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challenges of Clean development mechanism in nigeria

by ademoroti, mayowa simeon, BS


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requirement that every CDM project must qualify under “additionality”, gas flaring
would no longer be “business as usual” or the baseline scenario. “Additionality” is a way
by which Executive Board of CDM assures that the activities rewarded with credits
would not have occurred anyway (Houser, Bradley, Chids, Werksman,& Hedmayr
2008:5).

Another consideration that is peculiar to Nigeria and inhibits CDM implementation is the
typically small sized CDM projects scattered in different locations, which are of their
own, unattractive and less economically viable to potential investors. Saddled with the
responsibility of taking care of registration costs and risks, project developers find it a
herculean task to bring such small projects to financial closure and ensure bankability due
to its size before potential investor gets attracted. This constitute a reasonable set backs
for most CDM projects of this categories in Nigeria since the knowledge of
programmatic approach is lacking.

Kyoto Protocol 2012 first commitment period expiration: Beyond 2012, the future of
CDM projects poses a challenge. On the market side, only few investors would take the
risk beyond the first commitment period expiration. Kyoto Protocol expires in 2012, most
CDM projects life span beyond 2012 and thus there is limited or no carbon credit market
for such project. There is a certain school of thought that are of the opinion that Kyoto is
bound for a natural death due to the non-inclusion of China and refusal of adoption by
United States. Another school of thought has it that Kyoto Protocol has a political
undertone in monitoring the growth of developing countries and are wary of the
credibility of the carbon markets

This poses a threat to energy efficiency and infrastructure-oriented CDM projects in
seeking for conventional finance as African generally are very conservative in delving
into new frontiers agog with different information such as Kyoto is going to get bigger
such that developing countries would eventually get caps and therefore economic growth
will be suppressed.


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CONCLUSION

As earlier mentioned, Nigeria’s potential in CDM project development is huge and the
socio economic advantage is numerous. The various benefits range from enabling
increased free flow of investment to infrastructure development and vibrant private sector
through technology transfer. Hence the call for aggressive participation in capacity
building which is the most critical of all barriers iterated above is a call in the right
direction. For example, the Trigeneration at Cadbury Nigeria Plc was identified through a
UNIDO capacity building initiative.

Also proffering solutions to finding conventional finance through awareness and training
of the stake holders, such as the Nigerian Financial Institutions and the Government
would go along way to mitigate the eternal problem with national and foreign direct
investments. This would also stimulate interests in research and development which
CDM requires. It will in both long and short term benefit the country at large.

Post 2012 Carbon Credit Fund advised by First Climate is a fund established by five
leading European public financial institutions and its currently buying carbon credits that
spans beyond 2012 when Kyoto expires.

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