Africa’s carbon market awakening: from potential to energy

Whereas Africa bears the brunt of local weather change impacts, regardless of contributing merely 3.9% of world carbon dioxide (CO₂) emissions, the continent is awakening to an unprecedented alternative. Africa holds immense potential for nature-based local weather options but captures solely 16% of the worldwide carbon credit market – a $1.4bn business projected to achieve between $7-35bn by 2030 and doubtlessly $250bn by 2050.

The local weather contradiction

The statistics paint a stark image of local weather injustice. Africa’s common floor temperature in 2024 was 0.86°C above the 1991-2020 common, with North Africa experiencing the quickest warming at 1.28°C above baseline. The continent endured unprecedented flooding, persistent droughts and excessive warmth that disrupted agriculture, schooling and livelihoods.

Southern Africa skilled its worst drought in twenty years, with cereal yields falling 16% beneath the five-year common. In Zambia and Zimbabwe, yields plummeted by 43% and 50% respectively, whereas West and Central Africa suffered devastating floods affecting over 4m folks.

Regardless of this local weather vulnerability, Africa’s participation in world carbon markets stays dramatically underrepresented. The continent at present hosts over 100 carbon credit score tasks throughout greater than 20 international locations, with a collective offset capability exceeding 90m tonnes of CO₂ equal yearly. Nonetheless, this spectacular challenge portfolio displays regarding focus: renewable power tasks account for 27% of actions, family units 16%, forestry 14% and power effectivity 13%, with practically 90% of current credit score provide traditionally concentrated in simply two challenge sorts – cookstoves and deforestation avoidance.

Africa has utilised solely 2% of its huge nature-based resolution potential monetised by way of carbon markets, representing one of many world’s most important untapped alternatives for local weather finance and sustainable improvement.

Financial transformation past environmental advantages

Carbon markets supply Africa excess of environmental restoration – they signify a pathway to financial transformation and social improvement. The voluntary carbon market’s projected progress positions Africa to seize substantial local weather finance flows at a crucial juncture in its improvement trajectory.

Excessive-integrity African carbon markets might mobilise as much as $6bn in local weather finance yearly by 2030, whereas supporting as much as 30m jobs throughout the continent. This financial potential extends past pure monetary returns – carbon market tasks immediately contribute to no less than 10 of the United Nations’ 17 Sustainable Growth Objectives, creating synergies between local weather motion and improvement priorities together with poverty discount, meals safety, clear power entry and sustainable financial progress.

Present market alerts exhibit rising investor confidence. The Africa Carbon Markets Initiative (ACMI) has secured over $1bn in demand-side commitments for African carbon credit by 2030, together with $650m in buy intentions from Commonplace Chartered, Vertree, Nando’s, ETG and the UAE Carbon Alliance, alongside $250m in letters of intent from traders to develop high-integrity tasks. Kenya’s expertise illustrates the transformative potential. The nation’s complete Local weather Change (Carbon Markets) Laws 2024 established a nationwide carbon registry, necessary neighborhood benefit-sharing mechanisms and alignment with worldwide requirements, making a framework that ensures carbon revenues translate into native improvement outcomes.

AUDA-NEPAD’s strategic management

Because the premier improvement company of the African Union (AU), AUDA-NEPAD serves because the continent’s major coordinating mechanism for carbon market improvement. Our organisation’s complete carbon markets research, offered at COP28 in Dubai, recognized 4 basic obstacles limiting Africa’s participation: lack of information about carbon market mechanisms, inadequate institutional capability, absence of regulatory frameworks and restricted entry to monetary sources.

AUDA-NEPAD’s response to the expansion of Africa’s carbon markets has been systematic and bold, offering technical help and mobilising monetary sources for local weather adaptation initiatives and climate-resilient improvement. 

Our organisation has established the Centre of Excellence on Local weather Adaptation and Resilience in Cairo, serving as a hub for modern analysis, data technology and capability constructing throughout the continent. Most importantly, following the thirty seventh African Union Summit’s mandate in February 2024, AUDA-NEPAD is creating the African Gold Commonplace for Carbon Offsets – the continent’s first indigenous carbon market normal. This groundbreaking initiative addresses issues about “carbon colonialism” by making certain African possession and management over certification processes, methodology approval and profit distribution mechanisms.

The African Gold Commonplace represents greater than technical innovation—it embodies a basic shift towards making certain carbon markets serve Africa’s sustainable improvement targets. 

The usual, as soon as finalised, will incorporate meals safety issues, power entry targets, poverty discount, job creation and rural financial improvement alongside local weather aims, with strengthened necessities for neighborhood benefit-sharing and clear income distribution frameworks.

Strategic partnerships and world collaboration

AUDA-NEPAD’s strategy recognises that Africa’s carbon market transformation requires strategic partnerships throughout a number of scales. Our partnership with the International Middle on Adaptation focuses on the $25bn Africa Adaptation Acceleration Program (AAAP), which has already channelled over $15bn to construct local weather resilience for practically 60m folks.

Though local weather finance flows to Africa have grown by 48% from $29.5bn in 2019/20 to $43.7bn in 2021/22, with personal sector finance practically doubling to $8bn, this progress represents solely 23% of the estimated funding wants for implementing present Nationally Decided Contributions, highlighting the crucial significance of carbon markets as a complementary financing mechanism.

Constructing momentum towards ACS-2

The Africa Local weather Summit (ACS-2) in September 2025 represents a pivotal second for showcasing Africa’s unified strategy to carbon markets. Not like earlier local weather summits the place Africa has primarily advocated for loss and harm compensation, ACS-2 will place the continent as an answer supplier and funding vacation spot.

AUDA-NEPAD’s technique for ACS-2 centres on demonstrating concrete progress in carbon market improvement. A number of African international locations have superior regulatory frameworks in 2024, together with Kenya, Ghana, Mozambique, South Africa, Rwanda, Tanzania, Uganda, Egypt, Senegal and Zambia, making a basis for coordinated continental motion.

The summit will function a platform for launching the African Gold Commonplace, saying new funding commitments and presenting bankable tasks to worldwide traders. With over 6,200 carbon credit score tasks registered globally in 2024 and 305m tons of credit issued, Africa’s enhanced regulatory frameworks and high quality requirements place the continent to seize a considerably bigger share of this rising market.

The trail ahead

As Africa prepares for ACS-2 and COP30, the continent stands at a singular historic juncture. 

The convergence of rising world carbon market demand, enhanced regulatory frameworks, growing institutional capability, and strategic partnerships creates unprecedented alternatives for financial transformation by way of local weather motion. The projected progress of voluntary carbon markets to $35bn by 2030 coincides with Africa’s enhanced readiness to take part meaningfully in these markets. The African Gold Commonplace, mixed with strengthened nationwide regulatory frameworks and AUDA-NEPAD’s coordinating function, positions the continent to seize substantial worth from its pure local weather options.

Success will rely upon continued coordination between AUDA-NEPAD and member states, sustained political dedication on the highest ranges, ample monetary sources to help implementation, and efficient engagement with worldwide companions and carbon market stakeholders. The measurable targets – $6bn in capital mobilisation and 30m jobs by 2030 – present clear benchmarks for evaluating progress.

Because the world grapples with the urgency of local weather motion and the necessity for large monetary useful resource mobilisation, Africa’s carbon market awakening represents each a possibility and a duty. The continent that has contributed least to world emissions however suffers most from local weather impacts is positioning itself to turn out to be a crucial a part of the answer – not by way of charity or compensation, however by way of mutually useful partnerships that drive financial improvement whereas addressing the world’s local weather disaster.

The journey from Addis to Brazil will take a look at Africa’s unity, resolve and strategic imaginative and prescient. However with AU’s management, the African Gold Commonplace’s promise and the continent’s huge pure potential, Africa’s carbon market revolution has begun. 

The query is not whether or not Africa can take part meaningfully in world carbon markets, however how rapidly the continent can scale its participation to fulfill each its improvement wants and the world’s local weather imperatives.