Commission under the Seventh RTD Framework Programme (FP7).

This will allow an estimated additional €350 million of loan financing in 2009. (“New public-private

partnerships for research in the manufacturing, construction and automotive sectors”, pg. 4)

As part of its European Economic Recovery Plan, adopted in November 2008 to tackle the global

economic downturn that badly affected key sectors of European industry, in early 2009 the European

Commission launched three public-private partnerships (PPPs). These PPPs were designed to fund

research and innovation in the manufacturing, construction and automotive sectors to boost

competitiveness and increase employment. Progress over the past year shows the scheme is having a

positive effect in manufacturing and in the automotive industry and is starting to boost energy efficiency in

construction.

Working closely with industry, the European Commission proposed research actions to develop new

technologies and promote the rapid conversion of the results into marketable innovations. At the same

time they encourage active participation by small and medium-sized enterprises (SMEs).

Three partnerships have been implemented (in the following sectors):

the manufacturing sector, a EUR 1.2 billion ‘Factories of the Future (FoF)’ PPP initiative to promote the competitiveness and sustainability of European manufacturing industry;

the construction sector, a EUR 1 billion ‘Energy efficient Buildings (EeB)’ PPP initiative to promote green technologies and the development of energy efficient systems and materials in new and renovated buildings to radically reduce their energy consumption and CO2 emissions; and;

the automotive sector, a EUR 5 billion ‘Green Cars (GC)’. PPP initiative to improve the sustainability of all European road transport and accelerate the move towards electrification of road and urban transport. The budget includes a EUR 4 billion loan facility for research and

25

support measures from the European Investment Bank (EIB) under its European Clean Transport Facility (ECTF). With relatively similar objectives, ‘Future Internet’, a new PPP devoted to information and communications technology (ICT), was officially launched in May 2011.

Long-term approach

These initiatives are helping secure the long-term future of a knowledge-based and low-carbon EU

economy, as underlined in March 2010 in the Commission Communication ‘Europe 2020: A strategy for

smart, sustainable and inclusive growth’. In the near future PPPs are expected to play a strategic role in

at least three of the seven EU 2020 flagship initiatives – Innovation Union, Resource-efficient Europe and

Industrial Policy. The Innovation Partnerships, newly proposed frameworks to facilitate innovation, will

also build on initiatives such as these PPPs. (“New public-private partnerships for research in the

manufacturing, construction and automotive sectors”, pg. 4)

The overall EUR 3.2 billion research budgets of the three research PPPs in the Recovery Plan are

based on matched funding from the Seventh Framework Programme (FP7) and the private sector. The

PPPs use the current FP7 funding schemes and the calls are published annually. In addition, the Risk-

Sharing Finance Facility (RSFF), a loan facility for investment in research and technological development

(RTD) and innovation set up with the EIB under FP7 – as well as the measures supported under the

ECTF for the Green Car PPP – has enabled companies to secure funds to take concepts to the market.

Total RSFF lending in 2010 provided by the EIB and supported by the European Commission amounted

to EUR 1.84 million.

Engaging industry

To achieve a fast start-up, in July 2009 the PPPs already launched the first cross-thematic Calls for

Proposals under FP7. In parallel, exploration of a strategy for the longer term was also undertaken. To

structure the dialogue between the public and private sides of the PPPs, the European Commission

invited representatives of the industrial and research stakeholders to take part in Ad-hoc Industrial

Advisory Groups, convened to determine the priorities for shared investment in research.

Following wide-ranging cross-sectoral consultations of the stakeholders, multi-annual roadmaps

were published in January 2010 for the FoF and EeB PPPs. A similar roadmap was published for the GC

initiative in early 2011. These roadmaps help prepare the annual Work Programmes for the PPP Calls for

Proposals within FP7.

The manufacturing and construction sectors have set up dedicated non-profit associations – the

European Factories of the Future Association (EFFRA) and the Energy-efficient Buildings Association

(E2BA) – to facilitate liaison with the EU Commission in developing the PPPs. (“New public-private

partnerships for research in the manufacturing, construction and automotive sectors”, pg. 4)

Green hubs and Green Corridors

This domain covers the development of efficient interfaces in the transport system, or ‘green hubs’.

Efficiency in this context is defined as high operational performance, effective use of resources, limited

impact on the surroundings and the environment. The approach to develop hubs according to this

ambition has two dimensions:

• the improvement of the hub itself, focusing on operational improvements, reduction of energy use of

processes in the hub, etc;

• relieving the hubs of temporary or geographically concentrated pressures by connecting the hubs with

each other.

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Given that corridors and hubs also involve infrastructure, the explicit development of new models of

Public-Private Partnerships (PPPs), in which not only the investment but also the level of innovation is

made part of the partnership, need to be considered as ways to achieve green hubs and Green Corridors.

(“European Green Cars Initiative: Public-Private Partnership”, pg. 57)

Today, the construction sector is fully aware of a huge responsibility, being the highest energy

consumer in the EU (about 40%) and main contributor to GHG emissions (about 36% of the EU’s

total CO2 emissions and about half of the CO2 emissions which are not covered by the Emission Trading

System).

In March 2007, the European Council set clear goals for 2020:

Increase energy efficiency to achieve a reduction of 20% of total energy use (below 2005 levels); 20% contribution of Renewable Energies to total energy use (11.5% above 2005 contribution); 20% reduction of Greenhouse Gases (GHG) below 1990 emissions (14% below 2005 emissions).

In line with the European Economic Recovery Plan, further strategic targets impacting on Energy

Efficiency in Buildings and its innovation potential are associated to the following policies:

the EU Lisbon Strategy for Growth and Jobs; the Barcelona 3% RTD intensity objective; the Recast of the Energy Performance of Buildings

Relevant European Directives;

the Action Plan on Energy Efficiency in Europe – saving 20% by 2020; the Directive on end-use energy efficiency and energy services; the White book on Renewable Energy Sources (RES); the Action Plan on Energy Efficiency – “Doing More with Less”; the Directive on electricity from renewable energy sources; the Directive on eco-design of end-use energy consuming equipment; the Directive on appliances energy labelling; the Directive on heat demand based high efficient cogeneration; the European Strategic Energy Technology Plan; the Environmental Technology Action Plan; the EU Sustainable development strategy; the Green paper towards a European strategy for the security of energy supply; the Kyoto Protocol and related international agreements; the i2010 Strategy and Communication. (“Energy-Efficient Buildings PPP”, pg. 7)

In line with the ambitious 2050 targets, we expect that already in 2030 the entire value chain will produce

advanced systems, solutions and high value services for intelligent and sustainable buildings and

districts. The long term strategic objectives include:

Most buildings and districts become energy neutral, and have a zero C02 emissions. A significant number of buildings would then be energy positive, thus becoming real power plants, integrating renewable energy sources, clean distributed generation technologies and smart grids at district level.

Industry will employ highly skilled individuals capable of efficiently, safely and quickly carry through construction processes. This means an extended value chain and collaborative “assembly” line delivering adaptive and multifunctional energy and resource efficient buildings and districts solutions.

Unemployment is kept low as skilled local jobs will be created through an effective and dynamic matching of demand and supply. Public Private Partnerships will indeed cover the entire innovation chain, fostering performance based contracting and innovation friendly procurement practices. This will be achieved with sustainable financial incentives schemes on the demand

27

side. On the supply side, systemic technical solutions optimised at European scale will be integrated locally.

Urban planning and smart cities implementation leverage on these novel solutions at building and district scale, creating the basis for intelligent connections between buildings and districts and all urban resources.

Such globally competitive energy efficiency industry is able to deliver new business opportunities, jobs and solutions. In terms of environmental impacts, greenhouse gas emissions are reduced to 80-95% below 1990 levels, as required by the Energy Roadmap 2050 (COM(2011) 885/2). In addition, the use of renewable energy and efficiency technologies is extended as required by the Strategic Energy Technology Plan, the energy efficiency plan and the recast of the EPBD.

(“Energy-efficient Buildings PPP beyond 2013 - Research & Innovation Roadmap”, pg. 19)

Based on an analysis of these barriers and the existing landscape of initiatives including existing public

private partnerships, some examples of opportunities for PPPs are presented below. These are only

examples based on the analysis, and there would, naturally, be other PPPs which would likewise have

the potential to capture parts of the resource opportunities:

Food waste (high‐income countries): Development of a reverse supply chain to divert food

waste to its most efficient possible end use. Existing PPPs such as FUSIONS play an important role targeting the prevention of food waste — and can be supported in these efforts — but a new PPP could also potentially play a role redirecting waste to more efficient end uses. As part of

such a PPP which will need to be tailored to each specific local context, an at‐scale logistics

system to collect food waste from farms, wholesalers, and retailers could be developed. In similar models, logistics companies (e.g. from the waste management industry) have provided free collection on the condition that they can sell or process what they collect. From a centralised

collection hub, products could either be returned to the retail market, for near‐term sale, or can

be linked to auction/claiming systems for food banks, composting firms, or livestock breeders. Meanwhile, centralised logistics could enable collection of granular data on food waste. If needed, anonymity could be guaranteed to donors. Regulatory agencies may also need to clarify liabilities in instances of donation, or rationalise laws surrounding animal feed, e.g. “Good Samaritan Laws”.

Food waste (middle‐ and low‐income economies): Address supply chain bottlenecks by

supporting coordinated investments in supply chain development and by improving data collection. In middle and low income countries, governments and supporting multilateral institutions such as the International Finance Corporation (IFC) and the World Bank could facilitate supply chain coordination which would enable food and beverage companies to provide joint investment in supply chain improvements at a scale that often is not feasible or attractive for any single player.

Industrial energy efficiency (motor systems): Establish standards for motor systems similar to those that exist for individual motors. A potential opportunity exists for a PPP focused on motor system efficiency, by driving toward the coordinated global adoption of motor system standards. A coalition of industry leaders in a range of countries could, for instance, push for the establishment of voluntary standards for common archetypes of motor systems. The development of this voluntary set of norms might in turn accelerate the adoption of a more formal set of global industry standards.

Urban water leakage: A multi‐local, city‐focused approach to addressing water leakage. This

could involve leveraging a network of cities like the existing C40 platform to make water supply efficiency a goal for member cities. The PPP could help facilitate a wide range of actions. Fundamentally, the PPP would be looking to lower risk for all parties – for the municipality in raising water rates and disrupting roads etc, and for the companies in terms of investing in new infrastructure. One or a handful of major cities with high leakage rates could be selected as pilot model cities for major urban water supply improvement projects. A group of lead “best practice” cities with experience in leakage reduction and supply improvement. The projects would hinge on the commitment and leadership of the municipal water utility of the pilot city in question. This could also be supported by development of more detailed data on water leakage, including “global league tables” and consumer data applications that can help spur action.

Grid integration: Grid integration may be accelerated, mostly on regional and national levels, through a PPP to disseminate grid integration best practices around addressing issues such as

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public acceptance, permit process streamlining, regulatory frameworks, cost recovery mechanisms and access to finance. It is, however, important to recognise that the nature of barriers will vary in each local context and hence the approach to supporting grid integration will

ng waste water with those that could use it. WaterMatch, a free website and data portal that attempts to facilitate matches between producers and potential users of industrial wastewater, or another platform with a similar approach, could potentially be scaled up in a three step approach. First,

regulators could work with local wastewater treatment plants to provide up‐to‐date data on

wastewater availability and facilitate the matchmaking process in lead countries (chosen based

on level of water scarcity, current reuse levels, and the presence of water‐intensive industrial

activity). Second, the database could partner with water‐intensive industries to populate the site

with data of their treated effluent volumes and the related quality. Finally, a water analytics toolkit

that would help water‐intensive industries understand the true cost of water in their internal

processes, and then determine whether and how they could re‐use some of their own effluent

streams. This PPP can achieve global scale by providing a cross‐country database of

wastewater.

Advanced bio‐based fuels and chemicals: There may be an opportunity for a PPP to help

bio‐based‐products ‐ such as ligno‐cellulosic processes (transformation of ligno‐cellulosic

feedstock into biofuels or bio‐chemicals), biogas (methane), biodiesel from animal fat, methanol

based on biomass etc., to become commercially viable. Different nations and regions would have

different motivations for supporting a PPP promoting advanced bio‐based fuels and chemicals,

ranging from energy independence, GHG mitigation, job creation or development of a competitive high technology industry. The PPP could cover different combinations of feedstock, processes

and end‐products (fuels or chemicals) depending on the objectives of the nations/regions

supporting it and the nature of the feedstock available locally. It could be an objective to establish clear and pragmatic standards around environmental footprint accounting that would provide further stability to prospective investors in this field.

Successful action on PPPs like these could potentially deliver a significant share of the available resource

benefits. Across each of these opportunity areas, there are a set of implications for cities, public

procurement, international trade, and finance. Some of the PPP opportunities discussed here could be

integrated into existing structures or existing PPPs, while others would require more of a push to develop

new partnerships. (“Accelerating Green Growth through Public-Private Partnerships”, pg. 8)

Public-private partnerships

Second, public-private partnerships offer the best opportunity to meet the five evaluation criteria.

They allow different barriers to be addressed concurrently and increase the impact of a policy on market

transformation. As such they allow more sustainable changes. An example is the efforts of the French

government, which offers fiscal incentives for the use of specific “green” savings products. These have

been used by banks such as the Banque Populaire to offer preferential loans to customers putting in

place EE refurbishment projects. (“Promoting Energy Efficiency Investments: Case studies in the

residential sector”, pg. 12)

6. Foreign Direct Investment

When a firm wants to invest in a foreign country, there are two possible entry modes: Greenfield

investment or M&A (Mergers and Acquisitions). Greenfield FDI refers to the establishment of new

production facilities such as offices, buildings, plants, factories and the movement of intangible capital

(mainly services) to a foreign country. Greenfield FDI thus directly adds to production capacity in the host

country and, other things remaining the same, contributes to capital formation and employment

generation in the host country. Cross-border M&As involve the partial or full takeover or the merging of

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capital and assets of an existing enterprise in the host country by transnational companies from the home

country. M&A represent a change in ownership that does not necessarily involve any immediate additions

to investment or employment in the country (UNCTAD, 2006). (Foreign Direct Investment as an Engine

for Economic Growth and Human Development: A Review of the Arguments and Empirical

Evidence, pg. 11)

Greenfield investment is more important in developing countries than in industrialized economies (table

4). But the surge of FDI flows to developing economies in the 1990s was accompanied by a marked

change in its composition. M&A investments grew much more rapidly than Greenfield investments and

since the mid-1990s M&As have accounted for a third of FDI flows to developing countries, on average

(UNCTAD, 2006). Latin America and transition countries are above the average, while Asia and Africa

tend to have a significantly lower share of its inflows in M&As. (Ibid.)

Recent theoretical work by Helpman et al. (2004) and others has highlighted the importance of firm

heterogeneity in understanding FDI. Differences in absorptive capacity, regional dimensions, and vertical

linkages may explain why certain local firms do and others do not benefit from FDI. It is hypothesized that

whether a firm can benefit depends on the technology gap with the foreign firm and its capacity for

absorbing new knowledge and technology. Some empirical studies have addressed this need for

absorptive capacity at firm level. Kokko et al. (1996) find evidence of productivity spillovers to those

domestic firms with moderate technology gaps, but not for firms that use considerably lower levels of

technology. Barrios and Strobl (2002) and Girma (2005) find similar results. Also regional dimensions

might play a role, since domestic firms that are located close to MNCs may be more likely to experience

spillovers from human capital acquisition and imitation. Several empirical studies (Aitken and Harrison,

1999; Sjöholm, 1999; Haddad and Aitken, 1993) did not find clear evidence for this hypothesis. Yet, the

findings of Aitken et al. (1997) for Mexico, suggest that proximity to MNCs, in general, provides domestic

plants with better access to foreign markets. (Op.cit, pg. 27)

In the least developed economies, FDI seems to have a somewhat smaller effect on growth, which has

been attributed to the presence of “threshold externalities”. Apparently, developing countries need to have

reached a certain level of development in education, technology, infrastructure and health before being

able to benefit from a foreign presence in their markets. Imperfect and underdeveloped financial markets

may also prevent a country from reaping the full benefits of FDI. Weak financial intermediation hits

domestic enterprises much harder than it does multinational enterprises (MNEs). In some cases it may

lead to a scarcity of financial resources that precludes them from seizing the business opportunities

arising from the foreign presence. Foreign investors’ participation in physical infrastructure and in the

financial sectors (subject to adequate regulatory frameworks) can help on these two grounds. (Foreign

Direct Investment for Development: Maximising Benefits, Minimising Costs. pg. 10)

Among the other important elements of the enabling environment are the host country’s labour market

standards. By taking steps against discrimination and abuse, the authorities bolster employees’

opportunities to upgrade their human capital, and strengthen their incentives for doing so. Also, a labour

market where participants have access to a certain degree of security and social acceptance lends itself

more readily to the flexibility that is key to the success of economic strategies based on human capital. It

provides an environment in which MNEs based in OECD countries can more easily operate, applying

their home country standards and contributing to human capital development. One strategy to further this

goal is a wider adherence to the OECD Declaration on International

Investment and Multinational Enterprises, which would further the acceptance of the principles laid down

in the Guidelines for Multinational Enterprises. (Op.cit., pg. 14)

The beneficial effects of training provided by FDI can supplement, but not replace, a generic increase in

skill levels. The presence of MNEs may, however, provide a useful demonstration effect, as the demand

for skilled labour by these enterprises provides host-country authorities with an early indication of what

skills are in demand. The challenge for the authorities is to meet this demand in a timely manner while

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providing education that is of such general usefulness that it does not implicitly favour specific

enterprises. (Op.cit,. pg. 15)

While it is economically desirable that strongly performing foreign competitors be allowed to replace less

productive domestic enterprises, policies to safeguard a healthy degree of competition must be in place.

Arguably the best way of achieving this is by expanding the “relevant market” by increasing the host

economy’s openness to international trade. In addition, efficiency-enhancing national competition laws

and enforcement agencies are advisable to minimise the anti-competitive effects of weaker firms exiting

the market. When mergers are being reviewed and when possible abuses of dominance cases are being

assessed, the accent should be on protecting competition rather than competitors. Modern competition

policy focuses on efficiency and protecting consumers; any other approach may lead to competition policy

being reduced to an industrial policy that may fail to deliver longterm benefits to consumers. (Op.cit, pg.

17)

The privatisation of utilities is often particularly sensitive, as these enterprises often enjoy monopolistic

market power, at least within segments of the local economy. The first-best privatisation strategy is

arguably to link privatisation with an opening of markets to greater competition. But where the privatised

entity remains largely unreconstructed prior to privatisation, local authorities often resort to attracting

foreign investors by promising them protection from competition for a designated period. In this case

there is a heightened need for strong, independent domestic regulatory oversight. Op.cit, pg. 18)

The direct environmental impact of FDI is generally positive, at least where host-country environmental

policies are adequate. There are, however, examples to the contrary, especially in particular industries

and sectors. Most importantly, to reap the full environmental benefits of inward FDI, adequate local

capacities are needed, as regards environmental practices and the broader technological capabilities of

host-country enterprises. (Op.cit, pg. 19)

The net benefits from FDI do not accrue automatically, and their magnitude differs according to host

country and context. The factors that hold back the full benefits of FDI in some developing countries

include the level of general education and health, the technological level of host-country enterprises,

insufficient openness to trade, weak competition and inadequate regulatory frameworks. Conversely, a

level of technological, educational and infrastructure achievement in a developing country does, other

things being equal, equip it better to benefit from a foreign presence in its markets. (Op.cit, pg. 21)

Yet even countries at levels of economic development that do not lend themselves to positive

externalities from foreign presence may benefit from inward FDI through the limited access to

international funding. By easing financial restraint, FDI enables host countries to achieve the higher

growth rates that generally emanate from a faster pace of gross fixed capital formation. The eventual

economic effect of FDI on economies with little other recourse to finance depends crucially on the policies

pursued by host-country authorities. The sectoral composition of an economy can also make a difference.

While the service sectors of many developing countries may be underdeveloped and hence unable to

attract large inflows of FDI, extractive industries in countries with abundant natural resources can be

developed beneficially with the aid of foreign investors. (Op.cit, pg. 22)

FDI – like official development aid – cannot be the main source for solving poor countries’ development

problems. With average inward FDI stocks representing around 15 % of gross domestic capital formation

in developing countries, foreign investment acts as a valuable supplement to domestically provided fixed

capital rather than a primary source of finance. Countries incapable of raising funds for investment locally

are unlikely beneficiaries of FDI. Likewise, while FDI may contribute significantly to human capital

formation, the transfer of state-of-the-art technologies, enterprise restructuring and increased competition,

it is the host country authorities that must undertake basic efforts to raise education levels, invest in

infrastructure and improve the health of domestic business sectors. Domestic subsidiaries of MNEs have

the potential to supplement such efforts, and foreign or international agencies may assist, for example

31

through measures to build capacity. But the benign effects of FDI remain contingent upon timely and

appropriate policy action by the relevant national authorities. (Op.cit, pg. 23)

In respect to innovation policy it seems advisable to continue to use instruments that foster external

network links between different actors within the East German innovation system. Such programmes

have already been in place in East Germany for some time (e.g. InnoRegio, NEMO, ProInno). We would

recommend that the role of external knowledge flows that come through FDI and trade is recognised

more prominently. This applies to the potential contribution of inward FDI as well as domestic companies

that internationalise trough exports or outward FDI. While exports of East German firms have been

increasing in recent years (Zeddies 2007), outward FDI and the emergence of multinational headquarters

within East Germany are still weak. In addition the introduction of a general tax allowance for R&D

activities should be considered in German economic and innovation policy. The vast majority of OECD

countries has already introduced tax allowances for R&D performing firms. This provides an additional

incentive to international investors to locate new or to keep and upgrade technological activities in East

Germany. Finally, industrial promotion programmes at the federal level (GA-promotion programmes)

emphasise the potential effects of investment projects mainly in terms of employment. Furthermore, with

the exception of Saxony and Brandenburg there is no regional or sectoral focus in the project design

(Titze 2007). However, it might be appropriate to measure the potential effects of funded investment

projects in view of R&D and innovative capability. Greater selectivity in the distribution of investment

funds might also strengthen the absorptive capacity of the East German innovation system. (How does

FDI interact with domestic innovation systems – evidence from East Germany, pg. 13)

Thus, “absorptive capacity” denotes the maximum amount of FDI that a host economy can assimilate or

integrate into the economy in a meaningful manner (Kalotay, 2000). Specifically, there are two stages of

absorbability. One is to bring FDI projects to the practice and the next one is to convert the benefits of FDI

into host country’s competences. In another sense, Cohen & Levinthal (1990) point that organizations

need prior related knowledge in order to be able to assimilate and use new knowledge. Succinctly, in

order to absorb new knowledge and utilize the benefits of FDI as much as possible, the host country

needs to have the initial development of related knowledge and capacities. The capacity mentioned most

in previous studies is the technology factor of both national and domestic firm level, proxied by

technological gap between the host and the home country of FDI. The larger the technological gap, the

smaller is the impact of FDI on economic growth (De Mello, 1997). The second most mentioned factor is

the labor force described by human capital and education, which are found to be essential for absorbing

and adapting foreign technology, and to generate sustainable long-run growth (Blomström & Kokko,

2003). The third capacity is the R&D factor, which is the firm's ability to exploit external knowledge

(Cohen & Levithal, 1990). These three factors work through the channels of FDI transfer that we have

presented earlier. Beside, the host country likely needs more factors. The fourth one is financial system.

A better developed financial system positively contributes to the process of technological diffusion

associated with FDI (Hermes & Lensink, 2003). Finally, the institutional development seems to play a

role. Kalotay (2000) defines institutions as an investment-friendly policy and administrative framework,

while Durham (2004) uses the regulation of business, the protection of property rights and corruption as

institutional indices. (Foreign Direct Investment Absorptive Capacity Theory, pg. 5)

One is micro level proxies by domestic firms and one is macro level indicates by human capital, financial

system, technological level, and institutional development. Local firms represents itself in micro level at

the same time is one component of macro level to assimilate the benefits of FDI. Doing direct investment

in abroad, investors can establish either economic organizations in the form of one hundred (100) percent

capital of foreign investors or joint venture economic organizations with domestic firms or invest in the

contractual forms of BCC6, BO, BTO, and BT, and the other forms. In whichever form, foreign business

needs to cooperate with local business either being partners or sub-contractors or suppliers. Therefore,

domestic firm is not only the main channel for transferring FDI benefits, but also a bridge for connecting

foreign investors and host country. (Op.cit, pg. 8)

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In the co-operation with international enterprises, if domestic firms have at least initial development in

technology, qualified of workers, and managerial skills, domestic firms can learn and easily absorb the

advanced technology and business skills from foreign companies. In contrast, the international

enterprises can acquire and merge domestic firms. Indeed, Katolay (2002) states that the absorption

process depends on the skills and capabilities of local firms and on an affiliate’s commitment to the host

country. Benefits of FDI can be transferred to local firms by either vertical or horizontal channels as we

presented above. No matter what channel it is, domestic companies are required to have initial

technological level to assimilate or image the advanced technology from FDI. In similar vein, Chudnovsky,

López, & Rossi (2004) find that domestic firms with high absorption capabilities reap positive spillovers

from transitional corporations presence while those with low absorption capabilities were more likely to

receive negative spillovers. In the other respect, to be supplier of foreign company, local firm’s capacity

has to satisfy their requirements, which always relate to quality and technological issues. In addition,

technology brings productivity. Productivity is one of advantage factor in competition. The development of

a country cannot only rely on foreign firms but also strongly on domestic firms. It is no doubt to address

that the absorptive capacity of domestic firms is the most important factor determining the degree of

absorptive capacity of host countries. (Ibid.)

Consequently, labor is channel for transferring and receiving the FDI benefits. The transfer of benefits of

FDI to labor goes through training, learning by doing, accumulating experience. Then, labor is the force to

implement the know-how conveyed. Better educated and skilled labor is better know-how received, and

better performance achieved. Borensztein, De Gregorio, & Lee (1998) express that FDI gives positive

spillovers only in a country which has a minimum threshold stock of human capital with a sufficiently

qualified labour force. Likely, Van den Berg (2001) states that the main condition is the quality of the labor

force determine an economy’s ability to create new ideas and adapt old ones. In the disbursement stage,

labor force is indispensable to put project in practice. The shortage of qualified people might cause the

slow and stuck implementation. The low educated and skilled workers of host country definitely impact on

the disbursement of investment and mirror a negative image about host country capacity in FDI

promotion. Chen (1990) confirms that countries with higher amounts of investment in human capital will

be able to gain more benefit from FDI. Hence, to gain the benefits of FDI, the host country certainly need

to have good quality of human capital. (Op.cit, pg. 9)

With these function, financial system is a key tool to implement FDI activities such as disbursement of

investment capital; transfer money from oversea into recipient country; payment for building material, raw

material, labor cost; collection money after selling, transfer income out of country, and the other

businesses. All such basic activities need to have a financial development. If the investment capital is not

disbursed, the project process might be late or stagnant, even closed down. If the investment cannot be

implemented, the attract FDI is nonsense; hence the host country receives nothing from FDI. For that

reason, financial development is vital component to accelerate the recipient country’s absorptive

capacities and to facilitate the FDI operation in the host country. Alfaroa, Chandab, Kalemli-Ozcan, &

Sayek (2004) state that FDI is associated with faster growth in host countries with comparatively well

developed financial markets. (Op.cit, pg. 10)

Borensztein et al. (1998) find that FDI contributes to economic growth only when a sufficient absorptive

capacity of advanced technologies is available in the host economy. The higher efficiency of FDI would

result from a combination of advanced management skills and more modern technology. De Mello (1997)

states that the larger the technological gap between the host and the home country, the smaller the

expected impact of FDI on economic growth is. The aim of host country while calling for FDI is to utilize

the advanced technology of FDI to enhance the economy. This means the host country has to have an

initial development in technology to assimilate this benefit. (Op.cit, pg. 12)

Clearly, the development of institutions will facilitate the FDI business, and accelerate the absorptive

capacity of the country. Durham (2002) addresses those countries with higher legal standards likely

support FDI more efficiently. Similarly, Nunnemkamp (2004) concludes that institutional development

seems to be required to benefit from FDI. Institutional development expresses the development of society

33

and the governance level of the country. A stronger institutional development could lubricate the

absorption in a more convenient process. (Op.cit, pg. 14)

Controlling for this, the most common source of market failure is related to externalities or spillovers of

FDI. As theory suggests, a firm must possess some asset in the form of knowledge of a public-good

character (for example product and process technology or management skills) to be able to compete in

foreign markets. If the multinational corporation cannot capture all quasi-rents due to its productive

activities in the host economy, or if the affiliate increases the competitive pressure and removes

distortions, the host country's private sector can gain indirectly when productivity spills over to locally

owned firms. Thus, when markets fail to reflect the social benefits of the FDI, government action can be

justified to bridge the gap between social and private return for FDI projects that create positive spillovers.

(The Economics of Foreign Direct Investment Incentives, pg. 9)

Moreover, the incentives should ideally not be of an ex ante type that is granted and paid out prior to the

investment, but should instead promote those activities that create a potential for spillovers. In particular,

these include education, training, and R&D activities, as well as linkages between foreign and local

firms.14 An advantage of performance based incentives is that they may affect the entire stock of

investments, rather than just the flow of new investment. An added advantage of focusing on education,

training, and R&D is that these measures are compatible with WTO.s agreement on SCMs. Given their

broad scope, the investment incentives in question should be considered part of the economy.s

innovation and growth policies rather than a policy area that is only of relevance for foreign investors.

(Op.cit, pg. 20)

The interactions between firms in R&D activities are often de-scribed in a oligopolistic model. Muniagurria and Singh (1997) show that technology spillovers from a more advanced foreign firm to the home firm are realized only when the home firm conducts its own R&D. In a similar vein, Kamien and Zang (2000) argue that a firm has to enter the R&D race by engaging in R&D, first of all, in order to benefit from spillovers from rival firms in research joint venture. It is natural to assume that these strategic incentives are stronger in an oligopolistic market such as electrical machinery and radio&TV than food, non-metallic, and others. (R&D and technology spillovers via FDI: Innovation and absorptive capacity, pg. 19) The annual rate of return on R&D investment for pooled samples is estimated as roughly around 3%. Once I include the learning effect of R&D investment in the model, the direct effect of R&D on productivity growth becomes insignificant. Both foreign joint venture (FORGN) and foreign pres- ence in the sector (FOR) are found to have no significant effect on the growth of productivity. But only when FOR is interacted with R&D does it have a positive and significant effect. This implies that the indirect effect of R&D via the development of the absorptive capacity is far more important than the direct effect of innovative R&D in increasing productivity growth of the firm, and that R&D and intraindustry spillovers from FDI go hand in hand. (Op.cit, pg. 20) Dynamics of competition lead to a non-linear relationship between economic development and received

spillovers. In low income economies, a large technological gap may permit conventional demonstration

effects. With economic development, these benefits decline, while foreign investors become more likely to

compete directly with local firms and thus to cause crowding out effects (Aitken and Harrison, 1999).

However, at advanced levels of economic development, local firms also develop their motivation and

capability to react to foreign entry. Beyond a certain threshold, they are likely to generate net benefits

from the interaction with inward investors based on their own capability to absorb latest technologies, and

to react to increased competition by upgrading their productivity. (When and Where Does Foreign

Direct Investment Generate Positive Spillovers? A Meta-Analysis, pg. 3)

The study does not offer an answer to the question of whether, in general, FDI is a lever for eco-efficiency

or contributes to sustainable development. It is difficult to build recommendations on the basis of four

company-level case studies, and further empirical research will be needed to corroborate the conclusions.

Nevertheless, the case studies hint at two main starting points for the improved integration of

environmental aspects into FDI: corporate environmental reporting and “greening” of the supply chain.

(Making FDI Work for Sustainable Development, pg. 25)

34

An improvement in global environmental transparency, especially through global environmental reporting

of TNCs in the host countries, could lead to the dissemination of environmentally sound management

practices and technologies in the host countries. Environmental transparency plays an important role in

increasing access to technology and knowledge and improving both the environmental performance and

reputation of companies. This could inspire other companies to follow their example. FDI can thereby

have positive environmental impacts and effects. (Op.cit, pg. 26)

The incorporation of environmental standards and performance indicators into purchasing specifications

can be an important driver for environmental improvements along the supply chain. A strong

environmental policy contributes to a company’s environmental credibility and can thus support the

transfer of know-how as well as initiating technology transfer and dissemination. The enforcement of this

driver certainly is a challenge for both TNCs and host countries. Therefore measures which could help

such integration need to be designed and implemented bearing in mind different needs and interests.

(Ibid.)

The earlier studies have tested the hypothesis that productivity spillovers are strictly proportional to

foreign presence, but Kokko argues that this is not always the case. Spillovers from competition, in

particular, are not determined by foreign presence alone, but rather by the simultaneous interactions

between foreign and local firms. Hence, it is possible that the spillovers are larger in cases where a few

foreign MNC stir up a previously protected market than in a situation where foreign affiliates hold large

market shares, but refrain from competing hard with local firms. In fact, in some cases, large foreign

presence may even be a sign of a weak local industry, where local firms have not been able to absorb

any productivity spillovers at all and have therefore been forced to yield market shares to the foreign

MNCs. Analyzing the operations of foreign and domestic firms in Mexican manufacturing in a

simultaneous framework, Kokko (1996) finds support for these hypotheses. (The Economics of Foreign

Direct Investment Incentives, pg. 16)

7. Awareness Building

In pluralistic democratic societies pressure for any change normally comes from the electorate in the

bottom-up fashion. So it is presumed that, with greater awareness of environmental issues and problems

the public would exert pressure on their elected representatives to implement projects and policies and

undertake activities aiming at sustainable development. However, this political process is fraught with

three main difficulties that do not augur well for global sustainable development.

• The time-horizon of most elected political representatives does not extend beyond the next

general election, which is usually 4 or 5 years. Understandably therefore, after being elected they become

preoccupied with all the things they consider necessary for promotion and re-election next time round. If

the party in power loses the next election, a different party comes to power with a different agenda

reflecting its own priorities and ideology and, of course, its obligations of "patron-clientism". Sustainable

development, on the other hand, is a long-term process, not an event. It needs development and

implementation of consistent and coherent long-term policies — and most importantly continuity,

commitment and unwavering political will — to bear fruit. Clearly, under current arrangements there is a

mismatch between what is needed and what is on offer.

• General elections are usually won or lost on the "bread-and-butter" issues of taxation, education,

healthcare, housing, etc., and seldom if ever on environmental issues and problems. Although during

election campaigns major political parties do talk about the need to protect the environment and the

importance of achieving sustainable development, they shy away from the crucial issue of sustainable

consumption patterns — in particular the need for the affluent to adopt less consumptive life-styles

(WCED, 1987) — because they know the public at large equates improving standards of living and quality

of life to ever greater consumption of goods and services to which they aspire. And so for a political party

to campaign for election on the need to reduce consumption would be tantamount to committing political

suicide.

35

• The prevailing laissez-faire economic system, which is universal in its scope today and is

being reinforced by increasing pace of globalization, is itself the greatest obstacle to global sustainable

development. The system works only when there is uninterrupted growth in production and consumption

of goods and services. On the other hand sustainable patterns of production and consumption, meaning

production and consumption commensurate with the capacity of earth's ecological systems and raw

material reserves to supply, are the core pre-requisites of sustainable development (WCED, 1987; Nath,

2000). Thus trying to achieve sustainable development within the framework of the prevailing laissez-faire

economic system can be likened to trying to fit a square peg in a round hole. Most politicians know this,

and do not discuss it for fear of upsetting their constituents to whom sustainable consumption is

euphemism for reduced living standards. And so they project sustainable development in terms of energy

efficiency, keeping neighborhoods clean and tidy, and so on. Laudable though such efforts are, and

environmentally helpful too, it is hard to see how they could possibly deliver global sustainable

development unless the central issues of the affluent adopting less consumptive life-styles and equitable

allocation of wealth and natural resources within and between nations are addressed.

"...Developing countries should strive towards a level of consumption which is compatible with their need

for a basic standard of living while developed countries should implement policies and strategies which

encourage changes in unsustainable consumption patterns". (“Informal Mechanisms for Raising

Public Awareness at National and Global Levels and Important Related Issues”, pg. 4)

Problems with Public Participation

Contrary to the assumptions of many people, public participation is not easily achievable.

Robert Chambers, in his seminal work: ‘Whose Reality Counts’ (Chambers 1997) presented a vast range

of problems for development including:

• accelerating rates of change,

• the notion of a global ‘overclass’,

• blinkered professionalism (the professional prison) and

• self-deception among urban, industrial elites.

More pointedly, over the past seven years, across a range of projects in both the Mediterranean and the

UK, a number of problems with public participation, which resonate with Chambers categories, have been

observed including:

• Expert-driven change agendas,

• Exclusion of minority ‘voices’,

• Technical jargon excluding the population majority,

• Cynicism concerning the weight of importance politicians accept from public participation processes,

• Cynicism concerning the ability and willingness of the political class to ‘listen’,

• Disempowerment of the mass. (“Sustainability Analysis, Environmental Awareness and Public

Participation within CAMP Cyprus”, pg. 6)

In France the ‘Barnier’ Law, originally presented in 1995 and updated in 2002 – Law no. 2002-276,

imposed the need for public participation in the process of planning or infrastructure projects.

Similar Laws exist in other European countries including the UK and Denmark. In elaboration of this, in

the UK, as an initial means to improve public participation in sustainable community development issues

36

including planning and construction projects, it has been proposed that the Imagine approach be adopted

as the primary means. The Academy for Sustainable Communities (ASC) was set up in April 2005 by

the Department for Communities and Local Government and is a key part of the Governments drive to

create local communities fit for the 21st century. The mandate for the ASC is to:

• Create, lead and drive a consensus on the definition on what makes sustainable communities and why

they are needed;

• Make a leading contribution to the sustainable communities policy agenda and raise awareness of its

importance;

• Drive sustainable communities skills and knowledge policy at national and international level;

• Build capacity and capability in the sustainable communities sector;

• Commission new materials directly; and

• Influence the education and training programmes of others and to improve skills and knowledge on

sustainable communities.

The ASC is leading in a process which intends to drive the public participation in sustainability agenda.

The key means to operationalise this agenda is to provide Imagine as a facilitating device for

communities both as an academic form of analysis and as a local means to achieve grass-roots input to

issues pertaining to planning and development. The ASC process established in the UK might be a model

for the Cyprus context. As has already been noted, and as re-enforced by Cypriot experts, public

participation is very complex and demanding activity. Its effectiveness presupposes three major

‘resources’:

• Broad awareness of the state of the environment and the consequences of degradation through excess

or wrong development;

• Specific awareness of present conditions and possible future trends; and,

• Exposure to the perspective, views and objectives held by other involved social, economic and policy-

making stakeholders. (“Sustainability Analysis, Environmental Awareness and Public Participation

within CAMP Cyprus”, pg. 12)

It has been realized that the most important way to improve the condition is to create environmental

awareness amongst people. Environmental awareness has to be developed through both formal and

non-formal channels of education. In a country like Bangladesh, where about most of the adult

populations are illiterate; the need for non-formal education assumes particular significance. Such non

formal education can be arranged through science clubs and other children’s and youth organizations and

various social welfare bodies.

Steps should be taken for updating and improving the content and method of teaching. There should

be adequate coverage of environmental education in the teacher training programmes for primary and

secondary school teachers both in service and pre service. Arrangement should be made for the

provision of audio visual materials on environmental education for both formal and informal education

courses on environmental should be strengthened and updated in all the universities and institutions of

higher education in the country.

The press should give more coverage to environmental issues. Since a large population in

Bangladesh is illiterate there should be regular weekly or fortnightly programmes on radio and TV on

issues relating to the environment. The department of mass education should arrange film shows on

environment and nature conservation in both rural and urban areas. The NGOs should be provided with

37

assistance and support in their efforts of creating awareness about the environment and its protection.

(“Public awareness about environmental issues: Perspective Bangladesh”, pg. 24)

The usual arguments for participation include its positive contribution to the legitimacy and public

acceptance of governance arrangements and outcomes; harnessing of local knowledge for substantive

improvement of decisions and plans; resolution of political and societal conflicts by means of alternative

mechanisms; and empowerment of marginalised groups who have been left out of environmental

governance

Our understanding of participation rationales is derived from Fiorino (1990) and subsequent work by

Stirling (2006, 2008) and Blackstock and Richards (2007). Summarizing this work we define the following

rationales:

- instrumental: effective participation makes decisions more legitimate and improves results. It aims to

restore public credibility, diffuse conflicts, justify decisions and limit future challenges to implementation

by ‘creating ownership’. Policy goals are not open for discussion, only the details are (to a lesser or

greater extent). It hereby supports incumbent interests.

- substantive: non-experts see problems, issues and solutions that experts miss. It aims to increase the

breadth and depth of information and thereby improve the quality of decisions; it ignores power issues

e.g. related to problem framing. Unlike in the instrumental rationale, policy goals can be changed in a

substantive rationale. - normative: democratic ideals call for maximum participation. It aims to counter the

power of incumbent interests and allows all who are affected by a decision to have influence.

(“Rationales for public participation in environmental policy and governance: practitioners’

perspectives ”, pg. 3)

The “classical” policy tools are:

Behavioural tools: behavioural tools aim at influencing consumer behaviour using understanding drawn

from a broad field of domains such as psychology, sociology and cultural studies. Some behavioural tools

are known as “nudges” (inspired by the work of Thaler and Sunstein). A typical example is the “red orb”,

from Southern California Edison, indicating an excessive energy consumption in the household.

Behavioural tools have been used for a long time in areas such as health and safety. However, little is

known about the concrete results and benefits of such measures.

Communication/information provision tools: Environmental product labels provide information to

consumers with the hopes of influencing their purchasing decisions. However, the quantity and quality of

the information on product labels may be problematic. There is much to be learned from marketing

experts on how to effectively communicate information aimed at influencing consumers’ decisions. It is

clearly easier to leverage marketing work through product policy actions than to develop centralised

sustainable consumption marketing that would go against or control product marketing from the

producers. The use of information and awareness-raising instruments has to go hand-in-hand with the

provision of infrastructure and proper price incentives. Information tools like eco-labelling also lead to

development of methods for quantifying impacts, allowing investigation of benchmarks, identifying areas

for improvement potential, preparing the ground for mandatory measures and increasing their political

acceptability.

Economic tools: Economic instruments are seen as key in influencing people’s choices, since the price

of a good, quality and income is often the influencing factor for purchasing decisions (e.g. French

“bonus/malus” system for environmentally friendly cars led to 30% rise in purchase of fuel-efficient

vehicles in 2007, 45% in 2008 and 56% in 2009). Currently, consumers do not face the full costs of their

consumption patterns and the associated environmental costs. Economic tools are used to introduce

price signals and could be used to integrate the costs of pollution into the price of products. Finally, it is

important to consider the social costs of environmental policy, as they can have regressive effects.

38

However, the regressive effects of higher pricing could be mitigated through assistance to low-income

households or progressively graduated prices based on taxes.

Regulatory tools: Regulatory instruments require intensive research, enforcement, and administrative

burdens on governments compared to the other policy tools. Legislation directly aimed at the consumer

can receive less public acceptance. Nonetheless, when implementing a mix of tools or “policy packages”,

there may be a significant time-lag for households to adjust and therefore use of regulatory tools within

the “package” can be particularly effective in order to counteract unsustainable consumption behaviour

(as concluded by the EUPOPP study). (Policies to encourage sustainable consumption, pg. 13)

Civic movement as a form of awareness on environmental conservation can be done according to the

level and scale, started from the family, community, educational institutions and NGOs. From the studies

outlined above, there are three organizations that are performing social welfare efforts that come from the

society: the local community institutions, organizations whose basic motivation is philanthropy and

nongovernmental organizations.

All these three are nongovernmental social organizations as they grow from the inside and on the

initiative of society. Local community organizations are able to grow as a form of actualization of various

social institutions and usually are based on religious experiences, thus fueled by religious motivations.

Sometimes the basis is locality bond, kinship, patron-client, the principle of reciprocity and social

solidarity. As a community-based organization, these institutions usually exist with strong leadership, and

are able bind and involve the majority of people in certain communities. In order to develop these

institutions, the case is not how to turn them into a formal organization, rather how to maintain the bond

and the existing local patterns including patterns of leadership, while facilitating the appearance of

personnel managers with managerial skills.

The limitation is the scope of social services that are provided in local level. Meanwhile, social

organizations from the community in the form of non-governmental organizations (NGOs) can be broadly

divided into two: NGOs that are directly work on social welfare and social services and NGOs that

indirectly have impact on improving social welfare through advocacy and their position as a pressure

group that can influence decision and policy making. (Building Citizen Awareness of Environmental

Conservation, pg. 2)

8. Conclusions & Recommendations

There is also more and more recognition that climate change seriously threatens the attainment of

Millennium Development Goals and in particular poverty eradication and sustainable development. Now

and in future, it affects or will affect agriculture and food security, water resources, energy, human health,

coastal zones, economy, and physical infrastructure. (Comprehensive Framework of African Climate

Change Programmes, pg. 4)

Even though remarkable progress has been achievements in the last ten years, still the key challenges

remain on how to strengthen the capacities of African institutions in the long term while ensuring

sustainability. In the context of Africa, adaptation to climate change remains the top priority. In that

respect, there is real need to continuously enhance institutional capacities and develop concrete long

term, flexible and dynamic adaptation programmes in the continent. Also, there is need to further enhance

regional cooperation and collaboration to share experiences on lessons learnt, best practices while

capitalising on comparative advantages and complementarities. In terms of mitigation, the main issue is

to support African countries to increase their participation to the carbon market, especially on clean

development mechanism (CDM), reducing emissions from deforestation and forest degradation (REDD)

39

(plus) and agriculture forestry and other land uses (AFOLU). Currently, mitigation is based on national

projects that require a regional cooperation and technology transfer. The role of the regional cooperation

could be essential to achieve to address the barriers limiting the development of carbon in Africa.

Finally, on the basis of the existing regional initiatives in Africa, it is vital to develop a regional framework

of climate change in Africa that take into consideration the specificities of different regions as well as to

consolidate and improve the implementation of climate change projects and programmes within the

continent. (Comprehensive Framework of African Climate Change Programmes, pg. 5)

1. Concrete and effective programmes and projects for DRR, BES and cross –sectorial planning should

be elaborated at national and sub-regional levels (allow feedback mechanisms), and action taken for

sustainable funding and implementation;

2. The key sectorial programmes and projects promoting sustainable development at national and sub-

regional levels need take into account cross-sector and transboundary implications along with

mobilisation of sustainable funding for these key sectors;

3. Programmes and projects should be developed to not only to build economic and social resilience of

communities but also to support diversification of economies to reduce dependence on climate-sensitive

sectors;

4. Even though Cameroon and Gabon are not classified as LDCs, these two should prepare NAPAs in

order to enable/facilitate the harmonisation and coordination of Climate Change programmes and

activities within the sub-region;

5. COMIFAC member countries may want to consider including “Climate Change” as one of the strategic

areas and components for action within the“Convergence Plan” for a “Common Vision on Central African

Forest Ecosystems”;

6. Mainstreaming the activities of different sub-regional organisations such as COMIFAC and ECCAS,

into already existing instruments such as ECCAS Environmental Strategic Orientation with the COMIFAC

Convergence Plan through a collaborative action plan to be effectively implemented by member

countries;

7. Concrete and effective programmes and projects for disaster reduction and risk management should

be elaborated at national and sub-regional levels, and need to ensure they integrate the three

components namely Early warning and preparedness, emergency response and post-disaster recovery

as a package; (Comprehensive Framework of African Climate Change Programmes, pg. 92)

8. Even though the various initiatives and programmes address different specific sectors, given the

Sectorial overlaps, cross-sectorial linkages are vital in adaptation process. Furthermore for SADC has

only emphasized adaptation in agricultural and water sectors, leaving out other sectors under

represented, yet they are also greatly mpacted by climate change;

9. The Countries NAPA s need to be implemented, they reflect the diverse immediate and priorities

needs of different countries. However, they should meanwhile be reviewed to ensure the take into

account medium term and long term needs, transboundary and sectorial overlaps;

10. A comprehensive and integrated approach to planning and implementing the climate change

adaptation strategies across the wide range of agro ecosystems in different countries in Africa is critical

for planning and implementing effective adaptation strategies to reduce vulnerability across divide;

11. Programmes and projects should be developed to build economic and social resilience of

communities should not only focus on reducing vulnerability but should go a step further to promote

diversification of economies to reduce dependence on climate-sensitive sectors, in particular

40

implementation of income-generating activities for peri-urban and rural communities; and development of

workable finance structures such as micro-finance and micro-industries;

12. Setting up a regional consultative framework to ensure coordination and consultation at various

levels. This will also build an efficient communication link between research, institutions, political,

economic and community decision making. (Comprehensive Framework of African Climate Change

Programmes, pg. 93)

Need For Effective One Voice

For Africa, the immediate need is not essentially that of reducing greenhouse gas emission, which is

relatively low in the global context. According to the World Bank’s World Development Report 2010 (CIGI,

2009), high-income industrialized countries, with one-sixth of the world’s population, are responsible for

nearly two-thirds of greenhouse gases. The need is for Africa to ensure that the current development

impacts of climate change on its economies and populations are recognized and that a development

agenda is integrated into the various international agreements. It is important that Africa should speak

with a strong unified voice and present a common position in future international negotiations, and that

this voice should be heard (APF, 2007).

Capacity Building on Climate Change

One of the main problems in understanding the implications of climate change is the collection of reliable

meteorological data of sufficiently high resolution and continuity. This is crucial for detecting important

local and regional scale climatic trends as well as validating regional projections of climate models (and

hence reducing uncertainties in the projections)(Few, Osbahr, Bouwer, Viner, & Sperling, 2006).

Insufficient and unreliable meteorological datasets for the countries in Africa have remained a

fundamental problem. It is therefore imperative for Africa to develop capacity for research and data

collection, including meteorological infrastructure, to monitor climate change impacts, and formulate and

implement policies to protect natural resources, including forests, and conserve energy based on clean

low carbon technologies. Building capacities in these areas will enable data generation that can provide

reliable and appropriate information on present and future climate risks as improved data sources and

modelling capacity are vital ingredient in which adaptation decisions and actions can be based(Few, et

al., 2006). Curriculums that will adequately develop capacity in science with respect to climatic extremes

and climate change should be strengthened in both government meteorological/hydrological agencies

and relevant departments in higher institution of learning. Short and long time forecasting climate models

especially for drought and wind storm can provide information that can lead to useful policies that will

enhance adaptation mechanism for alleviating the impact of climate change.

It is argued by Smit and Pilfosora (2001, p 882) as referenced by Grothmann and Patt (2005) that

countries with limited economic resources, low levels of technology, poor information and skills, poor

infrastructure, unstable or weak institutions and inequitable empowerment and access to resources have

little capacity to adapt and are highly vulnerable (Grothmann & Patt, 2005). The urgency for capacity-

building for normalising climate information in various development sectors is a fundamental concern for

Africa. There are a number of institutions across Africa that frequently hold training courses as an

auxiliary to capacity-building activities in the area of climate variability and change (Ogallo, 2010). Among

them are USAID and RERA.

Need For Information and Awareness at the Grassroots Level

There has been persistent gap between the climate risk information and the ability of decision-makers

and vulnerable stakeholder to interpret and react to such information in Africa (Few, et al., 2006). In view

of this, diverse dissemination strategies that will tailor and package information on climate change to the

end users bearing in mind their characteristics and their environment should be identified and adapted.

Also, training should be provided for the use and advance of early warning which will tailor stakeholders

to reach consensus on necessary measures quickly. African countries should realize that climate change

41

does not just require state-of-the-art information and new technologies, but also the need for people to

respond, change their behaviour and find new livelihoods. People at community and grassroots levels

should take part in the planning and execution of programs and projects to minimize how climate change

affects human and socioeconomic development (Plaut, 2006). Civil society organizations in all the

countries were not yet organised around climate change. The role of the media can be further

strengthened. (Energy and Climate Change: Critical Reflection on the African Continent, pg. 93)

As interpreted by Sampei and Aoyagi-Usui (2009), many campaign programmes in various environmental

fields- including energy conservation campaigns and waste reduction campaigns- have used the mass

media, one of the studies include that of Davies (2008) (Sampei & Aoyagi-Usui, 2009). In the European

countries, with no exception of the Netherlands and United Kingdom, mass media have gained reputation

for these countries national campaigns for the reduction of GHGs (Sampei & Aoyagi-Usui, 2009; Staats,

Wit, & Midden, 1996). Public views investigated in developed countries have identified television and daily

newspapers as primary sources of information (Sampei & Aoyagi-Usui, 2009). The urgent need to

mitigate and adapt to climate change is becoming more widely understood in scientific and policy circles,

but public awareness lags behind (Stephen, 2005) especially in Africa.

Good Representation at Global Meetings

African countries need to ensure that they are represented at appropriate and relevant levels at

international meetings while discussing issues of climate change, including agenda setting, negotiations

and implementation aspects. African countries contribute a small portion of the various international

associations fighting against climate change. This needs to be addressed by the governments of Africa.

There is need for more participation of the African countries since most of the climate disasters occur in

Africa. African authorship in the IPCC reports contribute only 4%, with the majority from North America

and Europe (Ho-Lem, Zerriffi, & Kandlikar, 2011). Without great participation of the African leaders in

Climate committee, it becomes a grave task for the continent’s involvement in capacity building,

networking with the right organizations to help channel the course of greenhouse mitigation required for

its development and future generation survival. Many international organizations are ready to assist the

African continent in mitigating greenhousegases after incorporating their various mitigation options

successfully in Europe and various parts of the world. Though little emission is recorded in Africa except

South Africa compared to the rest of the world, it is still imperative that a continent like Africa needs to

make use of its resources and potential wisely in assisting and protecting the lives of her citizens. This

can only be successfully achieved by integrating with the rest of the world in its fight against greenhouse

gas emission. (Energy and Climate Change: Critical Reflection on the African Continent, pg. 94)

1. Recognize that indigenous peoples are highly vulnerable to climate change impacts, given their

high dependency on natural resources for their livelihoods and their generally marginalized

position within national societies.

2. Recognize and respect indigenous peoples’ traditional knowledge and its relevance for

sustainable development and climate change adaptation.

3. Adopt a human rights-based approach to climate change adaptation, in line with international and

regional human rights instruments and ensuring implementation of emerging national provisions

for protection of indigenous peoples’ rights.

4. Recognize and respect indigenous peoples’ right to land, territories and natural resources as an

indispensable element of strengthening their long-term resilience towards climate-induced

stresses.

5. Recognize and respect indigenous peoples’ right make their own adaptation priorities, and

participate in all decision-making that affects them – locally, nationally and internationally.

6. Provide adequate financial and technical support to indigenous peoples’ own priorities and

initiatives to adapt to climate change, including by ensuring direct access to adaptation funds at

all levels.

7. Devise targeted programs for particularly vulnerable indigenous peoples, adopting a human

rights-based and holistic approach to strengthening their adaptive capacity, including by

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addressing fundamental discrimination in terms of citizenship rights, access to education and

health, etc.

8. Provide sustained institutional and capacity-building support to indigenous peoples’ institutions to

access information, be consulted and participate in decision-making, to respond to climate

change hazards and to devise long-term strategies for sustainable community development.

9. Initiate training, awareness-raising, capacity-building and sensitization initiatives at local and

national levels, to overcome discriminatory attitudes against indigenous peoples and their

traditional livelihood practices.

10. Share relevant information on predicted climate change impacts, policies, strategies and

programs inappropriate and efficient ways with indigenous communities.

(Indigenous Peoples and Climate Change in the African Region: Traditional Knowledge and

Adaptation Strategies, pg. 13)

Many countries in the region have recognized the importance of turning the tide on habitats and species

loss. During the past decade, the World Bank has supported their efforts through technical assistance

and 124 biodiversity-related projects. It invested nearly $1 billion directly in biodiversity during this period,

with a principal focus on protected areas and landscape management. The scale of this investment

makes the World Bank the largest financier for biodiversity conservation in Africa.

Through these activities, the clients, partners and the World Bank have learned a number of important

lessons.

Protected area management needs strengthening so that parks can reach the full potential of

their intended conservation purposes.

Where political boundaries divide ecosystems, transboundary conservation areas enable

comprehensive conservation efforts that can create positive externalities for neighboring

countries.

Landscape-level planning and management extends biodiversity conservation beyond protected

areas—which can only cover a limited area— into production systems.

Resource users need incentives to conserve the biodiversity on their lands. Where such

incentives are provided and communities are included in decision-making, resource users can

change behavior and become powerful allies in conservation.

Conservation funding needs to be structured for the long term. Beyond government budgetary

resources, receipts from tourism can make an important difference. Innovative financing

mechanisms, such as carbon finance and conservation trust funds (CTFs), also have a role to

play. Where CTFs are used, special attention needs to be paid to yield projections and

management costs.

Biodiversity conservation needs to be further integrated into regular development planning and

implementation. The scope for doing so remains considerable.

Recognizing the importance of biodiversity and ecosystems to economic growth and building on this past

experience to support its African client countries, the World Bank, in its future programs, will make special

efforts to:

Incorporate biodiversity considerations more fully within its lending portfolio, through the

application of good environmental management practices and policies in the planning and

implementation of projects and programs.

Place special emphasis on designing and monitoring of projects that demonstrate how

biodiversity can be an engine of inclusive green growth and improved livelihoods, through greater

economic valuation and payments of natural ecosystem services and enhanced opportunities for

economic benefit-sharing.

Increase its focus on landscape approaches to conservation that encompass biodiversity-friendly

production systems and buffer zones, along with intact natural habitats within protected areas.

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Work with client countries and the private sector to ensure that good environmental practices and

compensation schemes, such as conservation offsets, are in place in extractive industries and

other development projects.

Promote public private sector partnerships and facilitate the use of private sector resources to

contribute to conservation efforts, in particular through the use of innovative instruments like

nationally aggregated biodiversity offset schemes, green bonds, conservation banking,

environmentally friendly “green” infrastructure and nature-based tourism.

Assist client governments and international initiatives that seek to support more-effective law

enforcement through partnerships and innovative approaches in order to address illegal taking of

wildlife, fish, and timber resources, which is reaching crisis levels in some areas.

(Towards Africa’s Green Future, pg. 2

A key conclusion of the IPCC in this regard is that “creating synergies between adaptation and mitigation

can increase the cost-effectiveness of actions and make them more attractive to stakeholders, including

potential funding agencies (medium confidence).” So far only relatively little attention has been paid to

possible synergies of technological approaches such as renewable energy in the overall climate change

debate. However, many renewable energy project types exist which link mitigation with adaptation and

thus could be called “hybrid” projects.

Mitigation and adaptation benefits from different

small-scale decentralised renewable energy technologies

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(“Adaptation of Climate Change in Africa and the European Union’s Development Cooperation”,

pg. 30)

Practical recommendations for stakeholders to respond to the value of water and wetlands in

decision-making

At the global level there is a need to ensure implementation of the Strategic Plan for Biodiversity 2011-

2020, the Ramar Strategic Plan 2009-2015, the UNFCCC, the MDGs, and strategic planning and

implementation of the many multilateral environmental agreements (MEAs). The role and value of water

and wetlands should be interegrated in each of these. This is an awareness and governance challenge,

with potential for signficant synergies and efficiency gains.

National and international policy makers:

Integrate the values of water and wetlands into decision making and national development

strategies – for policies, regulation and land use planning, incentives and investment, and

enforcement;

Regulate to protect wetlands from pressures that do not lead to improvements in public goods

and overall societal benefits;

Regulate to ensure that wetland ecosystem services options and benefits are fully considered as

solutions to land and water use management objectives and development;

Commit to and develop improved measurement and address knowldge gaps – using biodiversity

and ecosystem services indicators and environmental accounts (notably SEEA & water

accounts). This will require an improved science-policy interface and support for the

scientific/research communities. The recently established IPBES (Intergovernmental Platform on

Biodiversity and Ecosystem Services) could contribute signficantly in this area.;

Reform price signals (getting prices right) via water cost recovery, resource pricing and reforming

subsidies;

Commit to restoration targets and/or programmes, improving ecosystem health and functioning,

the water cycles, addressing poverty and development concerns and acheiving the mutliple

benefits of working with nature.

Local and regional policy-makers

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Assess the interactions between wetland ecosystems, communities, man-made infastructures

and the economy and ensure the evidence base is available to decision makers, whether spatial

planners, permit authorities, investment programme responsibles, inspectors or the judiciary;

Integrate into river basin and coastal management the ecosystem functions and the interaction

between hydrological, social and economic systems;

Integrate planning systems - e.g. water supply and management to take into account

bothecosystem-based infrastructure and man-made infastructures;

Ensure due engagement/participation of communities (including indigenous peoples) and ensure

that traditional knowledge is duly integrated into management solutions.

Site managers

When possible and relevant, assess the values of sites and trade-offs of different land use

decisions to help inform site management decisions to protect and enhance the values of wetland

ecosystems being managed;

Communicate the values at the local level - to get buy-in for the site management, attract funding

for protection and management measures, and reduce the pressures on weltands, including risks

of land use permit decisions that may undermine public goods.

Valuation research and statistical communities

Systematically contribute to filling the gaps in knowledge on the the values of water and wetlands,

on improved governance solutions, on measures and tools to support the development of

environmental accounts;

Improve the understanding of public goods and trade-offs between public goods and private

benefits from policies and investment choices.

Development cooperation community

Integrate the appreciation of the multiple values of wetlands and potential cost savings/to meet

objectives of development cooperation:

o e.g. ecosystem restoration to improve water security, poverty alleviation, local

development and wellbeing;

o e.g. investment in ecosystem-based adaptation to climate change.

Business

Assess the dependency of the business on water and wetlands related ecosystem services from

the short to long term;

Assess the risks to operation inputs, eventual liabilities, risk to reputation and to the licence to

operate from both resource availability and impacts, including pollution pressures;

Develop corporate ecosystem valuation and environmental profit and loss accounts to improve

disclosures;

Explore synergies between private interests and public goods and realise opportunities for

synergies whether via restoration activities, engagement in markets or wider commitments to no

net loss of biodiversity (or net positive gain); commit to water footprint reduction, in order to

safeguard future resource availabilty for private and public benefits.

(“The Economics of Ecosystems and Biodiversity for Water and Wetlands”, pg. ix)

Renewable energy and energy efficiency are two components that should go together to achieve

sustainable and eco-friendly environment hence the need to conserve the present energy generated in

the country using energy efficiency products and practices is essential for this initiative. It is therefore

recommended that the country should:

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1. Establish performance standards and Greenhouse Gas (GHG) emission baselines for major activities

and major sources

2. Ensure accounting and reporting of GHG emissions and identification of emissions reduction projects

in private and public companies under the Clean Development Mechanism (CDM) and encourage the

regulated participation of private enterprises in low carbon energy generation (particularly renewables)

3. Develop policies on energy efficiency and integrate them into current energy policies.

4. Promote energy efficiency products and practices at the side of end users and energy generation.

5. Create awareness on renewable energy and energy efficiency.

6. Establish agencies to promote the use of energy efficient products and ensure energy efficiency

practices.

7. Develop and imbibe energy efficiency technologies.

8. Develop appropriate drivers for the implementation of energy efficiency policy.

(“Renewable energy as a climate change mitigation strategy in Nigeria”, pg. 17)

The transition to low carbon development will require massive mobilization of financial resources. Today,

there is no clear overview of the scale of financial requirements to implement the transformation to low

carbon technologies and adaptation measures. Making this happen in Nigeria will require investments of

billions of dollars annually in low carbon energy infrastructure, dams and transportation.

The role of the fund

Given the weak recovery in the international financial market and the fiscal crisis in important donor

countries, international financial transfer will only fill a limited gap in financing a low carbon transformative

agenda and in protecting the poor. Other sources of finance will be important. The challenge is to find

innovative roles for international funding, especially in catalysing private sector and government sources

of funds. The following are possible gaps where the leapfrog funds can make a difference:

De-risking low carbon energy investments. Local banks and international investors often withhold

investment decisions on low carbon projects as a result of perceived policy, technology and market risks.

The leapfrog funds can play a catalytic role in mobilising local and international investments by providing

various forms of investment guarantees, including: policy insurance, loan guarantees, foreign exchange

liquidity funds, pledge funds, etc. The leapfrog fund’s aim will be to de-risk lending to projects that reduce

emissions and stimulate growth and/or are compatible with building resilience in vulnerable communities.

Meeting incremental costs. Several technologies that will make the poor people part of the climate

solution often have higher costs than their brown technology counterparts. Small hydro, solar energy and

efficient cookstoves, in many circumstances, tend to be costlier than their conventional alternatives. The

leapfrog fund may bridge these costs by providing funding to close the gaps in the costs of these

technologies.

Supporting market expansion measures. In most cases, low carbon development projects in Nigeria

have negative incremental costs. However, weak policies, inadequate funding, poor capacity and

information gaps often constitute market expansion challenges. The leapfrog fund can help to cover the

costs of opening up markets for low carbon technologies. In particular, it could help facilitate innovative

financial solutions to address the needs of the poor through micro-lending and climate based micro-

insurance schemes.

Closing skill gaps. Capacity building is required in a number of critical areas of low carbon and climate

resilient development. Training of project developers, bank officials and national regulators, as well as

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intermediaries such as national consultants is important in bridging existing skill gaps. The leapfrog funds

can assume a niche role in building the capacities of these critical actors in expanding the pipeline of

projects and in implementing sectoral programmes.

Expanding technology cooperation and promoting research and development. The leapfrog fund

can help stimulate innovation and technology sharing. Many technologies that are not necessarily

protected by intellectual property are often costly and have minimal local contents in their production. A

fund that helps local research, development and production will be essential. Such a fund can also

support south-south and northsouth cooperation.

Funding small-scale community based low carbon projects. Often development projects tend to

bypass the poor in rural areas. The leapfrog fund can address the specific situation of vulnerable groups,

particularly women. It can finance community based schemes that promote adaptation and mitigation

while growing the economies of the poor. One powerful example of how funding can target the poor,

especially women, is the market transformation for clean cookstoves. These efficient stoves save lives

from indoor air pollution, mostly women, and conserve incomes and forests.

Grants or loan?

Developed countries have accumulated climate debts by their disproportionate use of the greenhouse

gas storage capacity of the atmosphere. Consistent with the UNFCCC, rich countries should meet the full

costs of adjustments in the development trajectory of countries like Nigeria in meeting the challenges of

low carbon and resilient growth. Such grants are crucial in closing the existing gaps in funding. Grants will

be particularly important for community based projects targeting the poor, especially vulnerable groups

such as women, children and the disabled.

However, the global financial crisis and political reality in developed economies demand that a variety of

funding mechanisms should be encouraged. While grants will remain central in the demand for financial

transfers under the leapfrog fund, other forms of financing, including loans and guarantee schemes, will

also be needed. This will help to expand opportunities for scaling up energy access and climate-friendly

technologies and adaptation mechanisms. (“Low-carbon Africa: Nigeria”, pg. 11)

Beyond climate finance

The transition to low carbon resilient development in Nigeria is held back by several factors that go

beyond the existing financing constraints. These include a non-supportive policy framework, vested

interests, low level of awareness and weak implementing capacity among key actors.

Clear government commitments matter. Nigeria has no clear-cut policy to promote the transition to low

carbon economy. Even when low carbon development in infrastructure, especially in the energy sector, is

consistent with industrialisation and growth objectives of government, policies that are supportive of these

objectives are yet to emerge. For instance, most Nigerian industries are dependent on diesel generators

for meeting their power needs. Lack of clean government commitment to expand the gas grid or stimulate

hydropower development where these resources are available has maintained the high emission profile

of Nigerian industries and has reduced the prospects for growth and job creation.

Vested interests. Often when policies such as the Renewable Energy Master Plan or the National Gas

Master Plan are developed, they end up not being implemented. In many instances, vested interests

benefitting from the current brown economy ensure that little progress is made. There are no strong

coalitions within or outside government to counter these forces, or ensure that vested interests discover

potential gains from green technologies.

Creating awareness and building capacity. There is widespread lack of knowledge of the promise of

green technologies and how these can change the condition of the poor. Expanding low emission

development policy implementation therefore requires an appropriate narrative. Beyond spreading the

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knowledge, building required skills in technology, policies and project development are all important in

delivering a green transformative agenda for the poor.

Partnership with the private sector. Accelerating the transformation to pro-poor low carbon

development creates an impetus for partnership between the government and the private sector.

According to Nicholas Stern, achieving the goals of low carbon development is nothing short of a new

industrial revolution. For countries like Nigeria, this is an unmarked terrain, and there are no clear

examples of countries that provide good templates for bringing about this change. When perceived

investment risks and the required scale of financing are high, a partnership between government and the

private sector becomes an imperative. To incentivise the private sector, the government must provide a

clear and predictable policy framework, promote information sharing and technology development, and

help close existing skill gaps. (“Low-carbon Africa: Nigeria”, pg. 12)

Overarching principles

• Provide a predictable and transparent RE policy framework, integrating RE policy into an overall energy

strategy, taking a portfolio approach by focusing on technologies that will best meet policy needs in the

short and long term, and backing the policy package with ambitious and credible targets.

• Take a dynamic approach to policy implementation, differentiating according to the current maturity of

each individual RE technology (rather than using a technology neutral approach), while closely monitoring

national and global market trends and adjusting policies accordingly.

• Tackle non-economic barriers comprehensively, streamlining processes and procedures as far as

possible.

• At an early stage, identify and address overall system integration issues (such as infrastructure and

market design) that may become constraints as deployment levels rise. (“Deploying Renewables 2011:

Best and Future Policy Practice”, pg. 21)

Support policy options for the electricity sector

A number of well-developed policy options have been developed to address the economic barriers faced

by RE technologies in the electricity market sector. These options include:

Feed-in tariffs (FITs) guarantee the generator of renewable electricity a certain price per kWh at

which electricity is bought. The tariff is set over a long period of time, commonly 20 years. Note

that the tariff is fixed during the entire period of support (sometimes indexed to inflation). Tariff

adjustments are made only for new plants. Although originally intended to be the only

remuneration to generators, some later FITs provide a premium above market prices. Generators

then have two sources of income: one from selling power directly on the market and an additional

feed-in premium (FIP). Some governments have put annual caps on the amount of capacity that

can benefit from FIT support in a certain time period to restrict the overall policy costs. Caps can

also take the form of a limit on total expenditure, as in Malaysia.

Tradable green certificates (TGCs) systems are based on the idea of separating the actual

power and its "greenness". The power is sold on the normal market. In addition, generators of RE

can sell a certificate that represents a certain amount of renewable electricity that they generated.

A separate market is established for these certificates. Demand for certificates is ensured by

establishing a quota obligation. Certificates are sold to large consumers or retailers of electricity

that are obliged to buy a certain number of these certificates. The size of the quota obligation is

an upper bound for the annual generation volume, because prices would drop sharply if there

were an oversupply of certificates. TGC schemes usually include a fine that the entities under the

obligation have to pay if they fail to buy enough certificates. In most cases, this penalty rate

determines an upper bound for the value of certificates. In their original form, certificates did not

differentiate by technology. Today some schemes issue more certificates for the same amount of

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electricity produced by more expensive, yet promising technologies to stimulate deployment of a

portfolio of technologies.

Tenders are used when a regulatory authority announces that it wishes to install a certain

capacity of a given technology or suite of technologies. Project developers then apply to build the

project and name the price at which they are willing to develop the project. Tenders commonly

contain specific requirements (e.g. shares of local manufacturing, details of technological

specifications, maximum price per unit of energy). The bidder with the lowest offer is selected and

can go ahead with the project. Usually the parties sign a long-term contract (power purchasing

agreement). Tenders are frequently used to meet government-set quotas in systems where there

is no trading of certificates.

Tax incentives or credits are used, particularly in the United States, to support RE technologies.

An important prerequisite for this scheme to function is that tax credits can be traded, as is the

case in the United States. If a wind farm operator generates USD 100 worth of tax deductions,

the project owner can sell this deduction to companies that can then deduct this amount from

their taxes.

Direct cash grants/rebates can be used to reduce investment costs and so improve returns for

investors. In the United States, the Section 1603 grant scheme works as follows: RE technology

project developers get back 30% of the investment costs in cash. This payment lowers the

effective price that project developers see and, therefore, makes the technology more

competitive. This measure was introduced after the market for tax credits (see previous bullet)

had collapsed due to the economic and financial crisis in 2009. (“Deploying Renewables 2011:

Best and Future Policy Practice”, pg. 80)

As the case studies make clear, eco-innovation policies need to be coordinated in many ways. First,

policies to support eco-innovation generally develop and evolve over long periods, and coherence can be

difficult to maintain over time. In addition, priorities and needs evolve and instruments have to be revised

and adapted. For instance, policies to support micro-CHP in Germany have developed over 30 years; the

initial emphasis was on R&D and has led to important developments and a fragmented marketplace;

since 2005, the major instrument is NOW, a joint initiative of several federal ministries, which mainly aims

to develop applied research and field tests. Policy makers would benefit from a better understanding of

when and how to introduce an instrument, and when and how to phase others out.

Second, sub-national authorities actively support eco-innovation. They have developed capacities to

address environmental concerns at their level, and they consider environmental goods and services as

new engines for growth. Co-operation built on a better understanding of the respective roles of the

different layers is needed across levels of government. (“Better Policies to Support Eco-Innovation”,

pg. 80)

Third, co-ordination between research and industry is essential. Deployment matters just as much as

development of new knowledge. The private sector is the main vehicle for deployment, both domestically

and internationally (through trade and foreign direct investment). This means that:

• demonstration is essential, and governments can bridge the gap between research and industry when

markets fail;

• knowledge transfer networks, incubators and other forms of partnerships can help to circulate

information between research and industry;

• public-private partnerships can contribute to effective governance in support of eco-innovation.

Fourth, when markets are uncertain, (international) co-operative research can pool development risks and

share information. The case study on carbon capture and storage identifies opportunities for international

cooperation (e.g. on common regulation; on policies to transport and store carbon in neighbouring

countries; on R&D and demonstration subsidies). More could be learned on the appropriate instruments,

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timing and risks related to (international) co-operation for eco-innovation, taking account of

environmental, science, industry and competition perspectives. (“Better Policies to Support Eco-

Innovation”, pg. 81)