Unlocking Africa’s Carbon Potential

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Africa’s role in the global carbon market

Africa contributes to only about 4% of global greenhouse gas emissions, but African countries are among the most vulnerable to the impacts of climate change. Between 1970 and 2019, climate-related hazards had caused the deaths of more than 730,000 Africans and incurred an economic cost of 38.5 billion US dollars. At COP27 in Egypt, African countries launched the Africa Carbon Markets Initiative, with the goal of producing 300 million carbon credits per year. The initiative aimed to unlock $6 billion in revenue and create 30 million jobs by 2030.

Africa’s rapid economic growth, ambitious development plans, and growing population means that its energy consumption will increase significantly in the following decades. Hence, it is crucial to guarantee that the continent’s development path conforms to a fair energy transition in pursuit of global climate objectives. For instance, Rwanda has already demonstrated its commitment by restoring over 100,000 hectares of ecosystems, generating more than 176,000 jobs, and providing access to off-grid renewable energy for 88,000 households.

Carbon market mechanisms in Africa

The primary obstacles that impede the carbon markets in Africa are the insufficient number of carbon credit project developers, their relatively modest scale, and limited diversification. Consequently, significant opportunities exist in Africa for enhancing existing project holders and introducing new ones into the market. To achieve the goal of retiring 300 million metric tons of carbon dioxide per year in credits by 2030, it is necessary to double the amount of active project holders by 2024.

Despite the significant potential for emissions reduction, African countries have derived limited benefits from the Clean Development Mechanism (CDM): emission reduction targets by countries.   Only 164 projects activities are eligible for Article 6.4 transition on the continent, accounting for only merely 5% of the global total. Asia leads the ranking with 2746 project activities or 83%.

The Clean Development Mechanism is a carbon offset scheme managed by the United Nations which enables countries to finance projects reducing greenhouse emissions saved as part of their own efforts to achieve the Kyoto protocol’s international emission reduction target. This is one of the three flexibility mechanisms defined in the Kyoto Protocol. In contrast, the Voluntary Carbon Market is a mechanism for trading carbon credits that is not linked to international regulations. Companies, governments, NGOs, individuals, and other stakeholders sell and buy carbon credits independently of regulated or mandatory pricing instruments.

A 2023 report by Shell and Boston Consultancy Group projected that voluntary carbon credits markets would grow fivefold by 2030, eventually reaching a value of $10-40 billion. African political leaders are well aware that voluntary carbon credits present a substantial opportunity to expedite economic development. However, exploiting this potential necessitates significant structural efforts and concerted actions at both the state and grassroots levels.

How ACC is fighting carbon emissions in Senegal

In accordance with Article 6 of the Paris Agreement, ACC is positioned as a project developer rooted on the African continent, facilitating project studies and project realization through the utilization of private funds, both its own and in partnership with others. We firmly believe that our physical presence in the region fosters closer connections, better stakeholder involvement and community development to the projects we undertake. ACC is dedicated to upholding internationally recognized principles and undergoes rigorous technical assessments certified by global third-party entities.

ACC’s projects can be categorized into two main areas: first, they focus on avoiding or reducing carbon emissions by preserving biomass in Africa, thus preventing or mitigating carbon releases into the atmosphere. Second, they actively engage in the removal and sequestration of carbon through their reforestation efforts on the African continent. Our main goal is to reduce or eliminate greenhouse gas emissions, placing a significant emphasis on sustainable development in accordance with social, economic, and protective principles as we actively engage with local communities and strive to empower women and children in the combat against climate change.