Rwanda Forestry Authority (RFA) has placed forests covering approximately 1,000 hectares, managed by farmers' cooperatives in four districts, on the carbon market. This serves as an incentive for farmers' efforts in conserving the forests.
Farmers could receive financial incentives based on the amount of carbon emissions their forests have reduced and sold on the carbon market each year.
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A carbon market is a trading system in which tonnes of reduced carbon emissions (climate-polluting gases) are sold. Reduced tonnes of emissions were dubbed "carbon credits".
A carbon credit is equivalent to one tonne of reduced carbon emissions.
This market enables climate polluters to fund projects that reduce carbon emissions in other countries, and they can then include these emission reductions in their climate targets while still emitting greenhouse gases.
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The market is one of the mechanisms to mobilise climate finance for projects that combat climate change.
Under Article 6 of the Paris Agreement signed in 2015 to limit global warming to 1.5 Degrees Celsius, a country (or countries) and companies can transfer carbon credits earned from the reduction of greenhouse gas (GHG) emissions to support one or more countries meet climate targets.
The new development to monetise forests follows Rwanda's launch of the Carbon Market Framework during the 28th UN Climate Change Conference-COP28 that took place in Dubai, UAE from November 30 to December 12, 2023.
ALSO READ: Rwanda's carbon market framework launch, more events at COP28
Concorde Nsengumuremyi, Director General of Rwanda Forestry Authority, said the pilot phase will be implemented in four districts after partnering with a firm, CO2 Cap Projects Africa, which is interested in the carbon market.
The districts include Gakenke and Rulindo in Northern Province, and Bugesera and Rwamagana in Eastern Province.
"The farmers will get annual incentives for managing, conserving, and protecting their forests. This is additional money they will get in addition to the money they will get from harvesting the trees after a certain period agreed upon. We are going to partner with a company certified by ISO on the carbon market," Nsengumuremyi said.
The forestry authority met with farmers on Tuesday, December 19 to discuss the carbon credit implementation in the identified four districts.
"We chose to pilot a carbon credit project in the four districts because there are a lot of forests managed by farmers in cooperatives. The cooperatives are also trained on a long-term plan for conserving the forests showing them how they could benefit in the next 10 or 20 years," he said.
State forests
Nsengumuremyi said that state forests are also being put under private-sector management, paving the way for carbon credit.
The government had allocated about 8,000 hectares of state forests to private investors for management.
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The cabinet has approved four companies for the management and harvesting. These include Ecopen Ituze Ltd, Kayonza Distributors Company, Ekaterra Tea Rwanda Ltd, and Ikizere Silviculture Limited.
The country seeks to privatise management of 80 per cent of state forests by 2024. The 80 per cent target is equivalent to 49,188 hectares.
This target has been achieved at 66 per cent, an increase from 38 per cent in 2022.
Statistics show that the government owns 27 per cent of the total forests equivalent to 61,485 hectares without considering national parks, meaning that farmers own over 70 per cent of forests.
To attract more investors, Nsengumuremyi said, Rwanda committed to restoring degraded land.
Joel Shyaka, the Project manager at CO2 Cap Projects Africa, said they will soon pilot a carbon credit project on 900 hectares. At least 3,000 farmers could benefit from the carbon market in the four districts.
"The criteria to benefit from a carbon credit project include having registered their land in land authority, committing not to chop the forests within the agreement period, collaboration during land auditing, and others," he said.
He cited an example of how forest farmers will benefit. "If a farmer called Kalisa planted forests on 30 hectares with 90,000 trees that can absorb 5,985 tonnes of carbon emissions, he could get $9,000 per year as an incentive."
The launch of the pilot project is expected in January 2024. Calculating carbon credits, he said, the firm will use blockchain-based carbon trading technology.
Adam Bradford, Director of CO2 Cap Projects Africa, said the number of farmers to benefit will grow as they continue to collaborate with other landowners and institutions, with the continued drive to implement Rwanda's new carbon trading framework in collaboration with the country's leadership and public bodies.
"Our model is also open to any other private landowners who wish to monetise their land and contribute to mitigating climate change."
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Farmers' views
"We welcomed the project to incentivise our forest conservation efforts. We have learned that forests will remain our property and earn more money annually as an incentive if we do not cut them when they are not mature.
ALSO READ: Over 850 hectares of old forests restored
"We are happy that when we harvest the trees after the period agreed upon, the money will still be ours," Esperance Ugenwenimana, the head of a cooperative with 207 members owning and managing 37 hectares of forests in Gakenke District, said.
Petronille Mukazitoni, a farmer from Rulindo District said: "It is a motivation to get more money in addition to revenue from harvesting and selling the trees. We have 38 hectares as a cooperative with 115 members."
Proposed price
Rwanda seeks to reduce 38 per cent of greenhouse gas emissions by 2030. So far, 30.4 per cent of the surface is covered by forests.
Rwanda expects to sell 7.5 million tonnes of carbon dioxide equivalent (MtCO2e) - carbon credits - estimating that they could generate $337 million (approx. Rwf420 billion).
Given that the minimum price is $30, Rwanda will expect to get $45 per carbon credit (one tonne of carbon dioxide equivalent), hence $337 million from 7.5 million tonnes of carbon dioxide equivalent.
