Permission to Pollute? The Emerging Role of Carbon Credits in East Africa
In the global attempt to mitigate the disastrous effects of climate change, carbon allowances have aroused both hope and controversy. Critics argue that they serve as ‘pollution permission slips’, enabling wealthy nations and corporations to sidestep meaningful emissions reductions, while proponents champion them as a lifeline in developing regions with carbon capture potential. Still, the question remains: are carbon credits an economic tool paving the path to ecological demise or a powerful financial instrument capable of realising East Africa’s untapped potential into a global hub propelled by sustainable growth?
Carbon Credits
First developed by the United Nations (UN) during the Kyoto Protocol in 1997 and ratified by the Paris Agreement in 2005, carbon credits or carbon allowances, are a financial mechanism designed to reduce greenhouse gas (GHG) emissions by providing economic incentives for businesses or individuals to reduce their emissions.
A carbon allowance is a permit that allows the owner to emit a certain amount of GHG into the atmosphere and represents the reduction, removal, or avoidance of one metric ton of carbon dioxide equivalent (CO2e) from the atmosphere. In an attempt to curb the climate crisis while simultaneously recognising the challenges in reaching net zero, many nations and organisations have found them as the most suitable solution to compensate for their ‘residual emissions’ as they progress to decarbonising. Residual emissions refer to the GHG emissions, which remain after all technologically and economically feasible opportunities to reduce pollutants have been implemented. Article 6 of the Paris Agreement established cooperative approaches to reducing carbon emissions, enabling the trade of carbon credits in compliance markets or voluntary markets (VCM), where companies can sell credits, they have earned either through the removal or avoidance of GHG emissions.
The Kyoto Protocol introduced market-based mechanisms to help countries meet their emissions reduction targets cost-effectively. A relevant example is the Clean Development Mechanism, allowing developing countries to invest in emission-reducing projects in developing countries and earn carbon credits. Developed countries could then utilise these carbon credits to meet their emission reduction obligations.
Carbon credits provide an advantageous mechanism for financing the development of green energy projects in East Africa and promote sustainable development. Due to the region’s abundance of natural resources, such as large forests and grasslands, which act as carbon sinks, and the renewable energy potential in wind and solar, East Africa has a large potential to participate in international carbon markets. There are also vast areas of unproductive land which could be altered to increase carbon stocks and create credits.
Kenya’s Carbon Markets
Despite Africa's potential to capitalise on the carbon credit market, it only generates 2% of the estimated potential of 2,400 million carbon credits per year. As the second-largest issuer of VCM carbon credits in sub-Saharan Africa, Kenya is actively taking steps to position itself as a regional leader by amending the 2016 Climate Change Act in 2023 and finalising regulations to create an environment conducive to carbon trading in the country. The amended bill provides a regulatory framework for carbon markets, but additional regulations are expected in future to clarify how market participants interact within the market.
The Climate Change (Carbon Markets) Regulations 2024 provides a framework for the implementation of carbon projects and participation in both voluntary and compliant carbon markets. The regulations establish a carbon registry, outline carbon project requirements and explain project development procedures, placing strong emphasis on environmental integrity, sustainability and community benefits.
To date, most carbon credits in Kenya come from nature-based projects, including grassland management and forest regeneration. The Kenyan tech and transport sectors are also growing. However, VCM has lagged in East Africa due to a lack of up-to-date publicly available information on how carbon credits work, as well as inadequate governing policies. Through VCM infrastructure, Kenya aims to reduce their carbon emissions by 32% by 2030, with 11 million carbon permits received in 2022.
The Rufiji Delta, Tanzania
The Kasigau Corridor provides a suitable template for effectively protecting the continent’s natural ecosystems while engaging the local community. Similar to their Kenyan neighbours, Tanzania has implemented components of the REDD+ framework, such as community involvement in preservation through MJUTIMA and their development of initiatives to involve the local community. However, to increase their involvement in carbon markets, a similar framework could be adopted in conservation projects targeting other ecosystems besides forests, such as the Rufiji Delta in Tanzania.
Not only a form of coastal protection and timber income for the 30,000 dependent on the ecosystem, but mature mangroves are essential in carbon sequestration (the process by which CO2 is removed from the atmosphere) at a rate of 6-8 metric tonnes of CO2e per hectare per year – 2-4 times greater than mature tropical forests! In three decades, from 1989 to 2019, the delta has lost 20% of its mangrove coverage. Should the conservation efforts become verified independently based on their ability to remove GHG from the atmosphere, about 315,000 carbon credits can be produced each year from the Rufiji Delta at its current size. This adds to the community economic benefit of conservation, besides preservation for the sake of sustaining the forests for their livelihoods and contributes to the sustainable development of the region and finances the preservation of the valuable mangrove ecosystem.
Ultimately, the success of the role of the carbon market in Tanzania’s ecosystem preservation boils down to the effectiveness of the regulations and frameworks that govern the inception of the carbon markets, drawing inspiration from preexisting structures such as the EU Emissions Trading System.
Challenges
However, carbon offsetting projects have been met with criticism as the harm to local communities as a consequence of carbon market projects has been documented. The Kenyan government has been accused of illegally evicting the Ogiek people from the Mau Forest as the government seeks to have total control over the forest for profiting purposes. Shortly after securing a deal with UAE-based environmental asset preservation company Blue Carbon, which is “aimed at reducing emissions from various sectors of the environment such as forest,” reports emerged of the native Ogiek people being forcefully evicted from their homes within the Mau Forest by Kenya Forest Service rangers. This example demonstrates that carbon offsetting initiatives also have the potential to give rise to the development of unjust land seizures of lucrative often at the expense of local and indigenous communities. Moreover, Blue Carbon, a company barely three years old, has struck carbon offsetting deals covering a fifth of Zimbabwe, 10% of Liberia, 10% of Zambia, and 8% of Tanzania, amounting to a total area greater than the size of the UK. The organisation intends to sell carbon credits to decarbonise developed countries and multinational corporations. Sheikh Ahmed Dalmook al-Maktoum, the head of the new Blue Carbon company, also owns energy, oil and gas companies in this portfolio, with more under development. Energy generation is the largest source of CO2 emissions globally.
Furthermore, carbon offsets have been heavily scrutinised due to their ineffectiveness in actually decreasing carbon emissions. Critics argue that carbon credits have been used as a form of ‘greenwashing’ as emissions are excused in one area due to the avoidance of carbon halfway across the world, thus not decreasing carbon emissions. This may slow down the rate of decarbonisation as heavily polluting developed nations and multinational companies can purchase credits (from Blue Carbon and their UK-sized carbon sink) to offset their pollution. Although criticised for greenwashing, a study of the Beijing-Tianjin-Hebei region indicates that carbon markets were key in reducing carbon intensity by 14.04%, demonstrating the usefulness of carbon markets in reducing CO2e emissions within a particular area.
This shows that while carbon credits can be used to finance sustainable, community-led development, they can similarly be used as a greenwashing tool designed to buy the right to pollute at the expense of the environment and populations local to ecosystems used as carbon sinks.
The challenges facing the effective utilisation of carbon markets in East Africa as a tool for project financing and economic growth highlight the gaps that exist in governance and transparency. Responsible governing bodies should adopt strict guidelines for carbon offset projects, ensuring they meet robust environmental and social standards. Integrating Indigenous rights protections into project frameworks aligning with international standards like the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) would act as a protection against the displacement of local communities.
Conclusion
In conclusion, the development of carbon markets and their relevant legislation requires meticulous planning, which prioritises the safety of indigenous populations and environmental benefits. The entry of East Africa into the global carbon market is an exciting opportunity. With access to financing for enterprises and the economy alike, VCM may be the key to sustainable development. To ensure this, African governments should manage their natural resources to best manage and take responsibility for the consequences of carbon offsetting with the interests of their citizens in mind.
