Jean Marie Takouleu: What was the purpose of your presence at the Africa CEO Forum in Kigali, Rwanda?
Paul Muthaura: The Africa CEO Forum is a critical platform bringing together business leaders, policy makers and direction-setters from across the African continent. In convening such an excellent pool of thought and action leaders, it provides ideal opportunities to build convergence and secure inter-institutional commitments on key projects and initiatives across business lines.
The African Carbon Market Initiative (ACMI) that you lead was launched at COP27 in 2022 in Egypt. What does your mission on the African continent actually involve?
The mission of ACMI is focused on supporting the effective operationalization of carbon markets on the African continent through:
– scaling high integrity and high quality credit generation,
– empowering local Project Developers to promote transparency and integrity in project design and execution to allow for project scaling or aggregation to attract more impactful investment levels,
– developing and broadening verification and validation capacity on the continent to provide for strong awareness of underlying realities and impacts in project environments in the conduct of verification and validation processes,
– promoting a more balanced narrative on the role and value proposition of carbon markets on the continent, achieving visibility of the equivalence of African credits to alternate credit sources in order to improve pricing, as well as evidencing co-benefit impacts to stimulate demand in validating higher priced credits,
– catalyzing demand for and investment appetite in high integrity and high quality African credits and the equitable allocation of revenues from credits to all eligible demographic tiers including, where relevant, indigenous people and local communities that have played a critical role in the preservation of biodiversity.
This involves working closely with governments to implement conducive policy and legal environments, ecosystem participants to inform policy making together with convening a cross-section of partners to support timely outcome delivery and social and economic impact. This is targeted to unlock fresh capital flows for application to climate action thereby allowing the reallocation of existing capital flows to support broader economic development and transformation.
At present, several sub-regions of the African continent are experiencing prolonged droughts and torrential rains that are causing huge floods, mainly in the Horn of Africa. How can carbon credits help to tackle this climate emergency?
The promotion of improved data completeness and accessibility is expected to better inform timely intervention and corrective action to promote a transition to more sustainable practices in order to support global decarbonization and the allocation of capital to those areas most effectively supporting the transition to net-zero targets.
As its name suggests, the voluntary carbon market is a mechanism for trading carbon credits that is not linked to international regulations. What is the potential of the African carbon market? How far has ACMI got in mobilising international players?
ACMI welcomes the more aggressive commitments to the introduction of appropriate standards and accountability on the back of the end-to-end integrity objectives for the voluntary carbon markets announced during COP28 by the likes of ICVCM (supply side), VCMI (demand side) and SBTi (credible and transparent measurement). This steps will be instrumental in introducing improved consistency and reliability in voluntary carbon market practices, reporting and reliability.
In this context, ACMI is working with the continental tripartite of AU Commission, UNECA and African Development Bank, and other key partners, to promote the emergence of coordinated and correlated standards across regions and jurisdictions and the ultimate designation of a cohesive standard applicable to African carbon credits to increase demand and reduce the likelihood of unconstructive divisive off-taker negotiation practices and adverse downward pressure on pricing due to inconsistency and a lack of transparency between projects and jurisdictions.
These efforts build on the existing ACMI successes in consolidating a showcase of more than 100 high integrity and high quality credit generation projects (across sectors and across the continent) that are being managed subject to commitments to the highest standards of integrity.
ACMI has also drawn together Advance Market Signals constituting corporate commitments of explicit amounts of capital they stand ready to commit to the acquisition of or investment in high integrity and high quality credits generated or to be generated in Africa. At current the pool of advance market signals (for offtake as well as investment) stands in excess of USD 1.4 billion and ACMI continues to promote data transparency and accessibility to ease bilateral engagement between the supply and demand pools within the Showcase and the Advance Market Signal signatories.
Faced with a shortage of funding for access to clean cooking in Africa, players in the sector are turning to carbon credits, with varying degrees of success. In your opinion, what other sectors could benefit from the development of the African carbon market?
The leverage of high integrity and high quality carbon credits has been instrumental in allowing for substantial offsetting of the upfront acquisition and maintenance costs for a number of clean cooking solutions having a positive impact on health and livelihoods of users.
Other sectors positively impacted or likely to be impacted by credit generation include e-mobility and renewable energy solutions together with substantial expectations of an equivalent and scaled impact on the evolution of green industrialization. This green industrialization will impact on employment levels, increased value addition and product refinement pre-exportation to ensure higher revenue retention from final product sales and resulting overall economic growth and transformation.
A number of conservation organisations believe that the development of an African carbon market will give polluters a free rein to engage in greenwashing instead of making a genuine commitment to decarbonisation and the abandonment of fossil fuels. Greenpeace Africa reiterated this position at the 2023 African Climate Summit in Nairobi, where the continent’s heads of state called for the development of a continental carbon market. Do you understand the criticism surrounding the issue of carbon credits?
These criticisms do not appear to take into account the full picture of the current state of climate change with the pursuit of perfection potentially serving as the enemy of the good. It is fully appreciated where the criticisms are highlighting instances of misreporting and inappropriate projections of positive impact, as where that is the case, every efforts needs to be applied to ensuring credibility, reliability and constructive contribution to global efforts towards decarbonization. That notwithstanding however, it is equally important not to unduly discourage efforts to take appropriate, even if not perfect, efforts to mitigate climate change. In this regard, where action is being taken it should be promoted and encouraged for the contribution it is making even as efforts continue to further refine and improve the scale of impact those evolving solutions are able to provide.
Having due regard to the need to promote timely and impactful action, any acquisition of carbon credits is called to operate as a supplement and not an alternative to substantial action to reduce emissions levels. Only the hardest to abate emissions may then benefit from carbon credit offsets with the target of supporting attainment of net-zero or consistently reducing emissions targets. Due to the overall state of climate change, it is evident that proactive efforts to reduce emissions rates need to be effectively complemented by high integrity and high quality offset acquisitions to support an overall global transition to decarbonization. It must be acknowledged that abatement of some emissions levels are not possible to be optimized with current states of technology as well as sustainable financial commitments and therefore the need for credit acquisitions for offset the same is necessary.
Is there any way of making carbon credits more acceptable?
ACMI’s primary focus in scaling demand for and attractiveness of African carbon credits is based on substantially entrenching the highest levels of integrity and transparencey to both credit generation as well as application. This needs to be supported through consistent improvement of data quality, completeness and reliability to support credible measurement of progress against the global targets on decarbonization and the mitigation of climate change for long term sustainability and the management of the disproprotionate impacts of climate chnage on developing economies.
Interview by Jean Marie Takouleu