Good afternoon, everyone. My name is Paul Muthaura, the chief executive of the Africa Carbon Markets Initiative. I was a long-term securities regulator and for a span of time, a member of the International Standards Setter for Securities Regulators (IOSCO).
Thereafter, I moved to lead one of the larger regional insurance businesses in East Africa. I am glad to say that we were the first continental member of the TCFD Insurance Pilot Group.
Thereafter, I became an independent consultant, looking very much at supporting capital markets development in the East African region, and then looking fundamentally at the net zero transition and how we’re going to position Africa in a meaningful way, which led very much into the transition into the Africa Carbon Markets Initiative.
The Africa Carbon Marks Initiative was launched at COP27, and at the point of our launch, it was very much focused on really scaling voluntary carbon markets (VCMs) in Africa.
Building from that initial point, through extensive stakeholder engagement, there grew to be a recognition of the need to support work that’s much broader than just the VCM space, looking at how we’re going to position markets effectively on the Article 6 evolution and implementation as well as looking at roadmaps to compliance market development in various markets.
If anything, when you look at the somewhat adverse press that came out in 2023 and 2024 around some of the concerns around integrity gaps in the VCM space, we saw this as a stronger indication that there might or will likely be faster growth and scaling in the Article 6 space and the compliance market space. So, we’re glad that we’re readily able to support markets across the spectrum of types of carbon markets.
As I mentioned, we are seeing significant evolution in both the Article 6 space and compliance market space, building on the foundations of VCM space. There is a running query as to whether these are going to become integrated?
We do believe in time they will be, because a cohesive ecosystem really is what’s going to most support global climate goals achievement and effective balancing of those global goals as against national and regional priorities.
However, we must be conscious that by their very nature, compliance markets do tend to have a slower rollout process because of the policy and regulatory framework development to ensure alignment of national policy and international standards.
But we do believe that enhanced coordination across these markets will really support a shift, if it’s supported with an effective level of shared learnings and implementation of transparent frameworks, and will really drive a more effective response to climate change, both at national level, regional levels, and ultimately at a global level.
I think we are conscious that at the point of our launch, we were looking at really supporting and scaling of carbon markets on the whole African continent. But our work in our first two years has been very much focused on supporting a number of first mover jurisdictions that express their eagerness and willingness to work with ACMI at operationalising their national frameworks.
In that process, I think it’s become increasingly evident that there are multiple African jurisdictions that are looking to draft and implement carbon market policies and frameworks that are at differential levels of approaches. But we do believe that this does give some level of a platform for valuable lessons learning to better inform continental and global carbon market evolution.
And we’re really glad to be working much more constructively with key continental institutions in Africa, being the AU Commission, the UN Economic Commission for Africa, the AU Development Agency, AUDA-NEPAD, the UNDP, and of course, the African Development Bank, for a truly catalysed and a more coordinated continental standard development process, and hopefully a more consistent operationalisation through really building a much more coordinated and driven learning and information sharing process to help unlock a collaborative impact.
What’s becoming ever more evident is, with a lack of that kind of coordinated learning and information sharing, we really will see some level of slower or hindered progress, as well as the creation of gaps that, if addressed in a collaborative manner, would not have arisen.
When we look at countries stepping up to really understand how best they can engage with the carbon markets, we’re very conscious that they need to start from a very clear understanding at national level about what their objectives are. Are they trying to position carbon markets to support climate finance channelling?
Are they looking at it in terms of complementing sustainable development? Or are there much broader economic transformation goals that are being sought to be driven through the operationalisation of carbon markets?
We tend to find that where there isn’t a clear and coherent view as to why jurisdictions are operationalising these markets, you then tend to have really substantial challenges in implementation and some challenges in terms of trust building, because there is a disconnect between the stated goal and purpose and actual regulations and frameworks being put in place.
So we strongly advocate for countries to articulate what their objectives are as early as possible in order to guide effective policy formulation and avoiding some of the pitfalls that come from some incongruence.
Now, if we’re able to see countries speaking with clear purpose and vision as to what they’re seeking to deliver, we’re very hopeful that the scaling and operationalisation of well-coordinated carbon markets on the continent really allows Africa to have a key role as a potential driver of transformative change, but the achievement of that transformative change will be somewhat reliant on strategic alignment, fundamental integrity implementation and then the overall collaboration at all levels of the ecosystem.
And, potentially oversimplified, but from our view, Africa’s huge availability of renewable energy, the realities of the low emissions environment we’re operating within, and as a consequence, the substantially lower cost of transition to much more sustainable industrial practices that are possible on this continent because you’re not retweaking and redeveloping infrastructure that was already in place, but building right the first time and running with speed.
And then you add to that the really substantial young employable population who are in a position to be effectively empowered and capacitated to drive the new and scale it at a much speedier and much more impactful rate. We then believe Africa can have a huge value proposition to addressing solution delivery for the realities of the continental and global problems we’re seeing around climate change.
With our work so far in our first two years since COP27, I think we’re glad to note that we played central roles in supporting the design, implementation and operationalisation of legal frameworks in Kenya and Nigeria, as well as really supporting a lot of industry capacity building in, for example, Rwanda and Ghana, who moved with some speed to put their legal frameworks in place, and we’re looking forward to the announcements of the outcomes.
In addition, the work we have done with the Mozambique government in putting in place a very robust legal framework, moving them from purely REDD+ oriented framework to looking at the full spectrum of the carbon market solutions that can be implemented.
We’re also glad to note that there are a number of other jurisdictions that have already expressed some level of interest in working with us, from Malawi through to the likes of Cameroon, and we hope, when you look at scale and impact, if we’re able to make our progress with our engagement with the likes of South Africa, Ethiopia and comparatively with jurisdictions like Madagascar, we’ll be able to really start showing and providing some key reference points on what it can look like across the scale of levels of economic development on this continent.
Building on that, I think we’re glad to already be working closely with the government of Kenya to put in place an Article 6-2 pilot framework built very much on clean cooking in schools. We have been working with a number of parties to put together an Advanced Market Signal to bring together the demand side, to give strong, value-based commitments that if the right quality of projects are made available, they have already committed to allocate in excess of a billion dollars to evidence the allocation of capital to those projects that have the most impact and the most transparent economic value to the communities they’re operating within.
We’re glad to be working with a number of partners of the likes of the Voluntary Carbon Market Integrity Initiative, VCMI, looking from the demand side at the design of an auditor training programme to really close the very substantial gap that exists in verification and validation capacity on the continent.
This is hoped to also make sure that we have the right pool of capacity to be able to start making sure the co-benefit elements that are very substantive in African projects start being factored into the valuation of the credit from this continent. To support that, we have designed a soon-to-launch carbon hub, which is a repository of information, for African PDs and ecosystem players to reference to better understand how they can effectively participate in this space.
As earlier mentioned, we’re glad to put together the first showcase of African project developers, over 100 PDs cutting across more than 24 jurisdictions on the continent. We have also been looking to build greater awareness and capacity through hosting webinars and really working towards sharing an evidence-based narratives and the rollout of what we hope to be referenced as an ACMI message house.
So that whatever the issue, you have a central point, you can get information and updated content on what’s going on and what impact it is expected to have.
But what has become so evident is we need to take these steps through building effective partnerships. We have rolled these out with the VCMI and ICVCM on the demand and supply side and also with the International Emissions Trading Association as well as UNDP Africa.
And we’re glad to be making key steps with the Glasgow Financial Alliance for Net Zero’s Africa offices to really convene and bring together the demand side from the continent to catalyse effective investment on this continent. In addition, our partnership with the African Development Bank is very much central to supporting the introduction of appropriate financial intermediation tools and de-risking solutions that can help us move to the next step.
When you look at the very positive messaging that came out of COP29 around some level of conclusions being reached around Article 6.4, we feel these have introduced much needed clarity on internationally traded mitigation option trading rules as well as authorisation pathways and ultimately cooperative approaches to the building of Article 6 markets.
Now, that notwithstanding, we remain conscious that demand for credits remains constrained due to the nascent nature of many mechanisms and some of the system challenges we’re seeing around financing and policy alignment.
But we’re very hopeful that a sound interplay between the compliance markets under Article 6 and the evolving voluntary carbon market space will allow for some level of convergence as buyers increasingly seek credits with international authorisation as well as high environmental integrity.
All said, what do you think should be the priorities of stakeholders in establishing resilient carbon markets?
I think with all the positive work we see happening in multiple spaces, as well as project and product types, what’s absolutely central is the integration of the highest standards of integrity, really ensuring that mechanisms are credible and aligned with international best practices.
There must be transparency and credibility in terms of equity and inclusion so that frameworks are prioritised where they deliver social and economic benefits alongside the environmental outcomes attached to the emissions reduction and removal targets of the carbon markets.
But we must advocate for the highest level of regional and global cooperation so that we can take those next steps in terms of leveraging learning, promoting shared learning and really accelerating the development of aligned and well-integrated market systems.
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