- African countries could leverage their vast renewable energy resources, tropical forests, peatlands, and marine ecosystems to export premium carbon credits.
- The report states that Africa currently realises only around 2 per cent of its annual potential of carbon credits.
According to the 2024 Economic Report on Africa by the United Nations Economic Commission for Africa (UNECA), African countries could leverage their vast renewable energy resources, tropical forests, peatlands, and marine ecosystems to export premium carbon credits, providing a new revenue stream.
The report says, carbon markets could support Africa’s goals of resilience and prosperity, in line with Agenda 2063. They also present a potential path for achieving the Paris Agreement’s climate goals.
“A failure, however, to ensure credit additionality, appropriate governance, and high enough prices could lead to perverse market incentives that increase carbon emissions and slow the climate transition on the continent,” says the report, launched at the recently concluded 10th Africa Regional Forum on Sustainable Development (ARFSD-10) in Addis Ababa, Ethiopia.
Nassim Oulmane, Acting Director of ECA’s Technology Climate Change and Natural Resource Management Division, explains that Africa could invest in two types of carbon markets: the regulatory compliance market and the voluntary carbon market (VCM).
But so far, credits from the VCM, where many African countries participate, have been only a small fraction of those supplied by the overall regulatory compliance market. The report states that “Africa currently realises only around 2 per cent of its annual potential of carbon credits.”
Explaining Africa’s potential in carbon credits, Mr Oulmane said the continent should invest in its untapped renewable energy potential, youthful, rapidly growing workforce, available land and other natural assets, and low emissions.
“Proceeds from sales of carbon credits can provide additional revenue for climate-smart interventions,” said Mr Oulmane. He added: “In addition to improving the climate, many of these interventions improve livelihoods, create jobs, spur new economic and sustainable industrial activity.”
The African Carbon Market Initiative (ACMI) estimates the creation of 110-190 million African jobs by 2050 if the carbon price per tonne reaches $80 and direct and indirect jobs beyond nature-based solutions.
While the report shows that Cameroon, DRC, Ethiopia, Ghana, Kenya, Nigeria, Tanzania, Uganda, Zambia, and many other African countries have participated in the VCM, five countries were selected for case studies on investing in a sustainability transition: Gabon, Kenya, South Africa, Senegal, and Morocco.
Each case study reviews the national policy and strategic context and looks at the investment intervention in a sector important for promoting the transition.