By Zanji Sinkala
Among the significant initiatives unveiled during the recently held COP28 was the Africa Carbon Markets Initiative (ACMI), a program designed to amass $6 billion by 2030.
At the core of ACMI is the sale of offsets to companies dedicated to minimizing their carbon footprint. These offsets, will in turn, finance projects aimed at mitigating pollution, including the preservation of vital ecosystems such as forests and savannahs. Carbon credits are a market-based mechanism designed to mitigate climate change by incentivizing the reduction of greenhouse gas (GHG) emissions from the atmosphere and compensating for emissions produced over stipulated limits.
In simpler terms, they are financial instruments where a buyer pays another company to take some action to reduce its greenhouse gas emissions, and the buyer gets credit for the reduction. The basic premise is to assign a monetary value to the reduction or removal of one metric ton of carbon dioxide equivalent (CO2e) emissions.
This system encourages entities to adopt cleaner practices and invest in projects that offset or reduce carbon emissions. During COP28, IMF Managing Director Kristalina Georgieva backed the concept of carbon credits, emphasizing that pricing was key in holding big emitters accountable in accelerating decarbonization.
“For those that have adopted a carbon price, how do we get big emitters to accept that we need to accelerate decarbonization?” she said, “Mother Nature is helping us because countries rich and poor are already experiencing the devastating force of climate change.”At the Leaders’ Event on Carbon Markets hosted by the European Union at the COP28, Zambian President Hakainde Hichilema called on global entities engaged in carbon trading to create a structured mechanism that would protect developing nations.
On his Facebook page, he gave an update about his presentation at the event:
“We highlighted ongoing efforts to draft legislation on climate change, incorporating provisions for the advancement of carbon markets. We emphasised that rural communities, dependant on natural resources, can actively engage in carbon projects only when the benefits of carbon markets are clearly demonstrated and defined to make it easy for them to participate. We will continue our engagements here (Dubai) for the benefit of our fellow citizens,” said Hichilema.
While carbon crediting seems to be one of the solutions to climate change woes, poor countries who have been bearing the heavy brunt of climate change consequences remain indignant.
Critics argue that it is contradictory to introduce a system where companies or nations can buy carbon credits to offset their emissions, essentially allowing them to pay for the right to pollute.
Several companies have termed their extra carbon emissions “unavoidable”, meaning that the decision about what can be avoided or not lies in the hands of the company emitting the carbon- making it easy and affordable for them to pay for a solution.
This implies their indirect permission to keep emitting more, which is something climate activists find counterproductive to the urgency of combatting climate change.
“UN Environment supports carbon offsets as a temporary measure leading up to 2030, and a tool for speeding up climate action. However, it is not a silver bullet, and the danger is that it can lead to complacency,” said UN Environment climate specialist Niklas Hagelberg.
In other emerging scientific evidence, many carbon offsets apparently have no environmental worth. An investigation by The Guardian found that only a handful of Verra (the world’s leading carbon standard for the rapidly growing $2bn voluntary offsets market)’s rainforest projects showed evidence of deforestation reductions, according to two studies, with further analysis indicating that 94% of the credits had no benefit to the climate.
Gucci, Salesforce, BHP, Shell, easyJet and Leon were among dozens of companies and organizations that have bought rainforest offsets approved by Verra for environmental claims.
Raising even more eyebrows after the investigation, was the declaration by Shell a few months before the COP28, that it was moving away from offsets amid repeated indications that huge numbers of carbon credits do nothing to mitigate global heating.
When contacted by the Guardian, a spokesperson for Shell said: “Shell’s position on carbon credits, including from nature-based solutions, remains unchanged. Carbon credits remain a valuable and additional decarbonisation lever in our portfolio, including from nature-based solutions.
The carbon market may not be perfectly functioning everywhere yet, however there are ongoing discussions of how it can be improved which we welcome; that is how markets progress.”
In recent years, the need for carbon credits from Africa and other regions has increased significantly. This surge is driven by the push to embrace environmentally sustainable approaches to industrialization, particularly within the framework of various development initiatives like the African Continental Free Trade Area (AfCFTA).
The increase in demand for carbon credits has led to extensive land acquisitions across the continent, driven by the objective of establishing forest restoration projects to fulfill their heightened need.
Numerous ongoing and new projects in Africa fall under land-based carbon offset initiatives, including the Clean Development Mechanism (CDM) and the Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (REDD+) programs.
Notably, Kenya, a prominent carbon offset producer in Africa, recently inked a controversial Framework of Collaboration (FOC) with the Dubai-based firm Blue Carbon. This collaboration entails acquiring millions of hectares of land for carbon credit production.
Similar agreements with the same company have been forged with other African countries, including Zambia, resulting in the allocation of 7.5 million hectares to the company.This unfolds as poor land governance concerns persist.
Historically, Large-Scale Land-Based Initiatives (LSLBIs) have been implicated in numerous human rights violations, including forced evictions, displacements, and illicit land acquisitions, particularly affecting unregistered customary lands.
Further, they continue to thrive in the ignorance of individuals and communities, who may not be fully aware of their land rights or may lack access to information, making them vulnerable to exploitation and injustices associated with these initiatives.
Chief Mukungule of the Bisa people, situated in Zambia’s north-central Muchinga Province, lost more than half his chiefdom (134, 000 hectares) to the Ministry of Agriculture, which had plans to transform it into a farm block.
He claims that the deal was initiated using a letter bearing his forged signature, as he has no recollection of signing an agreement to sell off the land. Since then, dozens of locals from his chiefdom have been displaced with nowhere to live, while 2000 others face eviction.
“My subjects and I were not consulted on this development, and this cannot be accepted in my chiefdom,” he said in a Zambian local language, “I have only seen that letter used by the Ministry to form this farm block now, I never signed it!”
Meanwhile, various agricultural developments and activities are already underway in the disputed farm block, while the necessary statutory requirements such as the need for impact assessments, have been ignored.
In the process, this action threatens the livelihoods of his people, the delicate balance of local wildlife, and the integrity of the surrounding environmental ecosystems.
Some African climate activists have continued to voice their concerns around the benefit of carbon credits on the continent, despite strong proponents for it such as Kenyan President William Ruto.
Speaking at the Africa Climate Summit in September this year, Mohamed Adow, Director of Kenyan-based climate thinktank Power Shift Africa, said carbon credits had never worked in Africa and were a sheer waste of money.
“Rather than providing real and public funding into African renewables and adaptation, this week [at the Summit], rich countries pledged money to prop up carbon markets that have never worked, neither in Africa nor elsewhere. They are wasting money that should be spent on real solutions,” said Adow.
Although the Secretariat of the United Nations Climate Change Framework Convention on Climate Change (UNFCCC) is responsible for maintaining a global registry or clearing house for many types of carbon units, various regulatory bodies at the national and regional level (e.g., the EU) oversee and monitor transactions in this market.
Similarly, while there are several major exchanges where carbon allowances and credits trade in real time, there is no central exchange, nor a single unitary carbon market price.
Rather, prices are determined in different market segments as a function of supply and demand as with other traded commodities.
The downside of this is that the absence of a centralized system and the decentralized determination of prices based on supply and demand dynamics may create opportunities for exploitation.
Actors with more resources or market influence could exploit disparities in different market segments, potentially leading to inequitable outcomes. This lack of centralized oversight may open avenues for market manipulation or unfair practices, posing challenges to achieving a fair and ethical carbon market that benefits all stakeholders.
This story was produced with support from MESHA and IDRC Eastern and Southern Africa Office.
In picture: IMF Managing Director Kristalina Georgieva
