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Coffee with: Omar El Nemr, MEA Lead for Singapore-based Value Network Ventures (VNV): El Nemr (LinkedIn) is the Project Management and Structuring Lead for MENA at Value Network Ventures (VNV) Advisory Services, an international carbon project developer with over 100 projects under development in 17 countries. VNV currently issues around 1.5-2 mn credits a year and has its sights set on developing projects in Egypt.
Before joining VNV, El Nemr led project development at Libra Carbon — a local carbon developer formed through a partnership between Libra Capital, the EGX Holding Company, and the Agricultural Bank of Egypt. He also serves as carbon and renewable energy expert at the Financial Regulatory Authority of Egypt.
VNV was among those involved in this month’s launch of Egypt’s voluntary carbon trading market. The market allows companies to issue and trade voluntary carbon certificates in Egypt and Africa, which can be bought by other companies wanting to offset their emissions. Egyptian agriculture firm Daltex purchased 1.5k carbon credits from an agroforestry project in India’s Punjab through VNV Advisory. The project aims to promote sustainable farming practices in rural India while utilizing income from carbon credits to improve the livelihoods of small farmers.
We sat down with El Nemr to discuss the origins of VNV, the obstacles facing carbon projects worldwide, the future of carbon markets regionally, and more.
Edited excerpts of our conversation follow:
Enterprise: Tell us a bit about VNV, what obstacles is the company trying to address in the climate industry?
Omar El Nemr: VNV typically works with communities and governments more than we do with companies. Our work isn’t about giving additional revenue to a company that’s already generating mns of USD, it’s about mobilizing climate finance for developing, smallholder farmers, and coastal marginal communities. We are very much on the ground, working closely with the groups as primary project developers, rather than traders. I think ultimately what VNV is trying to do is promote an equal and just transition, but we can’t achieve that by only interacting with large corporations.
We need marginal communities to transition into more sustainable practices as well but you can’t just offer an ultimatum, and that’s where we step in.
E: How do you go about making that connection?
ON: A needs assessment is the foundation of it all. For example, Madagascar has one of the largest mangrove populations in East Africa, but they are suffering from deforestation because the local communities don’t have wood. So, we do a feasibility assessment to identify the underlying problem and determine that a mangrove project coupled with a cook stove project would be useful to help cut wood consumption and replant the mangroves. After the needs assessment we find an NGO or a local community that is willing to participate and that also understands the problem and we continue the process for the full cycle until the credits are sold.
E: What are the challenges for developing these sorts of projects in our region?
ON: We’re happy to develop Middle Eastern projects, but they are typically more expensive so we’re still trying to find a space so we can operate there. Financing is typically where we stop because developing projects is easy, but it’s harder to attract investment. You can’t try to match oil and gas investments because a lot of our project funding goes into community development which doesn’t generate revenues, and investors really need to understand that.
Raising awareness is something that I struggle with, because I wonder what incentives people have besides profit. I’d say you will need to bottom up pressure on suppliers and once that kind of pressure kicks in Egypt with education and awareness campaigns, consumers will start to realize the significance of the cause.
From an investment side, project developers have to showcase that carbon credits are an attractive investment opportunity. I’d also like to see investors visit these projects because they’re removed from it all, making it hard to grasp what a project is about. In Egypt for example, a project has to be open to the public for 30 days before it’s officially listed. I think you only really come to see the power of carbon markets when you see a remote town in the middle of Tanzania with 800k tree saplings just laid out on the ground for yourself. Who would be willing to pay for this if it were not for carbon markets?
E:How did VNV mark its entry to Egypt?
ON:When I first started working with VNV, Egypt wasn’t exactly on the company’s radar and my main focus was Tanzania. VNV already had a strong presence in Southeast Asia, so they started developing projects in Africa and the Middle East – primarily in Oman, Tanzania and Madagascar – and they were looking for someone regionally positioned to be able to address both markets. I was tasked with heading lead project management and structuring VNV advisory services for MEA projects. We have three projects in Egypt that I’m not at liberty to discuss just yet.
E:How did VNV get involved with the launch of Egypt’s voluntary carbon market?
ON: The premise of the market was to establish an international platform, so we reached out to the Financial Regulatory Authority and the EGX to discuss the possibility of listing our projects. We listed two projects at the beginning of the year – Nepal cookstoves and Bangladesh cookstoves – to present to Egyptian buyers, and then we listed Punjab agroforestry more recently. We’re going to continue to list our projects because we’re happy with the visibility that it brings — people need to know what is happening both in Egypt and regionally. That’s how you get calls from multinationals and investors looking to engage in this market.
E: Where do you see regional carbon markets heading over the next few years?
ON: There are separate efforts happening at the same time, but they’re aligned. We have Saudi Arabia’s RVCMC, Egypt’s Africa-wide regional voluntary carbon market, and Qatar launching its own accreditation standard — The Global Carbon Council. I think we will start to see a consolidation of these efforts to find a way for all of them to align with our common goal to bring down global emissions to 1.5 degrees Celsius.
Egypt is definitely heading in the right direction because it started with the regulations before there were a lot of projects. Usually, you’ll see developers leading projects in countries before regulations are set and then once they are, the projects are affected and it gives investors cold feet. Egypt is one step ahead because it set out the regulations and the laws pertaining to validation verification bodies, project registration, accounting, and treatment of carbon credits.
These characteristics give comfort to both us and our investors in Egypt as opposed to operating in a country where it’s ambiguous and you don’t know if the government will, for example, impose a moratorium tomorrow and stop the sale of carbon credits.
E:Where is VNV currently looking to expand?
ON: We’ve already done the most we can do in Southeast Asia, so we are looking at expanding into primarily African countries that have a robust framework for carbon project development, like Egypt, and are open to having that dialogue. A good example is Ghana which has established a very strong framework and attracted interest from Switzerland, Sweden, South Korea, and Singapore — whose delegation we were a part of. Now we’re looking at the Silk Road which includes Uzbekistan, Azerbaijan, and Kazakhstan.
E: Carbon offsets have faced a lot of controversy recently, especially in regards to the possible inclusion of Scope 3 emissions. How do you see that dust settling?
ON: I’m not a climate scientist nor a climate expert, but rather an observer. A lot of companies are really doing what they can. The type of credits you use is totally up to scrutiny, but if you’re a European airline and your mitigation costs are really high, you can do more with the EUR in Africa and move back over once all that mitigation is done.
People say carbon markets lack integrity and transparency, but I can’t think of another market where every single project is listed online publicly on a registry and I can download every single report and number. Carbon projects are not just about climate change mitigation, they are actually sound investment opportunities that can be de-risked to a large extent. Beyond that, you have bodies like the integrity council for the voluntary carbon market and the voluntary carbon markets initiative that are putting in place frameworks to further ensure transparency and integrity.
