Senegal inks 'world first' Article 6 private sector deal
Quantum Commodity Intelligence - Senegal unveiled Friday what it says is the world's first private sector investment to generate carbon credits under Article 6 of the Paris Agreement.
The African country has signed an agreement with Australian investment company Carbon Growth Partners and Swiss carbon project developer Allcot.
Under the arrangement, the private sector investors take on the financial risk of carbon projects and allow the host country to negotiate so-called internationally transferred mitigation outcomes (ITMOs) under Article 6.2 from a "position of strength" with other countries, the partners said.
The deal will see funding provided to the state National Integrated Waste Management Company of Senegal (Sonaged) for compost technology for food waste, which the partners said contributes 10% to global greenhouse gas emissions.
Waste will be diverted from 10 sites and processed into organic compost, which reduces methane emissions, and is an alternative to chemical fertilisers.
Plastic waste recovered in the process will also be recycled, the trio said.
The programme is expected to reduce carbon emissions by almost 250,000 metric tonnes by 2030 and generate the ITMO carbon credits.
Carbon Growth Partners has committed the first $2 million of a $20 million investment programme to scale the technology, while Allcot facilitated the partnership.
Senegal Environment Minister Mr Alioune Ndoye said: "Senegal – and the other nations of the global south – are not just here to claim damages and interests.
"We are here to demonstrate that we have the solutions – with the support of the private sector – to unlock the great potential of the Paris Agreement."
Carbon Growth Partners chief executive Rich Gilmore said: "Innovative investment partnerships like this one can transform the way the private sector views climate investment in developing nations; moving from a focus on risk, to a focus on opportunity with strong partners like Senegal."
Earlier this week, Allcot signed a one-year agreement with another Senegalese state entity – Solid Waste Management Coordinating Unit (UCG) – to assist with the design of waste management projects and programmes that could generate carbon credits to be transacted under Article 6 of the Paris Agreement.
UCG is tasked with implementing the waste management-related aspects of Senegal's Nationally Determined Contribution, including projects and programmes.
The partnership aims to deliver capacity building to UCG staff, help with the co-creation of climate change projects and programmes in solid waste management, and help find funding for projects and programmes.
The collaboration will also provide inputs on the potential for emissions reductions generated to be transacted through Article 6 market mechanisms.
The transactions could be country-to-country transfers, which are called internationally transferred mitigation outcomes (ITMOs), under Article 6.2, or from projects approved under Article 6.4, Allcot said.