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Standard lights up Tanzanian homes

21 December 2010

South Africa's Standard Bank Group is to help replace kerosene lamps with hand-held LED lights in 1.5-million homes in Tanzania, funding the scheme by buying the carbon credits generated through the large-scale replacement of fossil fuel lighting.

The project is the latest of Standard Bank's "green" initiatives in East Africa, particularly in Uganda and Kenya. The projects are positioning the group as a leader in Clean Development Mechanism (CDM) initiatives in Africa – which currently account for only 3% of all CDM initiatives globally.

"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," Fenella Auoane of Standard Bank Group's London-based carbon trading division said in a statement last week.

ILLUMI Nation Tanzania, which owns the LED project, estimates that it will save households with an average annual income of only US$150 nearly a third of that income. The total national saving will be around $200-million.

Tanzania's greenhouse gas emissions will be reduced by around 800 000 tonnes, while helping to reduce health problems in Tanzania resulting from burn injuries and the inhalation of kerosene gas.

Carbon credits trading

In terms of the Kyoto Protocol, such initiatives are registered for the allocation of carbon credits with the Clean Development Mechanism executive board of the United Nations Framework Convention on Climate Change (UNFCCC).

By trading these credits in a market worth $180-billion globally, industrialised countries are able to invest in projects that reduce greenhouse gas emissions in developing countries. This, in turn, enables industrialised nations to sponsor a net global reduction in carbon emissions at a lower overall economic cost for themselves.

In addition to leading the use of carbon credits on the continent, Standard Bank is also pioneering the UNFCCC's use of provisions for the "programmatic" Clean Development Mechanism.

In this approach, the UN approves a programme of activities that is then audited for carbon credits, rather than approving each individual installation. This new mechanism is particularly suited to Africa, given that many sustainable development project opportunities in sub-Saharan Africa comprise the 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," Aouane said.

"The fact that we're on the ground in Africa positions us ideally to combine local insight 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 continent."

African Carbon Asset Development

The ILLUMI Nation project is only the second one in Tanzania since 2007 to be based on carbon trading. Standard Bank Group is also involved in a solar water heating project for low cost housing in South Africa.

Standard Bank Group, the United Nations Environment Programme (UNEP), and the German government have also 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 Africa – including new revenue streams, access to energy, job creation and technology transfer – by deploying local, market specific solutions and partnerships.

SAinfo reporter