• African leaders want to develop a continental carbon market.

• Africa will need around $438 billion in adaptation financing by 2030.

• Carbon markets could help drive socioeconomic development in Africa.

The development of a continental carbon market will diversify sources of climate financing and limit disproportionate dependency on western initiatives. At the Africa Business Forum that was held on the 20th of February, President Lazarus Chakwera of Malawi urged the UN Economic Commission for Africa, Africa Union, and Afreximbank to explore the feasibility of a carbon market in Africa.

The forum was held under the theme “making carbon markets work for Africa”. It brought together different African leaders, climate experts in different organizations, private stakeholders, and so many others.

The carbon market is basically a scheme of trading carbon credits that an entity gets by reducing emissions extensively beyond the required levels and selling them to those unable to meet their reduction requirements. The main goal for the creation of carbon credits is to reduce the emissions of carbon dioxide and other greenhouse gases from industrial activities to reduce the effects of global warming.

It is estimated that Africa will need around $438 billion in adaptation financing by 2030. Meanwhile, carbon markets could unleash an estimated annual $82 billion in value, at $120 per tonne of carbon emissions concealed, as well as create 167 million additional jobs.

President Chakwera said: “We strongly encourage the innovative instruments developed by ECA to support African regional carbon markets. We also urge ECA, AU, and Afreximbank to accelerate plans to build an African carbon market from the regional carbon registry. They should also explore the feasibility of building a compliant carbon market in certain African countries, particularly those with the potential to generate carbon emissions from the extractive industries.”

Carlijn Nouwen, Co-founder of Climate Action Platform for Africa (CAP-A), explained that carbon markets could help drive socio-economic development and Africa is only scratching the surface.

In 2022, global trade in carbon amounted to $865 billion in compliance markets and $2 billion in voluntary markets. Only about 11 percent of all credits that were retired in voluntary Carbon Markets between 2011 and 2016 were African credits.

“That’s really missed opportunities because many African countries are considered to be really cost competitive locations for interventions that create carbon credits, thanks to low existing machine levels, massive energy potential, young and fastest growing workforce, and relevant natural resources,” she said. According to her, carbon markets can unlock finances for climate matter interventions but beyond that, such interventions can create new economic sectors and jobs, improve livelihoods, and solve intractable social problems such as energy poverty, and pollution, among others.