Newcastle Municipality pilots carbon credit project {writer: Janet Channing}

The Newcastle Municipality is piloting a carbon credit project that will encourage ratepayers to settle their accounts timeously, improve the municipality’s cash flow, and earn tradeable carbon credits that can be exchanged for cash – and, in so doing, create a completely new revenue stream.

Many municipalities struggle to recover debt from ratepayers. In fact, many are technically insolvent, and it takes some out-of-the-box thinking to attempt to remedy this.

Conventional debt-collection methods have largely failed, but the Newcastle Municipality aims to incentivise ratepayers to stay current by rewarding diligent ratepayers with an energy-saving Wonderbag.

The Wonderbag is a heat-retention cooker that reduces energy used for cooking by as much as 50%. In an independent survey, this translated into savings of approximately 15 kilowatt-hours of electricity and 1.5 litres of paraffin per week in an average household.

UN approval

Importantly, the Wonderbag has been registered as a Clean Development Mechanism (CDM) with the United Nations Framework Convention on Climate Change. It has been shown to reduce a household’s carbon footprint by 500 kilogrammes per annum, and can earn credits to be traded through the European Carbon Credit Exchange.

There are various innovative green ideas in the market, including water-saving, energy-saving, recycling and green building methods. In most instances, these require significant capital investment and ongoing revenue to remain viable.

The Wonderbag is one of the few local solutions registered as a CDM, which can actually generate tradeable carbon savings from its use.

Potential new earnings for the municipality from this programme are in excess of R1 million per annum; but before embarking on an initiative such as this, it is vital to ensure the various financial and property management systems within the municipality contain accurate data and are able to interface with each other.

This not only facilitates access to information, but also ensures changes in consumer consumption can be measured and quantified – an important component of earning the carbon credits.

With ever increasing demands on a municipality’s fiscus, it is increasingly important that new revenue streams be developed, and creative public-private partnerships may hold the key.

Newcastle’s embracing of the CDM Wonderbag ticks all the boxes:

• Ratepayers are incentivised to keep their municipal accounts up to date;

• The Wonderbag makes a genuinely positive contribution to the environment; and

• The municipality can earn income from the resulting carbon credits.

It is paramount that mechanisms are in place to verify ratepayer information, monitor changes in consumption patterns, and present the facts in an easy-to-use format in order to claim the carbon credits. Done correctly, it is a win-win situation for everyone, with Mother Earth one of the beneficiaries.

Going green

“Going green” means different things to different people, but the business concept of “eco-advantage” is most significant.

It combines an organisation’s ability to combine growth, profitability and long-term environmental sustainability into one tidy package where the benefits are easily measured.

Newcastle Municipality is leading the way with its Wonderbag Project.

Janet Channing (BA MPhil NDPV) is a registered property valuer.

Furthermore, she is a consultant to the KwaZulu-Natal Provincial Department of Co-operative Governance and Traditional Affairs; as well as a knowledge expert for the South African Council for the Property Valuers Profession Qualifications Committee.

This article was first published in the Autumn edition of the “Official Journal of the Institute of Municipal Finance Officers” (visit www.imfo.co.za to download a subscription form).