Malawi is increasingly pitching carbon trading as a source of revenue required to bolster its forex-starved economy.
In February, Minister of Finance and Economic Affairs Simplex Chithyola Banda listed increased and more efficient carbon credit revenue generation among the strategic economic recovery initiatives.
“Malawi considers carbon trading as one of the sectors where we can get revenue and boost the economy,” he said.
The country’s carbon potential is estimated at around 19 million metric tons annually.
Civil Society Network on Climate Change National Coordinator Julius Ng’oma says carbon trading can also boost biodiversity conservation and help reduce greenhouse gas emissions.
“Carbon trading can provide incentives for managing trees and forests and all other initiatives that enhance carbon sequestration and are aimed at avoiding reducing greenhouse gases,” he says.
However, transparency and accountability in carbon trading are an increasing concern.
In 2012 the Department of Environmental Affairs in the Ministry of Natural Resources and Climate Change evaluated 15 projects with an estimated carbon reduction potential of around 2 million tonnes.
More films have entered the market, but questions remain: how many credits have been generated by such carbon project? How much revenue has been generated? How has that revenue been shared with the communities that implement the carbon projects?
Ng’oma says the country has not benefited as much as it should have from such projects, “as the money realised mostly benefited the international project developers.”
He says very few people understand how the prices for carbon credits are determined and accounting mechanisms.
“These arrangements favour mostly experts in Global North,” says Ng’oma.
Minister of Natural Resources and Climate Change Michael Usi, now Vice-President, told IPS that most of the projects evaluated in 2023 were implemented under the Clean Development Mechanism and Redd+ to unlock resources form multilateral and bilateral donors for different projects.
Malawi registered 11 projects and accessed about $40 million in socio-economic development financing, he says.
However, Usi admits that there were no formal procedures of implementing these carbon initiatives, meaning that Malawi cannot efficiently count credits and track revenue generated.
Most of those carbon projects were largely about distribution of cooking stoves that reduce deforestation and carbon emissions.
“We believe they help in reducing the over-reliance on natural resources, especially wood,” said Usi.
C-Quest Capital works in 21 countries, including Tanzania, Zambia and Mozambique.
Its chief executive officer, Jules Kortenhorst, says the company has issued up to nine million credits on the voluntary carbon market and invested more than $40 million in Malawi since it started its projects.
For Kortenhorst, questions over transparency and accountability in the carbon market are not invalid.
He says many countries have not had internal systems to monitor and regulate the carbon market.
He said: “When the Paris Agreement was negotiated, there was Article 6—the idea that countries would establish carbon markets among themselves—but setting up internal administrative systems has been hard because they didn’t know what the rules were.
“Unfortunately, it has taken forever for negotiators to make progress in creating a rulebook for Article 6. This has been a very large frustration—until lately.”
In June last year, the government launched the Malawi Carbon Markets Initiative to champion the implementation of the frameworks, action plans, and ongoing programmes that support carbon markets.–Ips
source: The Nation- 25 july 2024