Kyoto Protocol may yet benefit South Africa

South Africa is well positioned to take advantage of the Kyoto Protocol provision allowing countries to trade carbon credits, says Sterling Waterford Securities CEO Gregor Paterson-Jones.

Minerals and energy department spokeswoman Yvonne Mfolo said yesterday that the scheme could see the country reduce carbon dioxide emissions by 21-million tons and generate revenue of about R618m by 2012.

The Kyoto Protocol, which comes into effect today, is a legally binding international agreement to reduce emissions of gases such as carbon dioxide to pre-1990 levels.

The protocol's clean development mechanism allows developed countries to trade carbon credits in international markets.

The credits allow companies in developed countries that are struggling to meet stringent emissionreduction targets to buy credits from countries that pollute less than their allotted limits.

Although it is one of the biggest emitters of carbon dioxide in the world, SA is not defined as an industrialised country under the protocol and is not required to reduce its gas emissions.

Paterson-Jones said SA had the potential to create significant amount of credits by supporting emission-reduction projects locally and at the same time bring in much-needed foreign direct investment.

His company is on the verge of listing instruments derived from carbon credits on the JSE Securities Exchange SA, subject to approval from the stock exchange.

Anton-Louis Olivier, director of Dutch energy company NuPlanet, said the European Union was the biggest market for carbon credits because of laws forcing countries there to reduce their gas emissions.

Sterling Waterford Securities director and former environmental affairs and tourism minister Valli Moosa said yesterday that the emerging carbon market would force industrial companies to comply with the protocol, especially because SA had one of the highest per-capita rates of gas emissions in the world.

Moosa said reducing greenhouse gas emissions would require regulation through legislation and market forces.

The Bethlehem Hydro energy project in Free State, currently being developed by NuPlanet, is one of six projects that the minerals and energy department has identified under the Kyoto Protocol's cleandevelopment mechanism.

Construction at the project is set to begin in three months' time.

Olivier said the planned hydro-powered plant would reduce carbon dioxide about 25 000 tons a year.

The project's financiers include NuPlanet, Development Bank of Southern Africa and the Energy Development Corporation.

Environmental Affairs and Tourism Minister Marthinus van Schalkwyk said yesterday that although SA was not required to reduce its gas emissions it had to diversify its energy sources by developing alternative renewable and noncarbon-based sources of energy.

Van Schalkwyk said he was concerned that US, one of the world's biggest emitters of greenhouse gases, had not ratified the United Nations-backed Kyoto Protocol.

Nongovernment organisation SA Climate Action Network is expected to demonstrate outside the US consulate in Johannesburg today in protest against the failure of the US to ratify the international protocol.