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The French Man Who Built A $10 Million Carbon Trading Company In Africa

This article is more than 8 years old.

Fabrice Le Saché, a 32 year-old French national, is the founder of Ecosur Afrique, a leading environmental finance group operating in Africa. The Mauritius-based company is one of the most successful carbon trading companies on the continent. The company boasts more than 40 carbon reduction projects in 17 African countriesand an annual turnover in excess of $10 million.

I recently spoke to Le Saché where he opened up about his business and provided some insights into the opportunities that exist in the carbon trading business on the continent.

Give me a brief personal and professional background on yourself.

I’m a French national born in Paris on 1st September 1982. I’m 32 years old. I studied international public law, international relations and political sciences in Paris and USA. I got a Comparative Law LLM degree in USA and an International Law Master degree in France. I have started my business when I finished university in 2006 and never worked in another company until now.

When and how did you start Ecosur Afrique? Why did you decide to venture into an environmentally-conscious business concern?

I started Ecosur in 2006 with $21,000. 9 years later the group generates $11 million annual turnover and is expected to reach close to 100 employees this year. We currently have 61.

I decided to start a business in the carbon credits industry for a very simple reason: I studied the Kyoto Protocol and learned about the opportunities for companies to trade their CO2 emissions allowances within a same country or region and for a company A located in an industrialized country to purchase a greenhouse gas emissions reduction from a company B in a developing country. A market was being created and the trend was huge because climate change is a structural issue. I wanted to be part of it. At the very beginning I structured the business with a sole advisory business unit, then we extended our scope and set up an investment branch in 2012 and, last, a trading affiliate in 2014.

Ecosur Afrique, a carbon finance advisory firm? In the most basic terms, what does a carbon finance advisory firm like yours do? Give me a crash course on your business model.

We assist companies, industries and local governments in Africa to obtain and sell carbon credits. They can generate carbon credits when they develop projects that reduce greenhouse gas emissions such as renewable energy, energy efficiency, waste treatment or fuel switch projects. Our job is to support the whole administrative process to help them register their projects under the UNFCCC Clean Development Mechanism (CDM) and monetize their carbon credits in the international market. Carbon credits are and additional layer of revenues for these projects when they operate. Carbon credits are a financial boost for clean technologies in Africa. As a consultant and broker we get a fee and a commission from the seller and / or the buyer.

You might need to understand the philosophy of the whole market. Established by the Kyoto Protocol, the Clean Development Mechanism is a key market instrument to mainstream climate action and to tackle climate change globally: a State or a company from an industrialized country can meet some of its emission reductions commitments by purchasing carbon credits resulting from projects that reduce greenhouse gases emissions in developing countries.

Such exchange of carbon credits is not a license to pollute, but a cost effective way to reduce CO2 emissions at a global scale; it is a tool for international solidarity that provides new and additional financial resources to support the transfer of clean technologies in developing countries; it does not attenuate the responsibility of industrialized countries whose obligations and efforts are, for a major part, focused on domestic actions; it is aimed at engaging companies, local authorities and non-governmental organizations and at providing flexibility and cost-effectiveness. The CDM horizontal approach is its strength: it catalyzes the action of the private sector and promotes direct and decentralized cooperation.

Everywhere in Asia, Latin America, Africa, the CDM has contributed to the emergence of new projects in the fields of renewable energy, waste management, energy efficiency, among many others; it has stimulated innovation, created jobs, driven investments.

With more than 7,500 projects in 10 years of existence, the CDM has become much more than a showcase of the green economy; it is one of its most successful achievements. Each of the projects in some 115 host countries directly benefits the people of the territories in which it operates, and beyond, all of us: 1.5 billion tons of CO2 equivalent have been avoided through the CDM worldwide.

There is very little awareness about the carbon market and information about carbon trading. Why do you think this is the case, and what are you doing to create awareness about this opportunity. Does carbon trading offer any real benefits to the poor in Africa?

Although particularly vulnerable to global warming, Africa has mobilized only 3% of all CDM projects and 1% of the total volume of issued carbon credits globally. I think this reason explains your impression of lack of awareness.

However these statistics reflect, yet, just a part of the reality. The African continent has massive possibilities to reduce greenhouse gas emissions with the double advantage of being achievable at low marginal costs while providing high social and environmental added value. This is true for the spread of innovative domestic technologies - solar lamps, energy-efficient cook stoves, water filters – or the decentralized energy production from clean local resources - biomass, solar, hydro, wind – or forest plantations and the fight against deforestation, for example. All of those are potential CDM projects that Africa can bring at the forefront of the international community action.

CDM is one of the few existing tool that can really help Africa as the continent is growing and facing environmental challenges that are all potential sources of instability and vulnerability: rapid urbanization, climate change modifying the agricultural structures and leading to uncontrolled internal migrations, industrial pollution, fossil fuels price volatility for businesses and households, accelerated deforestation, etc.

It is the right time for CDM : the continent knows about the mechanism, highly qualified national authorities dedicated to the CDM have been established, regulatory and fiscal frameworks are enacted, public and private stakeholders are aware of the CDM advantages. A large-scale low carbon economy is ready to take off across the continent but we miss an attractive carbon market price to enhance and foster this bright future.

You have 40 carbon reduction projects in 17 countries. Tell me about them.

We hold the largest carbon project portfolio in Africa. We helped the projects you mentioned to secure carbon revenues. Projects stretch from a Bagasse Cogeneration plant in a sugar factory in Senegal to a solar PV farm connected to the grid in Mauritius or biogas capture project from Douala landfill in Cameroon. The common link between all these activities is to reduce greenhouse gas emissions and generate carbon credits for an equivalent amount (1 ton of CO2 avoided = 1 carbon credit). Thanks to our action, these projects have monetized their carbon credits and thus secured additional financial revenues to support their activities.

Who are some of Ecosur Afrique’s current customers and what are your expansion plans?

Our clients are large agro-firms, power producers, energy intensive industries (cement plants, mining sites), waste collection groups, energy efficient services companies. In a nutshell businesses that have an opportunity to reduce CO2 emissions or that have clean products.

For the group we expect to reach $30 million annual turnover in the coming 3 year. We want to achieve this by consolidating and expanding some of our investments, providing a wider spectrum of advisory services and starting new trading lines and products. We are considering the opportunity of a partial public listing in the Mauritius stock exchange in 2017.

You have a subsidiary investment company, Ecosur investment, which acquires stakes in African start-ups active in the renewable energy and energy efficiency sectors. What qualities do you look out for before making an investment and what is your typical deal size?

We have channeled 4 Mio EUR in 5 start-ups from the energy efficiency and clean energy sectors. We hold majority stakes for 2 of them (SoutraFourneau, Biso Na Bino). For these last 2 assets we employ 45 staff on ground. SoutraFourneau and Bison Na Bino are respective market leaders in Côte d’Ivoire and DRC for efficient charcoal cooking stoves. We never think of it, but most of the population use charcoal and fire wood for some basic needs such as cooking food. Primary energy can amount up to 80% of the energy mix in some countries causing an accelerated deforestation. Our cooking stoves devices reduce up to 60% charcoal consumption which, in turn, decrease poor households daily spending and reduce deforestation and associated CO2 emissions. Our investments generate also our own proprietary portfolio of carbon credits.

How has innovation changed the way you do business?

Innovation is a key component for our business. All our employees can access their desk on lines. Our internal organization is based on a virtual office with regional physical locations where we interact in persons and welcome our clients (Abidjan, Kinshasa, Ebene, Brussels). We use all social networks to share information on contracts signed, tenders won and transactions executed. We thus help the community to get information that would be difficult or impossible to access otherwise. Innovation is also the underlying of our business as carbon credits are generated by projects featuring a high green technology component.

What has been your biggest challenge in running a Pan-African carbon emissions trading business?

My biggest challenge is not in Africa but in my own country - France - and continent - Europe - to change the way we see Africa. We are slow and international competition is moving quick.

What will your African legacy be?

My legacy will be my aggregated daily actions: less greenhouse gas emissions and more green technologies, jobs and sustainable growth in Africa.

Follow me on Twitter @MfonobongNsehe