Continent gets leg up into lucrative carbon market

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To put that in perspective, the projects amount to less than 1 percent of more than 1 300 projects worldwide that have been registered with the CDM, a carbon trading tool of the Kyoto protocol to reduce the gas emissions that cause climate change.

Africa as a whole doesn’t fare much better: only 28 projects have been registered from the continent so far.

Africa needs to ramp up its figures if it hopes to benefit from switching to lower-emissions production methods and energy generation. Developing countries can earn credits from emissions reduction projects and sell these on to countries with mandatory targets to cut emissions by the end of 2012.

The world is also eyeing a post-Kyoto treaty at the end of the year that could produce an expanded version of the CDM.

Africa has already wasted a lot of time getting to grips with carbon markets.

Capacity problems have naturally been a major constraint: the bureaucracy and time spent securing CDM go-ahead is daunting for the uninitiated.

So it’s rather good news that a unit of the state-owned Central Energy Fund, CEF Carbon South Africa, has teamed up with European partners to form a hub, offering comprehensive carbon trading solutions to African countries and trading as CarbonStream Africa.

While South Africa has some skills in carbon advisory services, CarbonStream Africa promises to accelerate emission reduction projects, assisted by international players who understand carbon markets.

Chief executive Deven Pillay says it unites the South African government, the private sector and local consultants with funding from international governments.

In the short term, more than 10 percent of all CDM projects should come from Africa, instead of the 2 percent to 3 percent the continent currently accounts for.

 

Optimistic road map

It is encouraging that at least one motor manufacturer is upbeat about its prospects this year. Renault South Africa, which next month launches its first locally produced Renault in more than 30 years, anticipates bucking the projected 7 percent to 10 percent downturn in total new vehicle sales into the local market this year.

Renault SA managing director Xavier Gobille is forecasting sales will more than double to beyond 10 000 units, from 4 082 units last year.

However, one of the reasons Renault SA can be so bullish about its prospects this year is that it has performed poorly in the past few years and anticipates reaping the benefits of a turnaround strategy. In 2007, sales totalled 8 143 units. It achieved stronger market penetration and higher sales volumes earlier this decade.

Its products are accepted in the local market and, provided customers have not been turned off by previously shoddy service, backup and quality issues, this market acceptance should help it achieve its goals.

However, the National Association of Automobile Manufacturers of SA (Naamsa) projects a 7 percent contraction in the new car market this year. It expects another challenging year for the South African automotive industry, characterised by intense competition and continued pressure on margins and industry profitability.

 

While the local production of Renault’s Sandero at Nissan SA’s plant in Rosslyn, near Pretoria, will result in some pricing and other benefits, this represents only one model in Renault SA’s model line-up.

Renault SA is vulnerable to currency fluctuations - as, indeed, are all vehicle importers - and will be hoping that the value of the rand strengthens against other currencies to help improve the price competitiveness of its products in the local market.

 

Clinch in a pinch

Both good and bad news has come this week out of South Africa’s wine industry - based mostly in the Cape.

The bad news: export sales are falling in the rapidly growing US market. According to local producers, this is due to the department of trade and industry’s insistence that support should be given to expanding our share of new markets in preference to those where we are already established.

The good news is that Distell refuses to give up in the face of suggestions that cash-strapped Britons, who have been hit hard by the financial crisis, will not buy much wine this year. It has launched a new range in the UK aimed specifically at those who are feeling the pinch.

It has clinched a deal with UK chain Threshers, which has more than 1 000 outlets, to stock the three wines in its new Danger Point range. It has also signed a deal to increase its business with supermarket chain Waitrose, which aims at the top end of the market.

Donald Gallow, Distell’s international director, would not give details of the increase in sales of these brands. According to SA Wine Information Systems, exports of packaged wines for the six months to November rose by 21.8 percent compared with the same period in 2007.

Meanwhile, according to Wines of South Africa (Wosa), the US remains the fastest growing wine market by value. But because of lack of government support, South Africa’s exports of packaged wines there have dropped from about 1 million 9 litre cases two years ago to 760 000 cases last year, in sharp contrast to local exporters’ performance in other markets.

Without state funding, Wosa’s investment has remained at R3.5 million a year - a small fraction of the support Chilean and Australian wine exporters receive from their respective governments.