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According to a research, Africa has to cease selling land on the “depreciated” carbon credit market.

According to a new analysis from the Africa Finance Corporation (AFC), African nations must quit offering land rights for sale at a discount if they want to gain greater value from the “tarnished and depreciated” global carbon credits market.

Africa has the potential to be a huge source of value on the global carbon credits market since it is home to some of the planet’s most significant natural carbon repositories, including forests, grasslands, peatlands, and mangroves. However, the AFC claims that far too many nations are selling their priceless assets for pitiful returns under the current system.

“Countries are participating in the wholesale long leases and sales of land – our cherished birthright – to foreign middlemen who seek to profit from a more suitably priced carbon market of the future, instead of maximising economic value from our natural assets. This is comparable to previous decades’ resource curse. Africa bears the brunt of global warming, so we must be vigilant against complicit agreements that devalue our natural resources while allowing the industrialized world to continue polluting, as stated in the foreword of How Africa Can Unlock the World’s Most Promising Net Zero Solution by Samaila Zubairu, president and CEO of Africa Finance Corporation.

We ought to concentrate on conservation and reforestation, with local actors spearheading the projects, the funding, the verification, and the trading, rather than selling our land rights into the devalued and tainted carbon markets of today. Only strong procedures that ensure long-term benefits to local governments and communities to continue conservation long after the initial financing is exhausted will allow our continent’s natural resources to reach their full potential.

The report states, “What we know for sure is that Africa’s relationship with the global carbon markets must shift.” “We have to be responsible for the preservation and growth of our woods. We must establish a global value chain for reducing carbon emissions that captures and holds value for future generations in Africa and around the world.

Market imperfections for carbon

At the ongoing Cop28 global climate conference in Dubai, governments are debating the creation of a UN-run multilateral carbon credits scheme, which includes adopting standardized approaches for credit issuance. One of the main topics of debate is carbon markets.

Global carbon markets, according to the AFC, present a practical path forward and have the potential to draw significant and urgently required funding for energy transition, conservation, and climate resilience. However, as things stand, the market runs the risk of allowing polluting nations and businesses to shirk their responsibility for “pollution per capita” and use the cheap carbon credits they have acquired to rationalize a reversal of course on critical emission reductions.Moreover, the wealthy world’s merchants and financial institutions pocket the majority of the value of carbon credits (see “How can Africa get a fair price for its carbon credits?” for more information).

This year has seen a rise in criticism of the carbon market due to a number of high-profile media stories revealing carbon offset schemes that seem to have serious problems in their methodology and design.

A sort of program called REDD+ projects, which allows the earnings of carbon credits to be used for the preservation of existing forests, has gained attention due to exposés in international media. According to investigations, several of these programs overstate their benefits; in certain instances, credits are purportedly sold to “rescue” forests that are not in immediate danger. These programs are referred to as “worthless” since the quantity of carbon removed from the atmosphere remains unchanged despite the purchase of carbon credits. This reporting has had the consequence of clouding the whole voluntary carbon market. The non-profit organization Carbon Direct predicted last month that between 2021 and 2023, the issue of carbon credits will decrease by 7%.

According to AFC, there has been “a substantial fall in the issuance and prices of carbon credits,” indicating the harm these frequent exposés have done to market trust. The largest casualty of climate projects has been the developing world; from accounting for nearly three-quarters of all issuance in 2021 to 53% in 2023, these projects have fallen on hard times.

“At this crucial moment, the world needs high-quality and high-value offsets based on conserving and increasing Africa’s unique carbon sinks,” the AFC states. “This is what a properly functioning carbon market must unavoidably be.”

Africa needs to be the leader.

The paper points out that stopping deforestation and increasing Africa’s carbon sinks are easier and less expensive than adopting the experimental carbon capture and storage technologies in their entirety by the wealthy nations in reaction to the volatility in the carbon markets. It contends that natural remedies have a greater chance of helping the world and Africa.

In order to protect Africa’s priceless carbon sinks, the report states, “We are advocating for African leadership to catalyze a shift towards high-quality nature-based carbon removal offsets, while increasing the value of Africa’s offset credits to finance further conservation, reforestation, and alternative livelihoods that sustain our environment.”

“We need to rework the reasoning behind the regulations controlling carbon markets so that it emphasizes providing incentives for the extension and protection of our forests. The prevalent notion of additionality diminishes the historical and contemporary importance of African forests in storing carbon dioxide, unintentionally hastening the process of destruction. In order for Africa to fully profit from a future carbon market that is viable, Zubaira says, the continent’s political and economic leadership must adopt a calculated strategy.

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