eBusiness Weekly
Business Writer
Zimbabwe is developing guidelines to establish an entity to issue carbon credits, Environment, Climate, Tourism and Hospitality Industry Minister Mangaliso Ndlovu said.
With global demand for carbon offsets picking up as more companies seek to lower their carbon footprint, there are already growing calls from stakeholders calling for setting up of an organisation that satisfies and issues carbon credits in the country.
A carbon credit is a permit that represents removal of carbon dioxide from the atmosphere and can be purchased by an individual or a company to offset emissions resulting from their industrial production processes, delivery vehicles or travel. For every tonne of avoided greenhouse emissions, the project owner receives credits, which can be sold to firms with a voluntary or compliance carbon reduction strategy.
While carbon credits are often created through forestry practices, a credit can be made by nearly any project that reduces, avoids, destroys or captures emissions.
Minister Ndlovu told Business Weekly that a policy framework on the creation of the accreditation entity was also complete while inputs from experts would be sought before it is presented to the Cabinet for approval. “It is work in progress and in the next one or two weeks, our experts will review the proposed policy framework before we present it to the Cabinet for approval,” said Minister Ndlovu.
At the moment, Carbon Green Africa (CGA) verify and validate REDD+ projects in Zimbabwe to generate carbon credits to offsetting carbon footprints by every player across the globe thereby mitigating the effects of climate change. CGA has a local team and network of partners, which has created core competencies which have enabled successful conservation projects governed by the rules of the Verified Carbon Standard and the community, climate and Biodiversity Standard (CCBS) at Gold Level while at the same enabling the project to be financially viable for all parties involved.
REDD+ is a framework created by the United Nations Framework Convention on Climate Change Conference of the Parties (COP) to guide activities in the forest sector that reduces emissions from deforestation and forest degradation, as well as the sustainable management of forests and the conservation and enhancement of forest carbon stocks in developing countries.
However, climate change campaigners said while having a local entity mandated to issue carbon credits was a noble idea given high costs involved in engaging international institutions, achieving international recognition might be difficult.
“We need our won entity or a body that can work with an internationally recognised institution to satisfy local and issue credits to local projects,” Edwin Moyo, CEO of Nhimbe Fresh, which recently commissioned a 1,9 megawatt solar plant at its Marondera operations said.
The solar project will provide the fresh produce grower and exporter with lower-cost and reliable electricity and nearly eliminate its reliance on the grid. It enables Nhimbe to cut energy-related costs by roughly 60 percent. With solar replacing coal and diesel generation, its emissions will be reduced by more than 1 000 tonnes per year.
Climate change analysts say establishing a national body to issue carbon credit was critical, but would need to work with international bodies to earn recognition. “Projects that generates carbon credits are getting verified and satisfied by bodies outside Zimbabwe, which is an expensive process,” said a climate analyst who preferred to remain anonymous.
“So in a way, it could make sense to have a national entity, which issues carbon credits. “But will it gain international recognition given Zimbabwe’s perceived record internationally? Can anybody legitimately say these carbon credits have been issued by a Zimbabwean entity and say that the credit is legitimate,” the analyst added.
Booming carbon market
According to a Reuters report, citing analysts at Refinitiv, the value of traded global markets for carbon dioxide (CO2) permits grew by 164 percent to a record US$851 billion in 2021.
Most of the increase came from the European Union’s Emissions Trading System (EU ETS), which launched in 2005 and is the world’s most established carbon market.
It accounted for 90 percent of the global value at 683 billion euros, the annual Refinitiv Carbon Market Year in Review showed. Prices in the EU ETS ended 2021 at more than 80 euros a tonne, more than double the price at the end of 2020, on expectations that a more ambitious EU climate target of reducing emissions by 55 percent by 2030 would lead to a tighter market.
Added to that, soaring natural gas prices from the fourth quarter led to more coal power generation, spurring demand for permits and making them more expensive. The analysts expect gas prices to continue to impact EU carbon permit prices this year.
‘‘More expensive emission permits hit coal power plants relatively harder than gas plants, but because of the soaring gas prices in the second half of 2021, coal generation was still more profitable,’’ lead carbon analyst at Refinitiv Ingvild Sørhus said.
The two regional carbon markets in North America — the Western Climate Initiative and the Regional Greenhouse Gas Initiative — grew by 6 percent last year combined to around 49 billion euros, Refinitiv said. Permits in those schemes rose in price by 70 percent over the course of last year and traded volumes also hit record highs because the caps on the schemes are much tighter through 2030 than to the end of 2020.
China and Britain launch schemes
China’s national emissions trading scheme launched in mid-July last year. In contrast to other schemes, China’s emission cap is based on emissions intensity.
Around 179 million tonnes of Chinese emissions permits were traded during the first five and a half months of the scheme, a modest volume compared to the more liquid carbon markets in Europe and North America, the report said. Britain also launched a carbon market last year, following its departure from the EU.
The UK scheme differs from the EU ETS in that it has a price floor of around 25 euros/tonne that is meant to help drive investment away from fossil fuels, although some companies say it puts them at a disadvantage in the global market.
Turnover amounted to around 23 billion euros last year.
The voluntary carbon market (VCM), where companies, organisations or individuals purchase carbon credits generated from projects to reduce emissions, had turnover of US$1 billion last November, putting it on course for an all-time high annual value, the report said.
‘‘We expect interest in the VCM to keep growing, boosted by an increasing number of companies worldwide taking on carbon neutrality goals and other climate commitments that involve the use of carbon offsets,’’ it added — Additional reporting by Reuters.
