An Africa-based project developer is seeking to capitalise on the US appetite for Redd credits.

The Anglo African Energy Group (AAEG), formerly Zen Carbon, is looking to sell credits to US voluntary carbon offset buyers that are generated from avoided deforestation projects in tropical-forested areas of the Congo basin.

The company, based in Lomé, Togo, is seeking to generate 400 million credits in the next six to nine months from projects located in the Central African Republic, Democratic Republic of Congo, Cameroon, Gabon and Angola.

The company has teamed up with Paul Ezekiel, former head of carbon trading at Credit Suisse, to market the Redd (Reducing Emissions from Deforestation) credits in the US.

Ezekiel will head up a new marketing office in New York to sell the African forestry credits. AAEG will also open offices in Canada and the UK.

Offset potential

Africa can potentially produce billions of avoided deforestation credits because of the large tracts of tropical forestland in the central and western parts of the continent.

The estimated carbon dioxide emissions that can be avoided from preventing deforestation in Congo’s tropical forests alone amount to 2.5 billion tonnes, said Philippe Solomon, chief executive of AAEG.

But despite Africa’s potential for producing avoided deforestation credits, most projects are currently undertaken in Central and South America and Indonesia.

Solomon is hopeful the US will account for a large portion of demand for future Redd credits from African forests because proposed US climate legislation contains several provisions addressing tropical deforestation.

The recently passed House climate bill, known as Waxman-Markey, allows emitters to use credits from deforestation projects in developing countries.

Forestry preference

The bill, which would allow companies to use one billion domestic and one billion international offsets for compliance, would allow anti-deforestation projects to generate carbon credits and set aside allowances to encourage the reduction of an additional 720 million tonnes from avoided deforestation by 2020.

Finding ways to reduce emissions from deforestation and degradation will be an important goal in international climate change negotiations, since tropical deforestation accounts for nearly 20 per cent of global GHG emissions.

Climate change negotiators are trying to find a way to fund efforts for Redd in a post-2012 climate deal, which the UN hopes will be reached at in Copenhagen.

Observers say the US will be influential in determining the outcome of climate negotiations, particularly in regards to Redd, because US lawmakers generally support the inclusion of forestry in climate change legislation.

Solomon expects international forestry offsets will be essential to bulking up offset supply in a US carbon market.

“I doubt the US can produce enough forestry credits domestically to meet demand,” he said.

Standards

The company hopes to verify the African forestry projects to the Climate, Community and Biodiversity Project Design standards, Social Carbon standard, and the Voluntary Carbon Standard.

The company is also seeking to register the credits with the Markit Environmental Registry, formerly known as TZ1.

Solomon said AAEG is marketing them initially to US financial institutions. He also expects the US government could be a potential buyer if it sets up a strategic reserve fund as outlined in Waxman-Markey.

The 2.5 billion-allowance strategic reserve envisaged in the bill is a cost containment mechanism that creates a cushion if carbon prices rise faster than expected.

The bill allows international deforestation credits to fill the reserve supply if the supply of reserve allowances is depleted.

Eventually, AAEG aims to develop a standard specifically for avoided deforestation projects in central and western African countries.

AAEG's Solomon is also looking to develop a Senegal-based exchange where the forestry offsets can be traded.