Wednesday, April 24, 2024

Kenewendo worries carbon markets underutilized

United Nations (UN) Climate Change High-Level Champions’ Special Advisor, Africa Director, Bogolo Kenewendo says the continent is losing out on trade on the expanding global carbon markets, which have the potential to unlock millions for the needs of African countries in terms of climate funding.

“The continent, now and in the future, should put its best foot forward in creating an enabling environment that allows for the development of carbon projects and for the private sector to understand exactly how they can get involved in this space,” said Kenewendo, speaking in Ethiopia at the sixth edition of the Africa Business Forum held under the theme “Making Carbon Markets Work for Africa”.

Additionally, the Africa Director said there is need to foster an environment that supports voluntary carbon markets in Europe and Asia, adding that the regulatory environment must “not stifle any pre project development that happens.” 

“We have to make sure that we are developing frameworks that allow and align with both the voluntary and compliance markets,” she says.

Voluntary carbon markets allow carbon emitters to offset their emissions by purchasing carbon credits emitted by projects targeted at removing or reducing greenhouse gas from the atmosphere.  On the voluntary market the trade of carbon credits is on a voluntarily basis. However, compliance market is a market for carbon offsets created by the need to comply with a regulatory act. The compliance market is used by companies and governments that by law have to account for their greenhouse gas emissions, and this is regulated by mandatory national, regional or international carbon reduction regimes.

In response to a question about how she views Africa participating in the carbon market, she said that Africa contributes roughly 11% of the voluntary carbon markets. “Just to put it into perspective, the voluntary carbon markets at the moment, especially for nature based credit, trade somewhere between US$5 to US$10. And the compliance market, right now, Japan is trading at US$125,” she said. She expressed worry that the enormous gap is preventing Africa from taking advantage of many chances to unlock finances.

Recent years have seen a rise in the popularity of carbon markets, with about 23% of worldwide emissions now subject to some form of carbon pricing. The carbon market is still unpredictable, though. Different price ranges are possible, from as little as $10 per tonne of carbon dioxide equivalent to more than $125 per tonne carbon dioxide equivalent. One tonne of carbon dioxide or the equivalent quantity of another greenhouse gas reduced, sequestered, or avoided is equal to one tradable carbon credit.

Kenewendo added that it is evident that countries can be encouraged to pursue a low-carbon development path with the proper pricing. “We should certainly use the carbon markets to drive finance into the continent for Africa and for the attainment of sustainable development goals,” she said. However, some environmentalists have expressed concern that countries are entering into covert carbon market agreements with little oversight.

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