Africa needs an informed approach to tap opportunities and navigate challenges in the global carbon market

  • 14 Nov 2023
  • 3 Mins Read
  • 〜 by Brian Otieno

The global carbon market is growing at a rapid rate and is currently valued at about $909 billion, almost a trillion dollars. Due to the lucrative nature of the market, African countries are angling themselves for a bite of the cherry. As the continent primes and positions itself to tap into this lucrative resource bank, an informed approach, premised on clear and sustainable objectives, is key for the continent to fully reap the benefits of its involvement in the market. As a result of its rich resource base of renewable energy sources, Africa stands to benefit from the carbon market and trading agenda, but only if the same is done in a structured, informed, and judicious manner.

The structure of the global carbon credits market involves industrialized nations and businesses seeking to offset their carbon emissions by investing in eco-friendly projects elsewhere. In the exchange model, one carbon offset is equivalent to one metric ton of carbon dioxide removed from the atmosphere. Post COP27 held in Egypt, African countries like Kenya, Malawi, Gabon, Nigeria, and Liberia have taken a great interest in the carbon markets space.

Even though carbon trading and markets have been greatly taken up by African countries, information on the design, outlay and structure of carbon markets throughout Africa, and in Kenya to be specific, remains scanty. The existing information around it has not been broken down to the masses to enable them to appreciate in fullness what it entails as well as the opportunities and risks that such markets come with. As a result, African countries, including Kenya are exposed to the risks of being subjected to unsustainable and scrupulous arrangements in the carbon markets space.

The recent past has seen African countries position themselves as champions for sustainability, climate change agenda and proponents of effective climate financing models. Whilst this is welcome, capacity building remains fundamental not only for governments but also for the masses. To the governments, capacity building allows them to put in place adequate infrastructures to ensure any carbon market arrangements they get into are not lopsided. On the other hand, the masses, are the ones who will either enjoy the benefits of sound and informed policy approaches or be swamped by the perils of misinformed carbon market arrangements.

Accordingly, Africa needs to take a deliberate approach towards positioning its model of trading in the carbon markets for the better. The model in place should be that which does not exemplify involvement in carbon markets for the sake of it. However, the approach needs to be that which links the entire pillars of a carbon market project or arrangement.

Emphasis should also be laid on having a model that links the whole process right from ideation, through to project development and finally to financing. More importantly, African countries should vouch for a collaborative African platform instead of segmented and confined country markets for exchanges and trading as this leaves individual countries vulnerable to fishy arrangements.

Looking at some of the deals or arrangements ceded into by African countries already taking the lead in this market, exemplifies the need for tailored capacity-building initiatives for relevant stakeholders in the space. Liberia, for instance, is about to get into a deal that would see it concede about 1 million hectares, approximately 10% of the country’s land mass, to a private Emirati company that will oversee the marketing of carbon credits obtained from the country. This is a contract that will last for a period of 30 years. The nature and design of this deal leave more questions than answers.

Consequently, training initiatives, knowledge and insight-sharing platforms and mentorship schemes, technically designed to equip and support African countries in this space are fundamental. African governments, businesses and the general population need to be equipped adequately to participate effectively in carbon credit markets.

Suffice it to say, for the continent, the common adage that information is power makes absolutely every sense now!