Africa's carbon market offers a powerful means to address climate change and uplift communities. The tangible benefits seen in the projects in across Africa highlight the potential of carbon credits, both environmentally and socio-economically. As regulations evolve, governments have the opportunity to address current challenges and meet national priorities by crafting policies that prioritize local needs and ensure sustained advantages. By championing local expertise and fostering shared benefits, Africa can realize the carbon market's dual promise for its people and the environment.
Carbon trade is the buying and selling of credits that permit a company or other entity to emit a certain amount of carbon dioxide or other greenhouse gases.
Climate change is a driver for change through which new value can be realized for businesses or institutions in Africa--thus benefitting local economies and people. For those that contribute to climate change through the direct or indirect emission of GHGs, they can act to reduce these emissions and pay for the costs in part by generating emissions reduction credits that are tradable assets.
Reducing the carbon footprint for businesses is of course part of good corporate citizenship, but if non-obligatory reductions can be monetized at the same time, it is more likely that such actions can be realized more quickly and scaled-up. Likewise, for small-scale activities implemented by SMEs, such as decentralized waste management, carbon credits can provide additional revenue streams far into the future, thereby increasing the viability and sustainability of business models. To what end? Carbon market vehicles can be a mechanism to channel new investment into Energy Security in Africa. They can also help African countries to meet their voluntary greenhouse gas reduction targets as well as their national renewable energy targets.
For African countries, trading of carbon credits represents an opportunity for economic development, job creations, access to climate finance and a driver for change that can contribute to the global fight against climate change, the realization of the Aspirations of Agenda 2063, and the sustainable development goals.
Recently, the Africa Multi-Stakeholder Conference on Carbon Markets is underway at the African Union Headquarters here in Addis Ababa. The concerned bodies who drown from various African countries were assembled to talk on the carbon trade and agreed to collaborate and take decisive action to harness the potential opportunities in carbon trading.
The overall goal of the conference is to provide a platform for the African continent to deliberate on carbon markets, the approaches and opportunities they present, the threats they pose and possible options the continent can explore, taking into consideration its circumstances.
Harold Bundu Saffa is Environmental Issues Permanent Representatives Subcommittee Chair. He said that Africa finds itself at a critical juncture where economic development must align with the imperative to address a rapidly changing climate.
The African continent is not the primary driver of the global climate crisis, yet it disproportionately bears the burden of its consequences. Africa faces prolonged droughts, erratic rainfall patterns, soaring temperatures, and intensified extreme weather events, all posing existential threats to food security, water resources, and the livelihood of countless communities.
Compounding these pressing challenges is the stark reality of insufficient climate finance, which limits the continent's ability to effectively address the multifaceted climate crisis, the chair elaborated.
The African region has the potential to leverage its rich natural resources to unlock economic value, accelerate sustainable industrialization, and promote economic transformation and diversification.
Therefore, this conference provides a crucial platform for Africa to collaborate and catalyze action in harnessing the potential opportunities in carbon trading.
The conference will ensure that Africa receive fair pricing for its carbon in global credit markets and develops markets based on African principles and priorities rather than foreign ontologies or epistemologies.
Carbon-trading deals involving forestry projects in developing countries could reduce poverty at the same time as they offer an inexpensive way to off-set carbon dioxide emissions. Under the clean development mechanism (CDM) of the Kyoto Protocol, industrialized nations are allowed to meet part of their carbon emission reduction commitments by carrying out reforestation and clean energy projects in developing countries.
Policy and development agents at all levels should make sure that farmers get the required financial and technical supports to be effectively link to existing carbon markets. A policy environment that enables the necessary institutional mechanisms for community participation would be needed for the carbon trading afforestation contracts to work and bear fruits.
The use of forests to reduce emissions is not only financially viable, but could also bring significant benefits to the local communities involved. For Ethiopia, carbon trading also represents an opportunity to fund sustainable through financial inflows. However, with a low share of global carbon trade, there are strong concerns that Ethiopia is losing out this valuable opportunity. Markets for environmental services have been growing in recent years wherein more and more people are willing to pay for carbon project benefits.
Africa possesses vast ecosystems crucial for carbon storage, Saffa said, adding that the Congo forests, dubbed the world's second long to absorb about 1.2 billion tons of CO2 annually.
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The Congo basin was roughly 8 percent of the world's forest base carbon. However, this significant contribution is not reflected proportionally in the carbon trade.
AU/AfCFTA Relations and Trade Policy Director, Yusuf Daya said carbon market is crucial for exploring and implementing solutions that not only mitigate environmental issues but also foster economic growth and social development.
The potential economic benefits of carbon credit markets are essential; many African countries possess vast forests, savannas, and other ecosystems that act as significant carbon sinks.
By participating in carbon credit markets, these nations can monetize their natural assets, attract investments, and generate revenues to support development, the director noted.
This revenue can be reinvested in local communities, infrastructure, sustainable development projects, driving economic growth and reducing poverty.
According to him, there are, however, challenges that need to be addressed, including establishing robust regulatory frameworks, ensuring transparency and accountability and building capacity for monitoring and verification.
The three days conference has brought together government representatives from AU member states, representatives of regional economic communities, private sector entities and CSOs, among others.
