African countries must stop selling land rights cheaply if they are to extract more value from the “tarnished and depreciated” global carbon credits market, according to a new report from the Africa Finance Corporation (AFC).
Africa is home to some of the planet’s most important natural carbon repositories – including forests, grasslands, peatlands and mangroves – giving the continent a potential enormous source of value on the global carbon credits market. Yet under the current system too many countries are selling their valuable assets for meagre returns, the AFC says.
“Instead of maximising economic value from our natural assets, countries are engaging in the wholesale long leases and sale of land – our valued birthright – to foreign intermediaries that hope to profit from a more appropriately priced carbon market of the future. This is akin to the resource curse of past decades. We must guard against complicit arrangements that undervalue our natural assets while enabling the industrialised world to keep on polluting, with Africa suffering the biggest costs from global warming,” writes Samaila Zubairu, president and CEO of Africa Finance Corporation, in the foreword to How Africa Can Unlock World’s Most Promising Net Zero Solution.
“Instead of selling our land rights into today’s tarnished and depreciated carbon markets, we should focus on conservation and reforestation – with local actors driving the projects, the financing, the verification, and the trading. Our continent’s natural assets will only achieve their true value through robust mechanisms that guarantee lasting benefits delivered to local communities and governments to sustain conservation long after the initial funding is spent.”
“What we know for certain is that Africa’s interaction with the global carbon markets must change,” says the report. “We must take ownership of the conservation and expansion of our forests. We need to create our own carbon emissions reduction value chain with global participation that captures and retains value for Africa and the world for generations.”
Flaws in carbon markets
Carbon markets are a major topic of discussion at the ongoing Cop28 global climate conference in Dubai, with countries discussing the establishment of a UN-run multilateral carbon credits scheme, including adopting standardised methodologies for determining credit issuance.
The AFC says that global carbon markets offer a pragmatic way forward, with scope to attract meaningful and much-needed finance for conservation, energy transition and climate resilience. Yet, as things stand, the market risks enabling polluting countries and industries to ignore the burden of their “pollution per capita” responsibilities and justify backsliding on urgent emission reductions by hoovering up cheap carbon credits. Furthermore, most of the value of carbon credits is captured by traders and financial institutions in the rich world (for further details see “How can Africa get a fair price for its carbon credits?”).
Criticism of the carbon market has intensified this year, amid a series of high-profile media reports exposing carbon offset projects that appear to have glaring flaws in their design and methodology.
Exposés in international media have drawn attention to REDD+ projects – a type of scheme in which the proceeds of carbon credits can be used to protect existing forests. Investigations have suggested that many of these schemes exaggerate their impact – in some cases, credits have allegedly been sold to “protect” forests that are not actually in immediate danger. Such schemes are said to be “worthless”, in that the purchase of carbon credits makes no difference to the amount of carbon being removed from the atmosphere. The effect of this reporting has been to cast a shadow over the entire voluntary carbon market. Non-profit group Carbon Direct estimated last month that carbon credit issuance is set to decline by 7% between 2021 and 2023.
The damage to market confidence from these recurring exposés is shown by “a dramatic decline in issuance and prices of carbon credits,” says AFC. Climate projects in poorer countries have been the biggest casualty: representing nearly three-quarters of overall issuance in 2021, the developing world’s share has dropped to 53% in 2023.
“In a properly functioning carbon market, offsets based on preserving and expanding Africa’s unique carbon sinks must inevitably be high quality and high value, exactly what the world needs at this critical juncture,” the AFC says.
Africa must take a lead
The report notes that halting deforestation and expanding Africa’s carbon repositories is simpler and cheaper than the experimental carbon capture and storage technologies that may be adopted wholesale by the rich world in response to the chaos in the carbon markets. Natural solutions are more likely to benefit Africa and the world, it argues.
“This is why we are advocating for African leadership to catalyse a shift towards high-quality nature-based carbon removal offsets that enable our continent to protect its valuable carbon sinks, while increasing the value of Africa’s offset credits to finance further conservation, reforestation and alternative livelihoods that sustain our environment,” says the report.
“We must reshape the flawed logic of rules governing carbon markets, placing emphasis on incentivising the preservation and expansion of our forests. The prevailing concept of additionality undervalues the historical and current significance of African forests in sequestering carbon dioxide, inadvertently accelerating deforestation… It is essential that the continent’s political and economic leadership take a strategic approach to harness the full benefits of a viable future carbon market, which Africa must lead,” Zubaira concludes.
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