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Stanbic Bank Tanzania Limited has launched a scheme to help replace kerosene lamps with hand-held LED lights in 1.5 million homes in Tanzania.
Speaking recently in Dar es Salaam about the scheme, Stanbic Bank (T) Managing Director Bashir Awale said “the fact that we are on the ground, positions us ideally to combine local insights with our global capability in carbon trading in order to tailor answers and funding that very accurately meet the need for sustainable development on the African continent.”
He added that, “This deal shows how innovative we are and our capability to use our international resources with our local knowledge of the market.”
The bank, he said will be funding the scheme by purchasing the carbon credits generated through the large scale replacement of fossil fuel lighting.
“This and a number of other projects in East Africa, particularly in Uganda and Kenya, are positioning Standard Bank as a leader in the development and execution of Clean Development Mechanism (CDM) initiatives in Africa – which accounts for only 3 per cent of all CDM initiatives globally,” he said.
He added that in terms of the Kyoto Protocol such initiatives are registered for the allocation of carbon credits with the CDM Executive Board of the United Nations Framework Convention on Climate Change (UNFCCC).
By trading these credits in a market worth USD180bn globally, industrialised countries are able to invest in projects that reduce greenhouse gas emissions in developing countries.
This, in turn, he argued, will enable industrialised nations to sponsor a net global reduction in carbon emissions at a lower overall economic cost for themselves.
Through its subsidiaries and branches in Africa, where it has been involved in the lives and businesses of citizens through traditional transactional banking, Stanbic Bank has been able to identify and develop projects that lend themselves to funding by means of carbon trading, he said.
“We’ve been working very hard during the past two years to bring the projects to fruition – and the Tanzania LED light initiative is the first of several that will get off the ground in 2011,” says Fenella Aouane of Stanbic Bank’s London-based carbon trading division.
According to Aouane, ILLUMI Nation Tanzania, which owns the LED project, estimates that it will save households with an average annual income of only USD150, nearly one third of that income.
The total national saving will be some USD200m, she added. Tanzania’s greenhouse gas emissions will be reduced by 800,000 tonnes, benefiting the planet as a whole and significantly reducing health problems in the country resulting from burn injuries and the inhalation of kerosene gas.
In addition to leading the use of carbon credits on the continent, Stanbic bank is also pioneering the UNFCCC’s use of provisions for the “programmatic” Clean Development Mechanism, she said.
In this approach, rather than approving each individual installation, the UN approves a programme of activities that is then audited for carbon credits, she said, adding that this new mechanism is particularly suited to Africa, given that many sustainable development project opportunities in sub-Saharan Africa comprise mass application of “micro” technologies.
“We believe that it’s possible to make a profound contribution to the physical and economic health and well-being of individual nations and the world at large by applying sophisticated financial instruments to the needs of grass roots populations,” said Aouane.
The ILLUMI Nation project is only the second one in Tanzania since 2007 to be based on carbon trading. Stanbic Bank is also involved in a solar water heating project for low cost housing in South Africa.
Stanbi Bank, the United Nations Environment Programme (UNEP), and the German Government have launched the Africa Carbon Asset Development (ACAD) facility – a public private partnership between UNEP and African banks that aims to stimulate the growth of Africa’s carbon market through investor outreach and seed capital.
ACAD’s focus is on using carbon trading to provide wide-ranging economic, environmental and social benefits to the continent – including new revenue streams, access to energy, job creation and technology transfer – by deploying local, market specific solutions and partnerships.
Sceptre Group Limited is a specialist investment firm focused in low carbon financial investments such as sustainable biofuel plantations, agricultural farmland and green technologies. For more information on Biofuel Investments, please visit Sceptre Group’s website at www.sceptreinternational.com.