Access to clean energy in Africa remains a principal problem. Given that 80% of people living without access to energy live in Africa, there is an urgent need to find alternative means to speed up the accessibility to renewable energy. At the 2022 UN Climate Conference (COP27), climate financing was identified as a vital alternative option with the unveiling of the African Carbon Markets Initiative.
The initiative seeks to open more access to clean and renewable energy on the continent, helping to achieve sustainable economic growth. In addition, it will encourage the creation of voluntary carbon markets across Africa, clarify government responsibilities, set out market incentives and establish a clear regulation of the climate financing sector.
This timely initiative responds to an emergency situation. Owing to the COVID-19 crisis and demographic evolution, the number of people living without access to electricity is now increasing. Even more alarming is that this increase will continue to the end of this decade if the sector does not receive additional funding.
As such, the World Energy Outlook estimates that an additional 26 billion dollars per year are required to meet SDG 7.
ENGIE Energy Access’s decision to adopt carbon credits stems from the problem of financial viability it faces as it provides last-mile solutions through a PAYGO (pay-as-you-go) model.
Gillian-Alexandre Huart, CEO of ENGIE Energy Access, states that “achieving the UN Sustainable Development Goal 7 of universal access to energy by 2030 is largely falling behind” because of technical, regulatory and financial issues. With financial issues atop these hurdles, unlocking carbon markets and the need to amplify the intensity for more alternative answers has become significantly major.
“Our ambition is to contribute as a leader in the sector to catch up, while exploiting the $2 billion Voluntary Carbon Market (VCM) to its full potential. Thanks to increasing traditional and, in this specific case, alternative funding, means we will meet our target to impact 20 million people by 2025.”
With CarbonClear, a data-driven and innovative carbon offset certification company, ENGIE Energy Access will further raise funds for energy provision by issuing and selling carbon credits.
Under the terms of the partnership agreement, CarbonClear will be using its innovative and fully digital offsets model to certify the carbon offset generated from the solar kits distributed by ENGIE Energy Access to rural and off-grid communities living in sub-Saharan Africa.
ENGIE Global Energy Management & Sales (GEMS) – the energy management and sales division of the ENGIE Group will assist ENGIE Energy Access in selling these credits to climate-conscious organisations wanting to offset their greenhouse gas emissions with projects that have a high social and environmental impact. The partnership targets to issue 500,000t CO2e of offsets.
Through an IT integration between CarbonClear and MySolGo, the last-mile distribution software used by ENGIE Energy Access to monitor its PAYGO operations, Micro Carbon Avoidances (MCAs) are created, which are made available to corporate buyers wishing to compensate for their CO2 footprint. The carbon calculations applied are based on the established UN Clean Development Mechanism (CDM) methodology and are third-party verified by DNV.
This new partnership will further tackle major financing handicaps and accelerate the growth of ENGIE’s off-grid operations in sub-Saharan Africa. The goal is to not only create leeway for adequate financing but also drive the reduction of greenhouse gas emissions in Africa.
ENGIE Energy Access’s goal to reduce carbon waste in Africa and increase the adoption of clean energy solutions involves providing access to and productive usage of mini-grids and portable solar home systems (SHS) and clean cooking at an affordable rate. The sale of carbon credits is pivotal for mobilising the needed capital to scale.
The play here is that as the company benefits from increased sales, they also empower customers financially to reduce their default rate and meet their repayment rate.
Steven Fleurus, Head of Finance at ENGIE Energy Access, explains that “carbon credits are an important lever to optimise the affordability of our products and provide Africans living in off-grid settlements or businesses seeking alternative sources of energy better access to ENGIE’s solutions, thus supporting the growth of a sustainable economy in various markets.”
The company will continue to light the way for the adoption of clean and renewable energy. This path will lead to more partnerships and the implementation of novel initiatives. The precedent set here displays the value of combining digital technology with alternative funding solutions, such as the sale of carbon credits.
It unintentionally connects to the African story of “ubuntu”, which, for contextual reasons, can be interpreted as the need for collaboration between African leaders, climate sector players and industry leaders in forming more productive and innovative solutions to accelerate the growth of Africa’s off-grid economy. ESI
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