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However, the success of Clean Development Mechanism (CDM) projects that have been undertaken in Africa is spurring interest in green energy within the continent, says Standard Bank's head of Carbon Trading, Geoff Sinclair.

"We believe that this could result in Africa being an important future source of carbon credits," says Sinclair.

"Africa lags other emerging markets in registering projects under the Clean Development Mechanism (CDM) of the United Nations Framework Convention on Climate Change (UNFCCC), under the Kyoto Protocol," says Sinclair.

He says the reason for this is that the use of carbon credits to fund sustainable projects is not fully understood in Africa, and the cost of registering a CDM project is high. Africa currently accounts for only about 3% of registered CDM projects.

Rohitesh Dhawan, Resource Economist at KPMG, believes there is a need to increase the capacity of communities and economies to adapt to the expected impacts of climate change and sustainable investments and infrastructure needs to be put in place for when climate changes come to the fore.

"However, investing in initiatives to combat climate change is expensive. An estimated $27 billion dollars annually is needed to achieve reliable and secure electricity supplies in Africa by 2030," says Dhawan.

Securing funding for development is an ongoing problem in Africa, he said during KPMG's Africa Conversation series to discuss climate change and its impact on business from an African perspective, which was recently broadcast across Africa.

"However, the buy-in is there," says Bernard Osawa, Director: Renewable Energy at the Energy Regulatory Commission (ERC) in Kenya. "We've had some success cases. The government has put structures in places to facilitate investment, and we have investors who are really interested and are putting in their money."

Sinclair says Standard Bank is facilitating grants to numerous projects across Africa ranging from providing poor women in Burkina Faso with non-fossil fuelled cooking stoves, setting up urban composting in Mozambique, and rolling out solar heaters in Mauritius to financing a small hydro-electric scheme and a wind energy facility in Kenya, the Lake Turkana project.

The bank and the German government fund the African Carbon Asset Development (ACAD) facility, a public private partnership led by the UN Environment Programme, which has completed the first phase of grants to 14 low carbon projects in several African countries.

Sinclair believes the ACAD facility is beginning to prove its potential to accelerate the use of carbon credits in African countries in a manner that spurs overall development and creates opportunities for disadvantaged people.

"In addition to contributing to building green economies by providing people with access to energy, the 14 projects will create jobs, transfer skills and technologies, and drive new revenue streams for existing businesses," he says.

The ACAD facility is supported by the German government's International Climate Initiative, with grants in the first round set to come to about US$1million.

"This potential has further encouraged us to focus on helping to develop African carbon markets by collaborating with local companies and investors as well as through our involvement in the ACAD facility," says Sinclair.

Launched in 2009 and administered jointly by Standard Bank and the UN Environment Programme, ACAD is designed to be a catalytic platform that helps carbon projects reach financial close and generate credits. It makes available grant funding to assist project developers with CDM costs such as validation or registration. It builds carbon trading capacity in local financial institutions. It also funds technical studies or papers to identify and make recommendations regarding apparently intractable issues in the African market.

Some 72 projects are to be considered in ACAD's next round of grants.

Sinclair adds that climate finance in general is highly technical and burdened with an immense amount of complex documentation and information requirements.

"People wanting to benefit from activities focused around the mitigation of climate change do need a guide through the maze. So, ACAD's role as such a guide is essential.

"Over and above that, ACAD incorporates the skill, insight and experience of people who have successfully negotiated the maze many times. ACAD is therefore in an ideal position to provide realistic input into the standardising of the processes and mechanisms of climate finance to make them affordable and accessible for those who need it most. ACAD's role in process management is key to Africa's ability to exploit climate finance as a development tool."

KPMG's Dhawan noted that Kenya, which relies mainly on hydro-generated power, has become a model for encouraging international investment in national renewable energy initiatives.

These include the largest wind farm in Africa, the Lake Turkana Wind Power project, which will soon provide 300 MW of clean power to Kenya's national electricity grid.

The Industrial Development Corporation has also committed R100 billion to be invested in economy-stimulating initiatives in the next five years, not just in South Africa, but across the continent.

"Just over R22 billion of this has been earmarked for investment in the green economy," says van Rentia van Tonder, Head of Green Industry Strategic Business Unit at the IDC.

However, getting green projects off the ground in Africa is not without challenges and some potentially game-changing developments in Africa's climate change efforts are not always being supported by robust regulatory frameworks.

Delays in securing government guarantees and the lack of tools already in place to facilitate large investment, have left financiers with a low risk threshold. As African governments put the correct regulations and incentives in place, it appears that more investors will be willing enter the renewable energy market.

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