Green projects in renewable energy, agriculture, greening, transport, waste management and forestry among others have potential to trade carbon credits on the global carbon market.
Rwanda recently announced that it is preparing to leverage a market scheme of trading carbon credits which an entity gets by reducing carbon emissions extensively beyond the required levels and selling them to those unable to meet their reduction requirements in other organisations or countries.
A carbon credit is a kind of permit that represents one tonne of carbon dioxide removed from the atmosphere.
According to global management consulting firm McKinsey, demand for carbon credits could increase by 15 or more by 2030 and be a factor of up to 100 by 2050.
Overall, the market for carbon credits could be worth upward of $50 billion in 2030.
"We are establishing a scheme and new rules that will govern the carbon market. We are still working on them and will be announced soon so that investors embark on designing projects to take to the carbon market," Herman Hakuzimana, the Environment and Climate Change Adaptation and Mitigation Specialist at Rwanda Environment Management Authority (REMA) told The New Times.
Hakuzimana cited renewable energy as a potential sector with projects that can be taken to the carbon market.
"All projects that promote renewable energy can be taken to the carbon market because it is easy to count the tonnes of carbon emissions they can reduce," he said.
He noted that modern and improved cook stoves are among the projects that can sell carbon credits.
"Besides reducing deforestation, improved cook stoves mean that carbon emissions are reduced when few trees are cut. So, it is easy to count them," he said.
He said that creating a carbon market is among the resolutions from COP26 (26th climate summit) that took place in Scotland last year.
"During the climate 26th summit-COP26 last year, the issues related to the carbon market were discussed. Now what will be discussed during COP27 is the implementation framework," he said.
The agreement reached on carbon markets at COP26 was six years in the making.
According to experts, this will also accelerate private sector involvement in investing in cost-effective emission reductions.
"In Rwanda, we have other sectors in which projects that reduce carbon emissions can be designed to sell carbon credits on the carbon market. We want the carbon market to be the source of climate finance in Rwanda. For instance, waste management projects can also sell carbon credits. This is because there are a lot of emissions that come from landfill," he said.
Methane gas from landfills is a potent greenhouse gas because it is estimated to be 28 times more powerful than carbon dioxide.
Accounting for about 20 per cent of global emissions, methane is the second most prevalent greenhouse gas after carbon dioxide, which makes up more than 70 per cent.
Rwanda seeks to invest $28 million in utilizing gas from landfill for cooking and lighting.
"Projects that reduce emissions in the agriculture sector have potential to sell carbon credits. For instance, this can be done by managing agriculture waste for organic fertilizers," Hakuzimana noted.
Agriculture accounts for 70.4 per cent of the total national emissions according to the third National Communication report on climate change released in 2019.
Other sectors with potential projects to sell carbon credits, he said, include those in the transport sector.
"Electric vehicles are another good example of projects that can sell carbon credits," he said.
Total Adoption of electric vehicles and related solutions in Rwanda will require up to $900 million according to the Ministry of Environment.
According to Rwanda's national inventory, transport accounted for 13 per cent of the total greenhouse gas emissions which electric vehicles could reduce.
Rwanda seeks to reduce 38 per cent of its emissions by 2030 or 4.6 million tonnes of greenhouse gases
Climate Actions related to agriculture will reduce 49 per cent of 4.6 million tonnes of greenhouse gases by 2030.
Climate Actions in the waste sector will reduce 14 per cent of 4.6 million tonnes of greenhouse gases while Climate Actions related to the energy sector will reduce 34 per cent of 4.6 million tonnes of greenhouse gases as Climate Actions in the industry sector will reduce 3 per cent by 2030.
Carbon credits from the forestry sector
Aloysie Manishimwe, a conservation expert and researcher with the Centre of Excellence in Biodiversity and Natural Resource Management at the University of Rwanda said that forests can sell carbon credits.
"Studies have found that native tree species in Nyungwe forest store a lot of carbon compared to trees in Amazon forest," she said.
She explained that Rwanda has great potential to sell carbon credits considering that it emits less carbon.
"Rwanda pollutes less and on the international market, Rwanda has a lot of carbon credits to sell. If we look at how much Rwanda is emitting and how much it is allowed to emit if it does not reach its allowed emissions. Therefore, it can sell the difference," she explained.
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Experts say Rwanda can create new forests or use the existing ones less intensively with a change of species of trees to get carbon rights (credits).
So far, forest coverage in Rwanda stands at 30.4 per cent.
The carbon market is being considered as a source of climate finance for developing countries.
Faustin Mvuningoma, Coordinator of Rwanda Climate Change and Development Network (RCCDN) which brings together over 60 organizations said that climate finance at COP27 should be successfully discussed by African negotiators.
The Rwandan Civil Society is also participating at COP27 and Rwanda Climate Change and Development Network (RCCDN) has joined The African Civil Society through Panafrican Climate Justice Alliance (PACJA) to push for climate justice.
"Rwanda as other countries of Africa does not contribute a lot to climate change by polluting the air but they are more vulnerable to climate change effects than developed countries that are top carbon emitters. That is why climate finance is Rwanda's priority which we as civil society organizations are supporting," he said.
