Listed companies are catching up on the carbon trade market, with cement rivals Athi River Mining and East African Portland Cement considering separate approaches to cash in on the business.
East African Portland Cement company is facing challenges in increasing additives (puzzolona) during the manufacturing process because it would require the present open circuit grinding technology to be replaced by a closed circuit system.
East African Portland Cement is seeking to take advantage of revised guidelines on cement which now allow substitution of clinker by up to 35 per cent as long as standard strength is maintained according to a specified class. The company says the cement will require to be ground finer than before, necessitating new technologies.
The EAPC project is expected to be operational in April, 2008 and targets 59,850 tonnes of carbon dioxide annually at a cost of Sh560 million or $7.9 million .
This would enable the company to sell carbon emissions for $1.7 million (Sh120 million) annually over a period of 40 years. Athi River Mining (ARM) is looking at the possibilities of using husks from coffee, coconuts, cashewnuts and other fibres to replace coal , cutting on carbon emissions.
East African Portland, on the other hand, is seeking to increase the ratio of additives in cement from 26 per cent to 35 per cent, reducing the greenhouse gas emissions associated with grinding clinker. “We are trying various alternative fuel sources in an effort to cut down on our carbon emissions and also reduce energy cost,” says Pradeep Paunrana, the ARM managing director.
However, due to shortage of coffee husk and the distance involved in transporting it to Mombasa where ARM factories are based, the switch is not likely to be cost effective. “The distance is long and coffee husk is being used to make charcoal hence the volume we need is not available. However, we are trying out other crop wastes such as coconut husks and fibres and cashew nut husks”, says Mr. Paunrana.
KenGen and Mumias Sugar Company are already engaged in carbon trading. KenGen carbon emission’s deal is estimated to be worth Sh1.3 billion in exchange for 900,000 tonnes of carbon. The Emission Reduction Purchase Agreement entered into with World Bank will see KenGen engage in “cleaner” power production in its various power production plants.
Currently, KenGen is working on Olkaria III, which is expected to produce 35 Megawatts. Geothermal power is more preferred to the other two main sources of power production as its cleaner and renewable.
Mumias Sugar Company entered into an agreement with Japan Carbon Finance to buy Carbon Emission Reductions from Mumias. The agreement, signed in June 2006 will take effect from 2008, says Mr James Luchacha of Mumias Sugar Company.
The agreement will see MSC reduce its carbon and methane emission from bargasse, the by-product of sugar cane, which will be used to generate electricity. “The co-generation project will allow the company to sell 30MW to Kenya Power and Lighting Company as clean power, eliminating the need for KPLC to burn fossil fuel to get power”, said Mr Luchacha who is an engineer.
A carbon finance investment forum held recently in South Africa resolved to trade 100 million carbon credits annually from Africa in what is being seen as the next opportunity to help Africa tackle poverty through trade and not aid. Carbon emission buyers and bankers who participated in the forum found that there were latent opportunities for Africa countries to sell carbon credits to industrialised countries. The United Nations Environment Programme estimates that by selling 100 million carbon credits Africa economies will earn an estimated $1.2 billion (Sh80.4 billion) per year.
Lack of capital and know-how of the specialist carbon financial limits Africa’s ability to tap into the new jewel. East African Portland, for instance, would need $3.6 million (Sh252 million) in the form of carbon finance contributions for the project to take off.
“The challenge is to ensure these opportunities are accessible to all big and small economies on the continent”, says Achim Steiner Executive Director for UNEP.