Ethiopian Business Review

Carbon Trading Poised to Finance the National Railway project

“Ethiopia is taking sustainable development seriously,” said Adriaan Kourthuis, director of Climate Focus, a Netherlands based consultancy firm which is working with the Ethiopian Railway Corporation (ERC) with a plan of collecting USD one billion through carbon trading, during the launching of a 15 months plan of Carbon Financing Project, which was held at the Friendship Hotel on August 27, 2013.

Carbon Financing is a general term used to refer to investments that involve the reduction of green house gas emission and the financing these investments could secure through carbon trading. The carbon financing of the national railway network will be the second project in Ethiopia in this regard. The first was Humbo Community Based Forest Management Project, in Wolayta Sodo, in Southern Nations Nationalities and Peoples Region. The Project, which was also the first in Africa, got USD34, 000 from the World Bank in 2012. The Bank has also committed USD726, 000 for the next ten years.

The team of experts from ERC and the consultancy firm have put in place an ambitious goal of generating USD one billion from carbon financing for the construction of the national railways network. The national railway network, another ambitious mega public investment is said to be an all carbon free project.

The significance of the rail way project in reducing the amount of carbon that would have been released in to the atmosphere is what the team of experts of ERC will need to prove to the world’s industrialized economies to secure possible financiers.

Within the next 15 months, experts working on the Project are expected to identify, among other things, possible financiers. These undertakings will be inputs to a proposal to be presented to possible donors, who will be invited to an international event that will take place at the United Nations Economic Forum for Africa in the second quarter of 2014. The Carbon Financing Project will consume USD260, 000 allocated by USAID’s Strategic Climate Institution Programme (SCIP).

The national railway network project of Africa’s second-most populous nation is 4,744 KM long electrified railway lines, which will cost the country USD5.9 billion.

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