Jeffrey Gogo Climate Story
BUYERS around the world spent $278 million to offset 84,1 million tonnes of carbon dioxide equivalent (MtCO2e) in 2015, according to a new report, but the funds eluded Zimbabwe – a country targeting to earn more from keeping its forests standing, than fallen.
According to the “Raising Ambition: State of Voluntary Carbon Markets 2016” report released recently by US firm Ecosystem Marketplace, governments and private sector organisations bought 10 percent more carbon offsets last year than they did in 2014 (77 MtCO2e).
In value terms, buyers spent less though, down 7 percent from $298 million spent the year before.
While the rise in the amount of offsets sold shows some increase in voluntary action to curb climate change, global carbon prices have tumbled 14 percent to an average $3,3 per tonne from a year earlier – and what could be worse, the trend indicates REDD+ credits – the kind Zimbabwe is largely pursuing – are losing style.
Investors are switching more to wind or renewable energy-generated credits, the report says.
Last year they bought 12,7 MtCO2e of wind credits compared to 11 MtCO2e from REDD+, a UN programme that aims to reduce emissions from deforestation and forest degradation.
Zimbabwe joined that programme in 2013, and has now begun to build capacity to exploit opportunities that save its 15,6 million hectares of dry or open canopy forests, limit emissions, create income and improve livelihoods, say authorities.
Already, Carbon Green Africa is running the country’s biggest private REDD+ project covering 750 000 hectares of land across four rural district councils in Mashonaland West – but it’s not been all rosy due to an over-supply of credits on the global market. At the end of 2014, Carbon Green Africa remained stuck with over 3 million unsold credits, as prices sank to as low as US50c per tonne.
So, just how does the carbon market system work? Take the Carbon Green Africa project, for instance.
Operating in the rural councils of Mbire, Nyaminyami, Binga and Hurungwe, CAG is implementing various programmes that range from conservation farming to bee-keeping – their ultimate aim, preserving the region’s native forests.
Forests are a natural absorber of carbon dioxide, the biggest driver of climate change.
When that is achieved, the company periodically invites independent global auditors to verify whether the project has indeed achieved its intended objectives – avoiding deforestation, and at what scale.
Eventually, the auditor issues out to CAG what is known as a credit, unit or offset.
Each credit is equivalent to a tonne of carbon dioxide, and is later sold mostly to governments, individuals and private sector organisations in advanced economies keen to reduce their carbon footprint.
The trade is built on the understanding that developed country governments or corporations that cannot lower greenhouse gases emissions in their home economies can do so by paying someone else overseas to do it for them – and hold that as proof of own contribution to abating climate change.
Over the years, the carbon market has become a lucrative business, with a total $4,6 billion worth of credits traded since 2005.
The most active markets operate in the US, China and in the European where offsets from projects in renewable energy, forestry and land use, household devices (like clean cookstoves), waste management and others are traded.
As far as REDD+ is concerned, buyers pay countries or private organisations a kind of compensation for avoiding deforestation in tropical forests – clearly indicating that forests are worth more standing, than fallen.
Governments can in turn use this money for whatever they want, but preferably help communities adapt.
Carbon Green Africa pays the rural councils, which have entered into 30-year agreements with the private firm, a certain portion of the credits sale proceeds, according to each council’s shareholding in the project, or based on the amount of forested land in contribution.
In the project, Mbire holds 34 percent, Nyaminyami 29 percent, Binga 20 percent and Hurungwe 17 percent.
This is more or less what Government authorities here are trying to achieve at the national scale. According to Zimbabwe’s climate plan submitted to the UN last September as part of its contribution to efforts to limit global temperature rise at 1,5 degrees Celsius, the country said it will need up to $1 billion to implement REDD+ activities through 2030.
With 45 percent of its total land cover under forests, Zimbabwe is considered a net carbon sink.
“Zimbabwe intends to leverage on its resources including carbon credits or sell of emission reductions through international or regional carbon markets and or carbon pricing mechanisms to mobilise more resources for managing climate change,” said the Ministry of Environment, Water and Climate in its submission.
Now, while investor-interest in REDD+ credits is waning, posing potential revenue headaches for the future, newcomers like Zimbabwe can take solace from the fact that when investors eventually buy REDD+ credits, they pay more for them.
In 2015, forestry offsets earned $37,5 million, as they retained higher average prices, says the Ecosystem Marketplace report.
By comparison, wind offsets, which account for a quarter of the market share (REDD+ 22 percent) earned $24,4 million due to an over-supply that pushed average prices to $1,90 per tonne.
Across industry, prices were highly volatile, with some quoted as low as US10c per tonne, and others as high as $44 per tonne, mainly to supply-demand dynamics. Projects in water filtration, clean water treatment and those based in the oceans were hit hardest by the volatility.
But what’s really drawing investors to wind offsets is their “affordability and understandability factor,” says the report.
“Even buyers with little to no knowledge of offsets can understand wind at a glance.”
Perhaps this explains why at a time Africa earned $34,4 million from carbon credits in 2015, much of it from clean cookstoves in Kenya, Zimbabwe’s private REDD+ projects found little to no takers.
CAG chief executive Charles Ndondo was not available for comment.
Of the 6,7 million tonnes of carbon dioxide equivalent units sold across the continent last year, Kenya accounted for 46 percent of the total.
Uganda sold 1,5 MtCO2e, the second highest, with other sales from different organisations in Zambia, Madagascar and Malawi making up the remainder. There was no mention of the DRC’s vast forestry projects.
It is worth noting that sales from Africa accounted for just 8 percent of the global carbon offset sales last year.
Either this points to governments not doing enough to join carbon markets train or those with the money needed to drive the initial investments into credit-earning projects are unwilling to do so.
Still, buyers paid more for African offsets – at $5,9 per tonne on the average – than they did in any other region, suggesting similar projects may truly be sustainable, going forward.
God is faithful.