Africa urgently needs climate finance to mitigate and adapt to climate change. Its negotiators have asked for between US$750 billion and $1.3 trillion per year by 2025. This is an ambitious goal considering the failure of global north nations to meet the pledge made in 2009 to provide $100 billion in climate finance per year by 2020. At last year’s UN climate talks, COP27, African negotiators were at the forefront of the conversation over compensation for loss and damage caused by climate change. They argued that global north countries, which bear an overwhelming responsibility for greenhouse gas emissions, must compensate poorer nations. This decades-long demand finally resulted in agreement over a Loss and Damage Fund to support the most climate-vulnerable countries. Against this backdrop, COP27 also saw the launch of the African Carbon Markets Initiative, designed to turbo charge the growth of voluntary carbon markets in Africa. Proponents say carbon markets can play a vital role in ensuring African communities receive the necessary financial support amid the climate emergency. Damilola Ogunbiyi is the UN secretary-general’s special representative for Sustainable Energy for All, an international organisation involved in launching the initiative. She says it will be a “transformational opportunity for Africa,” with potential to “unlock billions in climate finance to support economies while expanding energy access, creating jobs, safeguarding biodiversity, and driving climate action.” Its detractors argue that carbon markets are ineffective, often poorly regulated, and a distraction from the unmet climate finance obligations of global north countries to the global south. Carbon markets for Africa The objectives of the African Carbon Markets Initiative are to: Expand the sale of African carbon offset credits about 19-fold by 2030 Create or support 30 million jobs by 2030, and more than 100 million by 2050 Mobilise $6 billion per year by 2030, and more than $100 billion per year by 2050, through trade in African carbon credits Ensure revenue from credits is distributed equitably Voluntary carbon markets allow greenhouse gas emitters to offset their difficult-to-avoid emissions by purchasing carbon offset credits created by projects that remove or avoid emissions. For example, an airline may purchase offset credits created by a reforestation project, or a cement producer may buy credits from a project that prevents deforestation. The complexity lies in quantifying how much carbon a project has removed or avoided, and how much the associated offsets should cost. How, for instance, is the 1.5 billion tonnes of CO2 soaked up each year by trees in the Congo Basin calculated and priced? To begin with, the African Carbon Markets Initiative will facilitate voluntary carbon markets. These need four main components: carbon offset project developers, standard-setting bodies, exchanges and marketplaces, and buyers. Project developers set up operations that seek to avoid emissions, such as from petrol use or landfill decomposition, or remove greenhouse gases from the atmosphere, such as by tree planting or direct air capture. These projects are evaluated by an independent verification body to ensure they meet the requirements of a standards setter. Once certified, carbon offset credits equivalent to the amount of CO2 avoided or removed from the atmosphere are issued to the project. One offset credit usually represents one tonne of CO2 equivalent. The developer then sells the offsets to companies, governments or individuals, usually via an exchange or broker. Most African carbon offsets and carbon credits are sold through these voluntary carbon markets. Only South Africa operates a “compliance market” – which deals with trade in carbon credits created by the need to comply with regulations. The African Carbon Markets Initiative believes that expanding voluntary markets is the best way to increase the transfer of funds from the global north to Africa. These funds, the initiative argues, can then be used to support development projects such as clean cooking stoves, and efforts to expand energy access – a major priority for African leaders calling for climate justice. To date, multilateral organisations have been driving carbon offset schemes in Africa. Since 2010, the African Development Bank (AfDB), through its African Carbon Support Programme, has worked to identify and fund appropriate projects. These include the Windiga solar PV project in Burkina Faso and a cable car system aimed at reducing fossil fuel use in Lagos, Nigeria. The World Bank, too, has supported similar projects in different countries. More recently, innovative companies have joined the fray, such as SunCulture, a Kenyan climate tech company selling solar-powered irrigation systems, and KOKO Networks, a company that works on replacing charcoal-burning – a major driver of deforestation across Africa – with cleaner cooking fuels. African governments are paying attention. In 2021, the heavily forested nation of Gabon announced it was launching the world’s largest sale of carbon offset credits. But some experts believe the potential of Africa’s carbon markets “is far from being realised.” Currently, carbon offset trading in Africa faces several challenges. Project developers are few, in part because of the expertise and financial investment required to run credit-generating enterprises. Also, government regulation is a huge barrier. For example, many African landowners do not have formal titles to their land, making it difficult to guarantee the lifespan of a project. Meanwhile, validating and verifying projects in Africa can be very expensive and time consuming. Of the roughly 40 validation/verification bodies listed as accredited by Verra, Gold Standard and CDM – the world’s leading carbon offset and credit standard setters – only two have offices on the continent. To compound the challenges for project developers, intermediaries who broker deals and are mostly based outside the continent can charge up to 70% of the value of an offset credit, reducing financing coming to Africa and revenues to local communities. The African Carbon Markets Initiative has a number of action plans to try and resolve these challenges. It says it will work with African governments committed to scaling voluntary carbon markets, helping them understand the potential and connecting them with providers of both technical assistance and funding. It says it will set up an accelerator to support promising nascent project types, especially those that are technology-based, by providing technical assistance and facilitating access to potential investors and international developers of similar projects. The action plans include building capacity for validating and verifying projects on the continent, helping to pioneer innovative financing mechanisms for project developers, and promoting quality African carbon offsets to buyers across the world. Joseph Nganga, a vice president at the Global Energy Alliance for People and Planet, believes the initiative “can help us achieve a more rapid and equitable energy transition for Africa, a transition that supports lives and livelihoods with clean, reliable energy while countering the existential threat of our time, climate change.” The initiative is currently collecting feedback from the public and refining its proposed roadmap. A January press release from Sustainable Energy for All stated that the initiative aims to launch a number of “country activation plans” by COP28 in late November this year. Loopholes and distractions Not everyone is sold on the potential of carbon markets on the continent. “We need to focus on cutting down emissions and staving off a disaster,” Philip Jakpo, director of programmes at Corporate Accountability and Public Participation Africa, an advocacy group, tells China Dialogue. “We see the initiative as another distraction from the real solution to climate change: cutting down emissions, not financialising the climate.” Bassey Nnimmo, director of the ecological thinktank Health of Mother Earth Foundation, echoes Jakpo’s point, and argues the initiative has “nothing new” to offer. Instead of investing in carbon markets, Nnimmo emphasises that the climate debt owed to Africa must be paid. “Someone has to accept liability for global warming and pay for it,” he said. There are human rights concerns too. Carbon credit an offset projects have been linked to serious rights violations across the world. Between 2010 and 2011, 23 farmers were allegedly murdered in Honduras over a land dispute with owners of UN-accredited palm oil plantations. In Chile, a dam project touted as a source of clean energy and validated for carbon credits, was found to have flouted environmental guidelines. In Kenya, thousands were evicted from their ancestral lands for a carbon offset project. Meanwhile, despite their huge costs for communities, many offset and credit projects do not actually reduce or avoid emissions. “Carbon offsets have an extremely poor record,” says Luciana Téllez, an environment researcher at Human Rights Watch. “We mustn’t forget governments and businesses have been experimenting with offsets for more than a decade, with little to show for their effectiveness.” She mentions a case in the Republic of the Congo where families can no longer afford to send their children to school after a tree-planting project – for carbon offsetting – commissioned by oil giant Total barred them from their fields. “This disaster in Congo is a taste of what to expect if the African Carbon Markets Initiative launched at COP27 takes off,” Tellez said. Her comments underscore the importance of regulation, monitoring and scrutiny in carbon markets, all of which are challenging in the African context. A spokesperson for the initiative was unable to offer comments on the concerns about it. In its working roadmap, the initiative acknowledged Africa’s uncertain regulatory landscape, especially as it pertains to land rights. To foster the growth of voluntary carbon markets on the continent, it promised to seek “clarification of land use regulation for developers and communities operating in nature-based projects.” The document also acknowledged that “there are significant global concerns over the integrity of carbon credits” and “broader concerns that the existence of voluntary carbon markets acts as a licence” to continue business as usual. “These concerns must be accounted for and addressed to ensure that African carbon markets develop with high integrity,” the roadmap states. In a press release, Bogolo Kenewendo, a member of the initiative’s inaugural steering committee, cautions that to deliver on its objectives, the initiative must operate “with integrity, equity and transparency.”