But despite these natural resources, Africa continues to be buffeted by the effects of climate change, including floods, droughts and climate-related crop pests and diseases that decimate livelihoods and ravage local economies. Sectors that power the continent’s growth, from agriculture and energy to tourism and transport, have been adversely affected by weather changes.
CLIMATE FINANCING AND THE RISE OF CARBON MARKETS
Accessing climate finance to counter the impacts of climate change has been a challenge for the continent. Yet carbon markets, trading platforms that allow individuals, firms and governments to fund projects that ultimately reduce emissions, have the potential to raise billions of dollars to meet Africa’s climate finance needs while creating jobs, protecting biodiversity, boosting energy access and enhancing climate action.
Africa, however, accounts for a paltry 2 percent of trading on the global carbon markets, which is valued at more than $2 billion.
Of all the carbon credits that were issued between 2016 and 2021, only 11 percent came from African countries. This is even as the global demand for carbon credits is poised to grow by a factor of 15 and could reach $50 billion by 2030 – an investment Africa could tap into.
“Carbon markets are a perfect avenue to unlock financing opportunities to meet the climate needs of Africa while fostering sustainable livelihoods for communities,” Raham Mbithi, a lecturer at Kenyatta University’s School of Environmental Studies, told FairPlanet. “These markets are particularly important now as the continent adjusts to the impacts of COVID 19, climate change and energy crises, and they go a long way in enhancing sustainability and resilience.”
THE DOWNSIDE OF CARBON MARKETS
But global carbon markets have been fragmented and complex, with concerns being raised about their transparency, equity and effectiveness.
The argument has been that the share of revenue received by local communities has not been reflective of what they deserve, with allegations of exploitation in Voluntary Carbon Markets (VCMs) proliferating.
A 2023 study by Carbon Market Watch indicated that 90 percent of intermediates surveyed in the report did not disclose the fees they charged and the profits they made following the sale of carbon credits in the voluntary market.
“The extreme opacity surrounding the financial transactions involving carbon credits is very troubling because it deprives us of insight into whether voluntary carbon markets are succeeding in their declared mission of financing climate action and makes it impossible to quantify the true amount of profiteering and speculation on the part of brokers, exchanges, online resellers and the emerging craze for crypto carbon trading,” noted a section of the report.
That scepticism has dented carbon markets’s reputation as a finance vehicle to build resilience among local communities and slowed down the resolve to mitigate the impacts of climate change, especially in Global South countries.
“Project owners have so far resisted calls of increased financial transparency, yet providing information about their earnings per credit would allow buyers to target projects where the gap between what they pay and what the project owner receives is the smallest,” the report further noted. “This will ultimately benefit the project owners, by strengthening their bargaining power with intermediaries.”
ENTER THE AFRICAN CARBON MARKETS INITIATIVE
To ensure that Africa trades transparently and increases its participation in voluntary carbon markets, a new drive was launched last year at COP 27. The Africa Carbon Markets Initiative (ACMI) is a collaboration between Sustainable Energy for All (SEforALL), the UN Economic Commission for Africa and The Global Energy Alliance for People and Planet (GEAPP).
It consists of a steering committee whose 13 members include African leaders, carbon credit experts and CEOs. The initiative is aiming to help Africa create 300 million credits every year, which would create 30 million jobs and $6 billion in new income. By 2030, ACMI hopes to produce more than 1.5 billion credits yearly in Africa, generating over $120 billion and supporting more than 110 million jobs.
But to reach these numbers and sustain that resolve, the initiative is betting on increased transparency and championing for trickle-down benefits to local communities.
“High integrity carbon credit projects could not only reduce emissions and remove CO2e from the atmosphere, driving on-the-ground climate impact, but they also offer an immense opportunity to drive development priorities such as expanding energy access, improving health through clean cooking, and creating jobs,” ACMI said in its roadmap report. “They are also gaining traction as a crucial way of funnelling finance to developing countries and have the potential to become a meaningful commodity in their own right.”
ACMI is now launching activation drives in Nigeria, Rwanda, Ghana and Kenya, which will assist the countries in formulating guidelines that are alive to modern realities of climate change and develop projects that will benefit local communities.
But this project and the carbon markets have faced criticism from environmentalists who argue that emitting, capturing and sequestering carbon is a cosmetic solution that does not address the real cause of global warming and is only meant to yield profits.
They further argue that the ultimate and sustainable way to address the climate crisis is by halting the construction of fossil fuels wells and mines and banning extraction from oil and gas fields.
“It is regrettable that carbon markets have been pushed and advocated by African leaders. These are just businesses at the expense of the planet,” Eunice Mwoki, an environmentalist based in Kenya, told FairPlanet. “Africa is on the verge of an unprecedented climate crisis with millions of its citizens feeling the heat of the weather vagaries.”
“The conversation and climate action should entirely focus on how we embrace clean energy sources and stop any further investment in fossil fuels,” he concluded. “Any other action, like carbon trading, is defeatist, selfish and will sink the continent and planet.”