As global companies scramble to offset their emissions, Africa is emerging as a key player in the carbon-credit market, providing both opportunities and challenges for the continent. Carbon markets allow companies to balance their emissions by purchasing credits from projects that absorb or reduce carbon dioxide, effectively reducing their reported carbon footprint.
READ EVERYTHING ABOUT OUR ECONOMIC INSIGHTS
However, for Africa to truly benefit from this booming sector, greater transparency and fairness are required to ensure that the continent’s resources and communities are not exploited for the gain of multinational corporations.
Africa’s Role in Global Carbon Markets
Spanning over two million square kilometers, the Congo Basin—stretching across Cameroon, the Central African Republic, the Democratic Republic of Congo (DRC), Gabon, Equatorial Guinea, and Congo Brazzaville—is one of the largest carbon sinks in the world. It absorbs more carbon dioxide from the atmosphere than it emits, making it a crucial asset in the global effort to mitigate climate change.
The Congo Basin has therefore become a focal point in the carbon-credit market, where companies can buy credits to offset their emissions without making significant reductions in their own carbon output. “Carbon markets provide a way to channel finance into projects that produce sustainable energy, support long-term agricultural schemes, and more,” explains Lydia Sheldrake, Director of Policy and Partnerships at the Voluntary Carbon Markets Integrity Initiative (VCMI). The VCMI was created to set standards and rules for voluntary carbon markets, ensuring both buyers and sellers adhere to ethical and effective practices.
[READ ALSO]
However, as Africa contributes its natural resources to the fight against climate change, there is a real risk that the economic benefits may not be equitably shared. Companies profiting from carbon credits may reap the rewards, while local communities see little in return, a trend that has led to increased calls for stronger regulation and oversight.
The Economic Potential for Africa
Despite these concerns, carbon markets offer significant economic opportunities for Africa. According to the Centre for Global Development, the value of carbon removal is estimated to be around $770 billion per year—an amount that is five times larger than the DRC’s annual budget. This figure highlights the immense financial potential carbon markets can unlock for the continent, especially in countries with large forested areas like the DRC and Kenya, which are major players in the voluntary carbon market.
In 2022, the compliance carbon market—where carbon credits are traded under government regulation—was valued at $865 billion, according to the Climate Action Platform for Africa (CAP-A). Additionally, voluntary carbon markets, where companies purchase credits on their own accord, traded $2 billion worth of credits. Some of the world’s largest companies, including Apple, Netflix, and Shell, have purchased carbon credits from Africa to offset their emissions. Kenya, after the DRC, is the second-largest issuer of carbon credits in Sub-Saharan Africa, cementing the continent’s role in this emerging global market.
Concerns Over Greenwashing
Despite the financial influx, concerns have arisen over whether carbon credits truly help the environment or whether they simply allow companies to engage in “greenwashing.” Greenwashing refers to the practice of presenting a company or its products as more environmentally friendly than they actually are, often to appease shareholders and consumers who prioritize corporate social responsibility.
“There is a sense that some international investors are more interested in appeasing their shareholders and having a ‘good story’ to tell, rather than driving real transformation,” notes Paul Muthaura, CEO of the Africa Carbon Markets Initiative (ACMI). “But we can also leverage the situation and channel investments to areas with the most transformative impact.” Ensuring that the money raised through carbon credits is used to fund projects with real environmental and social benefits will be key to achieving this goal.
Transparency and Fairness in Carbon Markets
The integrity of carbon markets is critical to their long-term success. A recent study published in the journal Science found that many projects aimed at reducing emissions from deforestation and forest degradation (REDD) were associated with little or no actual emission reductions. The study examined 26 REDD projects, including several in Africa, and found that only eight demonstrated significant reductions in deforestation. Even in these cases, the reductions were much smaller than what had been claimed.
One of the biggest challenges facing African carbon markets is a lack of local verification and validation capacity. “There is a lack of local verification and validation capacity in Africa, with most of it being done by experts from outside the continent who may not fully understand the local context,” Muthaura points out. Building this capacity locally is critical to ensuring that Africa can maintain control over its carbon assets and avoid being exploited by foreign entities.
READ EVERYTHING ABOUT GHANA EXPORT NEWS
Kenya has made strides in addressing these challenges. The country’s Climate Change (Carbon Markets) Regulations, passed in 2024, provide a governance framework for carbon market projects. The regulations require project developers to allocate 40% of the revenue from land-based projects and 25% from non-land-based projects to local communities. This ensures that the financial benefits of carbon markets are shared more equitably with those directly affected by the projects.
Additionally, the new rules prevent double-counting—where the same carbon credit is sold multiple times—and impose penalties for non-compliance. These regulatory frameworks not only help protect local communities but also increase the credibility of African carbon markets on the global stage.
The Future of African Carbon Markets
As Africa continues to develop its carbon market infrastructure, the potential for the continent to take ownership of its green transition is clear. The challenge lies in ensuring that the benefits of this transition are shared equitably, with local communities receiving a fair share of the financial gains and maintaining control over their land and resources.
In this respect, carbon markets could become a powerful tool for sustainable development, helping Africa balance economic growth with environmental protection. “There is a real desire to shift responsibility and ownership of the green transition process to Africa, rather than having it dictated by external actors,” Muthaura adds.
With transparency, fairness, and long-term planning, Africa can leverage its natural assets to build a sustainable future while contributing meaningfully to the global fight against climate change. As companies and governments invest in Africa’s carbon markets, the focus must remain on ensuring that the continent’s resources are used for the benefit of its people, not just multinational corporations looking to offset their emissions.
Facebook Comments