Latest news with #ZimbabweCarbonMarketsAuthority
Daily Maverick
02-06-2025
- Business
- Daily Maverick
Novel carbon credits initiative gives Zimbabwe an edge, but concerns remain over cost barriers
A new blockchain-based carbon credit registry could have 'profound' implications, but the costs are prohibitive and the risks of greenwashing remain. Zimbabwe's establishment in May of a regulatory body and launch of a blockchain-based platform for carbon credits – the first of its kind worldwide – has received plaudits from some experts, who say the move will enhance transparency and also make the southern African country a leader in the burgeoning field. However, some are wary that high costs will deter investment. Carbon credits, also known as carbon offsets, are tradeable units in the form of a certificate or permit that represents the emission, reduction or removal of one metric ton of carbon dioxide or equivalent greenhouse gas into the atmosphere in exchange for a monetary payment. There are two main types of carbon credit, namely compliance credits, which are issued under regulated carbon markets, and voluntary credits, which are largely unregulated. Zimbabwe's digital platform has three components, which include the general website for the Zimbabwe Carbon Markets Authority, which oversees all issues related to carbon credits, and the Zimbabwe Carbon Registry, in compliance with the UN Framework Convention on Climate Change and Article 6 of the Paris Agreement. This requires parties participating in the new market mechanism to have a national registry or have access to a registry to track all the carbon credits generated within their jurisdiction. A third component of the platform, which the Ministry of Environment, Climate and Wildlife says is still under development, is the marketplace that will allow buyers to directly purchase credits from the Zimbabwe Carbon Registry, 'eliminating the need for third-party brokers, thereby ensuring that project developers accrue the maximum benefits possible'. In response to questions on the initiative, permanent secretary in the ministry Tadeus Chifamba told Daily Maverick, 'This is critical in making sure that carbon credits generated in Zimbabwe are of the highest quality and standards and fetch the highest possible price on the international market, thereby maximising benefits for the country and communities.' 'Profound implications' According to global carbon market players, Zimbabwe is ranked the third-largest contributor of carbon credits in Africa, providing nearly 13%, behind Kenya and Gabon. In 2023, the government cancelled carbon credit projects and compelled operators to re-register, demanding up to 50% of revenue, following reports of fraudulent activities by a local project, Carbon Green Africa, which was sponsored by Swiss-based South Pole, one of the world's biggest project development firms. Under the new system, Zimbabwe becomes the first country to do away with the issuance and use of voluntary credits, transitioning to a compliance-only market by 2026, but credits issued in the country can still be used for voluntary purposes, with the proviso that they must comply with the higher quality assurance and accountability measures of the compliance market. Kudakwashe Manyanga is the founder and CEO of the Africa Institute for Carbon Trading and an industry expert. He told Daily Maverick that while the global carbon credit market has largely been voluntary, establishing a robust regulatory framework 'can provide necessary oversight and legitimacy'. 'A blockchain-based system can help ensure that carbon credits are genuinely produced, verified and retired, thereby increasing the integrity of the market and potentially attracting more participants. The implications for Zimbabwe could be profound. 'By implementing a well-regulated carbon market with a transparent registry, Zimbabwe is likely to attract both local and international investments in carbon reduction projects. Investors are increasingly seeking assurance that their contributions lead to tangible environmental benefits. A credible carbon registry could enhance Zimbabwe's attractiveness as a destination for climate finance, positioning the country as a leader in sustainable development in the region.' Mnanyanga, however, said the high fees associated with participating in the market were prohibitive and could sideline community-based projects, which he said often lacked adequate funding. The Statutory Instrument on Carbon trading regulations [ S.I. 48 Carbon Trading (General) Regulations of 2025 ] sets out various fees required for participation in the industry. For instance, there are three project categories. The registration fee for the biggest project is US$20,000, the second-biggest is $15,000 and the third-biggest is $10,000. There are other fees, including a first-time registration fee as a project developer, which is set at $5,000 for foreigners and $2,500 for locals. Greenwashing risks Michael Musgrave, of Newt Natural Capital, an advisory firm, is an academic and expert in carbon finance. He agrees that the costs involved in Zimbabwe's new system are prohibitive and says that in an industry which does not yet have many experts, overregulation is not the answer to ensuring that problems like greenwashing – a practice in which corporates may make unsubstantiated claims that their products are environmentally friendly or have greater positive environmental impact than they really do – do not occur. 'There are barriers in place in terms of regulation and certification, and government regulations introducing another layer of costs just make carbon credits less viable. The problems around monitoring, reporting and verification are not unique to Zimbabwe or Africa; they are problems that every carbon project experiences and we need as an industry to solve the problems globally, or at least on the continent, by training or upskilling people and having more expertise applied to the implementation of these projects, not by introducing more regulations. 'I really don't see that as a way of reducing greenwashing. There is a role for government to play, but I think it is a small regulatory role that should be well thought out and avoid the approach of just saying, 'well, everybody else is making money and we are not making money and therefore we will introduce regulations that enable us to make money. The justification is that they are looking out for the interests of Zimbabweans, but this is hardly the case.' The Centre for Natural Resource Governance is a local environmental advocacy group. In its statement on the latest development, the civic organisation also bemoaned that upfront fees required to establish and maintain carbon credit projects could be a hurdle for Zimbabwean businesses and organisations, saying that a lack of financial resources might limit their ability to invest in renewable energy projects or implement carbon emissions reduction strategies. 'Despite the potential financial windfalls that can accrue from carbon trading, we must state that it remains a false solution to climate change and is subject to manipulation by the private sector. Governments can also generate massive revenues for and on behalf of communities without ever ensuring the benefits extend to the communities,' the organisation said. 'National asset' Permanent secretary Chifamba dismissed concerns that the costs were a barrier to entry and that local communities were disadvantaged, saying the regulations actually protected communities 'from prejudice of the past', under the voluntary trade, which he said lacked transparency. 'It costs money for the government of Zimbabwe to assess proposed projects before approval or rejection in line with internationally set environmental integrity, social safeguards and sustainable development guidelines. The government cannot be expected to take money from treasury to subsidise profit-making project developers. 'Additionally, the export of carbon credits should be recognised as the export of any other asset, such as gold, diamonds or platinum and should be subject to royalties and export taxes by the government. These are national assets which belong to all Zimbabweans and there should be a mechanism to ensure that treasury or a designated national fund set out for the purposes of addressing climate change benefits from a certain percentage of the share of proceeds,' he said. Dr Francis Vorhies, the director of Stellenbosch University's African Wildlife Economy Institute and a research associate at the Wildlife Conservation Research Unit at Oxford University, told Daily Maverick that the distribution of revenue from carbon credits was a domestic issue. He believed that in Zimbabwe, the arrangements between government, business and landowners, as well as local communities, could be discussed and debated robustly for the benefit of all parties. Dr Vorhies said that while the initiative could give Zimbabwe a competitive edge because of its technical sophistication, which could guarantee transparency, Zimbabwe's global image could be a setback. 'The country does not have the best of reputations for doing business, and so investors may fear that such a state-run mechanism risks being too burdensome and too costly, and thus stay away.' DM
Bloomberg
07-05-2025
- Business
- Bloomberg
Zimbabwe Sets Up Carbon Markets Watchdog to Govern Trading Activity
Zimbabwe has published rules governing carbon markets trading and include the setup of a government-linked body to watch over the operations of the entire industry. The newly-established Zimbabwe Carbon Markets Authority has the power to consider and make determinations on the approval and registration of carbon projects, issue letters of approval, authorization, and registration for entities involved in carbon trading, according to a government gazette.
