Rwanda will announce its offering on the carbon market in April following consultations and studies that are currently under way, Minister of Environment, Jeanne d'Arc Mujawamariya said.
The carbon market is a scheme of trading carbon credits that an entity gets by reducing emissions extensively beyond the required levels, and selling them to those unable to meet their reduction requirements.
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The main goal for the creation of carbon credits is the reduction of emissions of carbon dioxide and other greenhouse gases from industrial activities to reduce the effects of global warming.
The government or any other authorised agency can specify a carbon credit trading scheme as well as issue tradable certificates among entities registered for the scheme.
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"We are developing Rwanda's carbon emissions trading and readiness frameworks under article 6 of the Paris Agreement. By April, the results of the consultations will be ready," Mujawamariya said.
She noted that to harness the carbon market opportunities, the government will make deliverables including carbon stocks potential from key selected sectors; review of policy, institutional, and legal policy frameworks for carbon markets in Rwanda; centralised accounting and reporting platform. As well as operational online carbon registry and training models of stakeholders in the market.
"All in all, understanding our potential and creating a regulatory framework and national registry will not only help to promote transparency and environmental integrity but also add value to the quality of carbon credits, hence, carbon investments in Rwanda," she added.
This, according to her, will allow Rwanda's economy to grow with another element of the carbon market with the private sector actively playing its role by investing in projects that generate carbon credits.
Carbon credits can be traded on both private and public markets. Current rules of trading allow the international transfer of credits.
By purchasing carbon credits, businesses essentially invest in other projects that help reduce greenhouse gas emissions.
By December 2020, more than 2.25 million carbon credits have been issued to Rwanda from the Clean Development Mechanism and voluntary carbon markets.
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Broadly, there are two types of carbon markets; compliance markets -- created as a result of any national, regional, or international regulatory requirement, and voluntary carbon markets -- referred to as the issuance, buying, and selling of carbon credits on a voluntary basis at a national or international level.
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Environmental experts argue that the current global carbon market is unfair in terms of pricing and does no justice to Africa as a country that contributes less to carbon emissions.
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For instance, industrial carbon credit mainly from developed countries is sold for high prices amounting to over $40 per tonne, whereas, forest carbon credit that abounds in African and water ecosystems is consistently priced cheaply as low as $5 per tonne.
In 2022, global trade in carbon amounted to $865 billion in compliance markets and $2 billion in voluntary markets. Only about 11 per cent of all credits that were retired in voluntary carbon markets between 2011 and 2016 were African credits.
It is estimated that Africa will need around $438 billion in adaptation financing by 2030. This is why carbon markets could unleash an estimated annual $82 billion in value, at $120 per tonne of carbon emissions concealed, as well as create 167 million additional jobs.
Experts say that Africa should seek entrance into the compliance market rather than voluntary markets because that's where most of the financing is.
