Several African heads of states and high-ranking dignitaries were in Nairobi last week to attend the inaugural Africa Climate Summit. The African leadership has been advocating for a substantial increase in the continent’s carbon credit supply to reach 300 million annually by 2030, a level that would unlock $6 billion (Sh876 billion) in income and support 30 million jobs. However, to even attempt it, several challenges abound as outlined below
1. Low share of Carbon Market
Africa has a low share of the global carbon market, accounting for only 2 per cent of the trading. Most of it is concentrated in South Africa and North Africa, due to several reasons, including lack of a common set of rules to govern the fast-growing carbon credits market, revenue sharing issues, state control and lack of regulation. However, the continent hopes to address these challenges through the Africa Carbon Markets Initiative, which aims to support the growth of carbon credit production 300 million annually and create 30 million new jobs.
2. Carbon Removal Technologies
Carbon removal technologies, including carbon capture and storage (CCS) and direct air capture (DAC), are essential for achieving net-zero emissions. These technologies are still in their infancy and require further research and development.
3. Ineffective carbon markets
Carbon markets have been a significant barrier to Africa’s ability to trade in carbon credits. They are often ineffective, complex, and prone to fraud and corruption, factors that have tended to undermine the African Carbon Market’s credibility and legitimacy. The African carbon credits in Africa are also cheaper to purchase because schemes are not strictly regulated.
4. Market Price Volatility
The carbon credits market can be volatile, with fluctuating prices for carbon offsets. This uncertainty can deter potential investors and project developers in Africa.
5. Community rights
Carbon markets do not respect the rights and needs of indigenous peoples who often bear the brunt of environmental and social impacts of carbon projects. Though the markets can protect forests, increasing the economic value of these lands create incentives for land-grabbing. Many offsetting schemes are also located in lands historically claimed, inhabited and used by indigenous people and local communities. Often, the rights of these communities are unsecured, putting their well-being at risk and threatening the future of carbon markets.
6. Regulatory and policy barriers
The absence of a uniform framework is creating uncertainty and deterring investment in carbon credit projects, as lack of clear guidelines on revenue sharing is stirring conflicts and hindering growth of the sector. Countries like Kenya are now seeking to regulate the industry to ensure the integrity of the carbon credit market, with the prospect of overly restrictive or unclear regulations likely to pose challenges for project developers. Some like Zimbabwe have decreed that a large share of all proceeds from the offset go to the state, hence discouraging private sector participation.
7. Not a permanent solution
While it is a well-intentioned mechanism to combat climate change, Carbon markets often fail to address the root causes of climate change. About 90 per cent of offsets traded in the voluntary market are not for removing carbon, but avoiding its release. The price put on locking away one tonne of carbon removal also differs in its stage of maturity, in how much it can be scaled up, and how effectively it removes carbon dioxide and for how long and the costs involved.
8. Perverse incentives
Carbon markets create perverse incentives for polluters to continue emitting greenhouse gases, while shifting the burden of mitigation to the Global South. They allow polluters to offset their emissions by investing in conservation initiatives in developing countries, an undertaking often seen as a “free pass” to continue polluting the environment instead of paying to offset and does not necessarily lead to a net reduction in global emissions. They are also cheaper to buy in developing countries than developed ones where schemes are more strictly regulated.
9. Financial outlay
Whereas significant strides have been made in developing renewable energy technologies they are not yet able to completely replace fossil fuels. The transition to a low-carbon economy requires substantial financial outlay, especially in overhauling the existing energy infrastructure which is based on fossil fuels. In addition to lifestyle changes and political will, achieving a net-zero emission is a daunting task on the continent, given the infancy in carbon removal technologies.
10. Fair benefits distribution
Carbon markets do not ensure a fair distribution of the benefits and costs of climate action in Africa. They often favour the interests of powerful actors and marginalize the voices of affected communities. This has led to skepticism about whether these markets are truly contributing to emission reductions or are simply a form of “greenwashing.”
