African countries are working together to establish common standards and guidelines for accessing the carbon credit market, which could provide a new source of finance for their climate action plans.
The market for carbon credits has grown rapidly in recent years as companies and governments seek ways to offset their emissions. The credits are generated by projects that reduce greenhouse gases, such as renewable energy or reforestation.
In May, Zimbabwe, which is the third-largest producer of credits in Africa, accounting for 13% of the continent's output, caused a stir in the fast-growing global offset industry by mandating that 50% of offset sales go to government coffers.
Meanwhile, Kenya, Africa's largest producer of carbon credits, is moving to regulate its carbon credit industry, while Malawi has set up a specialized agency. Zambia's environment minister, Collins Nzovu, said Thursday that his country, the fifth-largest producer of carbon credits, may follow Zimbabwe's lead.
Climate and environment ministers from various African countries, as well as industry players, have recently been sharing their insights on how to capitalize on this emerging market, which is currently under-regulated but has great potential for profitability.
To address this issue, Zimbabwe is currently hosting the inaugural Africa Voluntary Carbon Credits Market Forum in the country's resort town of Victoria Falls. The Zimbabwean government is seeking to transform the Victoria Falls Stock Exchange into a hub for carbon credit trading on the African continent.
During the ongoing forum, which will be addressed later on Friday by Zimbabwe's President Emmerson Mnangagwa, Zimbabwe's Environment Minister Mangaliso Ndlovu said there was a need to establish a unified African framework for regulating the carbon credit market.
"There isn't as yet an established move for convergence to say, 'let's have a uniform framework,'" Ndlovu said. "Going forward, I want to believe there will be greater collaboration among African ministers of environment."
Reforestation programs are the most common offset projects in Africa because trees absorb carbon. The continent is home to the Congo Basin, the world's second-largest rainforest, and vast savanna forests.
Each carbon credit represents one ton of either removed or prevented climate-warming carbon dioxide or its equivalent. According to estimates, the global carbon trade could reach $1 trillion within 15 years.
While most offset agreements in Zambia and Zimbabwe have been made with local authorities and traditional leaders known as chiefs, there is a lack of uniformity and governments have received minimal financial benefits. Addressing this gap is now a priority for these governments.
"The biggest issues in this market are revenue sharing," Zambia's environment minister noted. "From what has been happening in the past, we haven't had a good share of revenue."
In the fourth quarter of this year, Zambia's National Assembly is expected to consider a climate change bill as part of its efforts to regulate the carbon credit industry.
Nzovu expressed the Zimbabwean government's willingness to receive 50% of the revenues, but noted that they would negotiate agreements on a case-by-case basis. The official pointed out that the government might be open to making concessions to project operators.
Both the Zimbabwean and Zambian ministers stressed that their intention was not to discourage investors, but rather to ensure a fair distribution of revenues. They added that there was no desire to "punish" those running offset programs.
The market for carbon credits has grown rapidly in recent years as companies and governments look for ways to offset their emissions. Carbon credits are generated by projects that reduce greenhouse gases, such as renewable energy or reforestation.
These credits can be bought and sold on the carbon market, allowing companies and governments to compensate for their emissions of carbon dioxide or other greenhouse gases.