FEATURE: Suppressed demand – Unlocking climate finance for Africa
By Mr Phillip Gwage – one of the founders of the Least Developed Countries Environmental Centre in Uganda.
High levels of poverty and low levels of development characterise Least Developed Countries (LDCs) and a number African countries. The majority of people in these countries cannot meet their basic human needs – such as access to clean and safe water, adequate energy for cooking and lighting – due to a host of barriers including poor infrastructure and high technology costs. Although there is a high demand for these services this demand is largely unmet, leading to a situation commonly referred to as ‘suppressed demand’. Suppressed demand is when household demand for basic services is low because people cannot afford them or there is a constraint on access or infrastructure, and not because of absence of consumer interest.
Carbon markets and suppressed demand
Africa’s share of the carbon market has historically been low and carbon market mechanisms have not been used to fully promote sustainable development. By accounting for ‘suppressed demand’ in carbon markets, climate finance can be leveraged to fund cleaner development and enable the poor to benefit from carbon finance from the Clean Development Mechanism (CDM). Accounting for suppressed demand means the development of a common and transparent approach to setting baseline scenarios to reflect future increases in emissions in countries, and not merely historical emissions. In low-income countries suppressed demand is closely linked with poverty levels. Recognising suppressed demand and taking action to include it in baselines and monitoring methodologies will improve the opportunity for low-income countries to participate in implementing CDM.
Suppressed demand, as it relates to the CDM and crediting of projects and NAMAs in Non-Annex 1 countries, is of crucial importance to future international climate finance frameworks. Without an incentive structure for mitigation and emission avoidance actions in areas/regions/countries with low current emissions patterns, climate mitigation is made more difficult (some would argue impossible). Areas with low sources of current emissions will be excluded from international climate change mitigation funding through carbon finance, and NAMAs in particular, due to the low potential to reduce emissions of these regions. The suppressed demand approach recognises that as barriers such as poverty, infrastructure and the high unit costs of energy or technology are removed or reduced, emissions patterns will change. It is a way of reliably predicting, verifying and monitoring future emissions scenarios, which can be technology and methodology specific. This is not only fundamental to the viability of carbon projects in poor areas, but also to the equity and fairness of mitigation activities, and sector/country level plans for mitigation and avoided future emissions. This is particularly the case for LDCs, where historic emissions are low and significant growth in emissions is expected.
Suppressed demand at CoP-17
CDKN provided technical support to the Least Developed Countries (LDC) and African negotiators at CoP-17 through the Least Developed Countries Environmental Centre (LEC) based in Uganda to effectively negotiate the suppressed demand issue within the UNFCCC processes. The issue of suppressed demand, if taken up by decision makers and implemented by the UNFCCC, will ensure that climate financing is unlocked for climate compatible development specifically in Africa.
A technical paper and a policy paper on suppressed demand were used to create awareness of the issues at CoP-17. The LEC were successful in presenting suppressed demand to the Africa Group of Negotiators and the LDC Group during the Conference with overwhelming interest from both groups to enhance their understanding and promote activities on suppressed demand. The LDC Group was interested in embedding suppressed demand in CDM, as they realised that projects in their countries were not benefiting from this mechanism because current methodologies do not account for baselines – making LDC projects unattractive.
The textual proposal on suppressed demand prepared as part of this support was adopted as the LDC’s and Africa Group’s position on suppressed demand and submitted to the UNFCCC Secretariat. This textual proposal was included in the negotiating text of the CMP7.
Subsequent conversations with the LDC and African negotiators have indicated that they have understood the benefits of an interpretation of baselines that include suppressed demand and have been able to engage technically and politically on the issue of suppressed demand in the context of the CDM reform and the new market mechanism. The acceptance of suppressed demand as part of the reformed or new market mechanism is a potential deal maker in 2015, as it quantifies emissions reductions and has the potential to resolve in part inequities in international climate change governance.
Find out more
Project summary: Suppressed demand in Africa
Contact Shehnaaz Moosa: firstname.lastname@example.org
The LEC team to CoP17 Durban comprised of Mr. Phillip Gwage, Prof. John B. Kaddu and Mr. Ben Lukwiya, and was supported by the LEC team in Kampala.
The image is courtesy of Kuyasa CDM Project and shows women installing solar water geysers on low-cost houses in Cape Town, South Africa.
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