COP27: African countries launch ‘game-changing’ carbon credits initiative

Subject: Environment

African Carbon Markets Initiative (ACMI)-

A new initiative putting carbon credits up for sale in African countries was launched during the 27th Conference of Parties (COP27) to the United Nations Framework Convention on Climate Change in Sharm El-Sheikh, Egypt.
African Carbon Markets Initiative (ACMI) aims to rally the world towards more ambitious climate action, expand the continent’s participation in voluntary carbon markets and create jobs while protecting biodiversity.
Carbon markets can unlock billions in climate finance needed to support the economies of African countries.
The leaders announced their ambitions to grow the African voluntary carbon markets at the launch by producing 300 million carbon credits every year by 2030 and 1.5 billion credits annually by 2050.
This can unlock $6 billion (Rs 49,041 crore) in income and support over 30 million jobs.
Major carbon credit buyers and financiers, like Exchange Trading Group and Standard Chartered, have announced ambitious plans to set up an advance market commitment (AMC) for high-integrity African carbon credits.
Nigeria is committed to carbon credits because the sector will soon become a major industry and benefit citizens.

Concerns in the ACMI-

Concerns and doubts about real frontline victims like ordinary African farmers benefiting from the initiative.
ACMI needs political goodwill and the support of technical experts to adopt international best practices from the leading European carbon market.
ACMI needs to collaborate with other regional carbon market platforms and global integrity initiatives like the Voluntary Carbon Markets Integrity Initiative.
Calls for regulation of voluntary markets, which are often unchecked.
Stringent policies are needed to check on social safeguards to avoid human rights abuses and ‘greenwashing’ loopholes that some corporations exploit to masquerade as eco-friendly without reducing requisite emissions.

What is carbon credit-

A carbon credit is a special permit that gives the user or buyer express rights to emit a given amount of carbon dioxide or other greenhouse gases.
Carbon credits trading is one of the many technical interventions used to reduce the amount or concentration of greenhouse gases in the atmosphere.
Carbon credits are based on the “cap-and-trade” model that was used to reduce sulfur pollution in the 1990s.
One carbon credit is equal to one metric ton of carbon dioxide, or in some markets, carbon dioxide equivalent gases (CO2-eq).
Negotiators at the Glasgow COP26 climate change summit in November 2021 agreed to create a global carbon credit offset trading market.
The Kyoto Protocol provides for three mechanisms that enable countries, or operators in developed countries, to acquire greenhouse gas reduction credits:

Under Joint Implementation (JI), a developed country with relatively high costs of domestic greenhouse reduction would set up a project in another developed country.
Under the Clean Development Mechanism (CDM), a developed country can “sponsor” a greenhouse gas reduction project in a developing country where the cost of greenhouse gas reduction project activities is usually much lower, but the atmospheric effect is globally equivalent. The developed country would be given credits for meeting its emission reduction targets, while the developing country would receive capital investment and clean technology or beneficial change in land use.
Under International Emissions Trading (IET), countries can trade in the international carbon credit market to cover their shortfall in Assigned Amount Units (AAUs). Countries with surplus units can sell them to countries that are exceeding their emission targets under Annex B of the Kyoto Protocol.

Carbon Markets:

A carbon market turns emission reductions and removals into tradeable assets, thus creating incentives to reduce emissions or improve energy efficiency. The carbon markets can be compliance and voluntary.
Carbon trading started formally in 1997 under the United Nations’ Kyoto Protocol on climate change which had more than 150 nation signatories.
Parties with commitments under the agreement agreed to limit or reduce their greenhouse gas emissions between 2008 – 2012 to 5.4% which was well below the levels of 1990.
Emissions trading, as set out in the Kyoto Protocol, allowed countries to sell the excess capacity of emission units to countries that had levels well over their targets.
Several countries like Kenya, Malawi, Gabon, Nigeria and Togo announced their commitment to scaling voluntary carbon markets at COP27.