Africa, the world’s poorest and most climate-change-hit continent, is bracing for a tidal wave of carbon offsetting cash. Might it help?

For better or worse, carbon trading’s next phase looks like it will play out in Africa. This article scopes some of the potential gaps between aspiration and reality.

All bets may be off, but payback is certain

First, let’s let the caveat out of the bag.  

We mean, of course, the belligerent, orange tiger-arsonist of a Big Caveat, residing in the White House. Donald Trump’s second administration appears determined to honour its campaign promise of igniting a global bonfire of regulations. 

Whatever the issue, the presidential elbow is consistently leaning heavily on the scales, tipping the balance in favour of might-is-right over rule-of-law. Climate regulation is an early, explicit target of this bureaucratic conflagration.

When the world’s richest country elects a rule-busting populist, all bets are off when it comes to constructing elaborate, rules-based systems. This is particularly true of regulations that, when it comes to enforcement, still rely more on good faith than sharp teeth.

Governments, generals, bureaucrats and businessmen everywhere are still struggling to adapt to our new world order, as the Trump II oligarchy systematically demolishes regulatory frameworks that have been constructed over decades.

Given the magnitude of this overnight tectonic shift in geopolitics, despair, defeat, or pragmatic collusion, are all understandable responses. 

Equally understandably, headlines are driven by matters of immediate life and death, in the form of real wars, prosecuted by tariffs as well as bullets.

But what of the apparently less obvious, but far more lethal, consequence of this zero-sum, transactional brand of politics?

Specifically, how will the fragile, delicate, world of carbon trading survive this scorched-earth assault? What chance does the delicate seedling of compliance carbon trading stand in the face of an elephant herd of billionaires-in-office, whose interests align with profit, not democracy – let alone carbon drawdown?

Right now, amid all the carnage, neither the fate of carbon trading markets, nor the world’s poorest continent, have a high news profile. When political rulebooks that have lasted 80 years are being ripped up by the global superpower, the fate of tentative carbon trading regulations ever being implemented gets a lower billing. 

If the wording of catchphrases were wrestlers, how can the EU’s milksop ‘Corporate Sustainability Reporting Directive’ (CSRD) survive when thrust in the ring with a 600-pound gorilla bellowing ‘Drill, baby, drill!’? 

It may be bleak, but here’s bleak hope: none of this makes the problem go away.  

Superpower alliances have shifted before, nations have waxed and waned. The impact of Homo sapiens’ fossil fuel addiction, however, is unprecedented, and impervious to either.

The Three-Headed Beasts of Government, Business and Media may rarely have appeared stronger, but there’s nothing new to see here. Looking beyond the headlines for what’s missing, becomes more important than ever. 

The inconvenient truth is that there are certain forces, physical and political, that will continue their inexorable march, however any short-term superpower realignment plays out. Specifically:

• Atmospheric Physics: as we transfer more and more carbon from the ground to the air, greenhouse gases will continue to heat the planet. ‘Carbon don’t care’.
• Realpolitik: people living in the poorest countries will continue to feel the environmental impacts of climate change first and worst.

One of the few certainties amid this chaos is that the longer our strong-man love-in lasts, the faster and further these twin forces will march. 

If ignoring these realities makes them get worse faster, deferring meaningful action – like large scale transfers of cash from Global North to Global South earmarked for climate mitigation – simply accelerates the avoidable tipping points we’re bequeathing the next generation.

What looks like a ‘political earthquake’ today, will soon appear as a minor twitch of the seismograph needle charting our species’s long-term fate, whose spiky oscillations are becoming increasingly violent. 

Filtering the signal from the noise requires looking beyond current crazy jerks.

The success or failure of the carbon trading ‘solution’ may be what our children write about this era when they come to write the history of the 2020s.

With this headline-hogging caveat out the way, let’s look at how Africa may become the front line of whatever happens next.

The View From Africa: a coming storm

Michael Makongo has been practising, studying and advocating for sustainability in his native Uganda for decades. 

A passionate auto-didact, Makongo has used the Internet to accumulate a wide range of learning, certifications, connections and networks that until recently would have been inaccessible to an intelligent, ambitious man from a farming community. 

He recently founded EALS Consult Uganda, assembling a team of like-minded professionals with a shared commitment to long-term sustainability. Their backgrounds and skills range from IT to tourism, via carbon accounting and project management, but all share Makongo’s urgent desire to preserve Uganda’s rapidly-deteriorating natural environment, by arresting and reversing the impacts of climate change on their country.

These efforts include marketing and technical collaborations with See Through News’s sibling carbon reporting ecosystem See Through Carbon, bringing STC’s accurate, free, open and transparent carbon reporting service to Ugandan businesses, small and large.

Makongo is well aware of the challenges of introducing carbon accounting in his country. If top executives in Global North multinationals are still unfamiliar with carbon accounting basics, why should ordinary people and businesses in Uganda know their Scope 3s from their Scope 1s?

Undeterred, Makongo is taking on the challenge. EALS is one of many African businesses preparing for the wave of carbon offsetting money that may be heading its way. Having grown up as a farmer, Makongo knows the importance of balancing optimism with realism. Like all farmers, he knows the climate can be blessing and a curse.

This is how he explains Africa’s impending opportunity/crisis:

Think of Africa’s carbon cash tsunami like a powerful storm that can either destroy or nourish the continent. Just as a storm can bring much-needed rain to parched fields, carbon trading can bring essential investments to Africa. However, if not managed carefully, the storm can also wreak havoc, causing destruction and displacement. Similarly, if Africa’s carbon cash tsunami is not harnessed effectively, it might exacerbate existing inequalities and fail to deliver its promised benefits.

So how will we know whether this impending storm will bring long-anticipated rain and nutrients to Uganda’s deforested, degraded land, or more destruction?  

First, let’s understand where this money is coming from, and why.

Voluntary vs Compliance Carbon Markets 

We’ve described the potentially game-changing nature of carbon-trading-with-teeth legislation like the CSRD in more detail elsewhere.

The broad point is that the Age of Voluntary, where claiming to be ‘carbon-neutral’ was a greenwashing branch of PR, where you got to set the rules and define the terms, is being overtaken by the Mandatory Era, where you don’t get to pick and choose.

In truth, ‘voluntary’ and ‘compliance’ carbon trading have always existed in parallel. Until recently, however, it was the former wishy-washy flavour that generated most of the money. ‘Voluntary’ carbon trading makes up , the majority of the trillion-dollar carbon industry, that has been so comprehensively unsuccessful in actually reducing carbon emissions.

If the forces of climate change denial, spearheaded by the ‘Drill, Baby, Drill’-sergeants prevail, voluntary and compliance carbon markets are equally threatened. 

Homo sapiens, for all our ‘wisdom’, is yet to prove it has much of a plan for an orderly transition to a sustainable future. Inadequate, porous and fissiparous though it may be, carbon trading is currently the best we’ve come up with.

Carbon trading may be far from perfect, especially the voluntary flavour, and still anchored to the corrosive proxy of money – but we have to hope it’s better than nothing until we stop suborning carbon reduction to the metric of money.  

Carbon trading in its current form basically involves rich entities (usually countries) paying poor countries to reduce their carbon ‘for’ them.

This version of carbon trading has a theoretical elegance, if you accept the premise that money trumps everything. The marginal cost of reducing a tonne of carbon in a wealthy country is high (in dollar terms); it ‘makes economic sense’ to reduce that tonne in a poorer country where the marginal cost is low.

Morally contemptible this may be, carbon trading is a clever-sounding justification for rich countries that have historically emitted most of greenhouse gas to pay distant, poor, brown people to literally do their dirty work. Like papal indulgences, they’re a cheap way for big businesses to carry on sinning with minimal disruption. 

Cynical? Possibly, but since the first carbon credit was issued in 1988, voluntary markets have done little to challenge this interpretation, and much to justify it.

Compliance carbon markets also use money as a proxy for carbon reduction, but remove the ‘write your own rules’ Wild West of the voluntary market. 

In this sense, compliance markets like the EU’s Emissions Trading Scheme (ETS) are a definite improvement. If implemented and rigorously enforced, they remove the worst of the greenwashing stains and provide a credible mechanism for long-term decarbonisation of our economies. 

But large-scale, enforceable compliance markets are only just emerging into the legislative sunlight.

As delicate seedlings, they’re vulnerable to Washington’s stampeding deregulation elephants.

Africa’s Unwanted Trump Card

Most emissions trading schemes still involve some form of offsetting, i.e. rich countries who consider reducing their own emissions ‘too expensive’ paying poor countries to do their reduction ‘for’ them. 

This gives Africa an unwanted point of leverage. As the world’s poorest continent, a lot of carbon trading credits will be ‘spent’ in Africa. 

Carbon trading’s Law of Gravity could be Africa’s strongest suit. Like water seeking the lowest point, carbon trading’s nature requires it to be spent in the poorest places.

However this money ends up being used, and however much or little carbon actually ends up being reduced or sequestered as a result, Africa is likely to be stage on which this crucial story plays out.

The Bid for African Carbon Supremacy

If/ when this tidal wave of carbon credit riches starts fertilising the African continent, who will benefit most, and how?

From a national perspective, African governments are jockeying for pole position. More than one national leader has spotted the potential benefits of becoming carbon trading’s market leader, first point of contact, exemplar, hub, first adopter, or centre of excellence in Arica.

International conferences are being held. Government schemes are being announced. Investment funds are being established. The prize is clear – the lion’s share of the carbon credit bounty.

Who, if anyone, will prevail in this race, is still up for grabs, but the runners and riders are becoming clearer.  

A sweet spot is appearing in the gaps between various African groupings of countries. Ruling themselves out are the continent’s:

• Big Beasts:  dominant regional economies like South Africa, Egypt, Algeria, Ethiopia – who already have large, diversified internal markets and for whom the marginal gain of a new revenue source is diminished.
• Oil Merchants: countries that are heavily dependent on oil and gas revenue, like Libya (56%), Congo (34%), Angola (28%), have powerful forces of inertia against any climate mitigation action.
• Small Fry: the countries at the bottom of the per-capita income and development index rankings, like Somalia, Central African Republic, and Niger – lack the infrastructure to deliver and support effective carbon trading systems.

A checklist for the keenest carbon market front-runners emerging:

• Mid-ranking economies, for whom the marginal gain of being a carbon market leader could make a significant impact.
• Anglophone countries have a clear advantage in any international context.
• Connected nations, both to global supply chains and neighbouring regional economies.
• Familiar countries, long-established as hosts to international agencies and bodies.

East African countries tick many of these boxes. Many are taking the most active steps to put themselves at the front of the queue to be fire-hosed with Global North carbon cash.

Kenya and Uganda are hosting carbon trading conferences, bringing together international, continental and regional players. 

In collaboration with UN agencies, and carbon asset managers, they’re creating investment funds to encourage the ecosystem needed to support a regional market leader. Consultancies, researchers, auditors, accountants and IT experts are all required to buttress a credible carbon trading system.

COP 2022 in Egypt created the African Carbon Markets Initiative (ACMI), with 13 partner nations. Africa’s most developed carbon markets (so far mainly voluntary, rather than compliance) are Kenya, Gabon, Malawi, Mozambique, Togo, Nigeria, Burundi and Rwanda, but they remain relative minnows on a global scale, with everything to play for.

Reality checks

Before anyone becomes too intoxicated by the prospect of Africa’s impending carbon rush, here are a few further caveats, pre-existing the tangerine disruptor mentioned at the top of this article.

Africa remains poor

First, let’s not forget the economic logic behind the flow of carbon credit money, compliance or voluntary, to Africa. 

Like water seeking its lowest level, carbon offsetting seeks the poorest countries where carbon reduction is cheapest.

South America and Asia also has contenders to receive the Global North’s carbon credit bounty, but the focus on Africa is because Africa has the highest concentration of most economically underdeveloped nations.

Africa isn’t the problem

Look at this time-lapse of historical greenhouse gas emissions by region since 1750, and try to spot Africa’s share. Blink and you’ll miss it. 

Check per-capita league tables of carbon emissions today, and you’ll find the average Ugandan generates around 1% of the emissions of an average American. 

From this perspective, placing the responsibility for emissions reduction on a continent that has barely contributed to the climate crisis, and is already generating as little as anyone on the planet, seems perverse at best, and morally contemptible at worst.

Greenhouse gas-lighting is not the first example of the Global North focusing on Africa to fix its own ills. It does, however, risk being the last, so long as carbon trading continues to be regarded as just a low-friction way of off-shoring red-tape at a ‘reasonable’ dollar price.

Africa has a big climate problem

Just because it’s unfair, doesn’t make it untrue: Africa suffers most from the climate crisis. 

Whatever lenses you use – deforestation, soil degradation, biodiversity loss, water shortages, flooding or fires – global heating’s impact on daily life is most keenly felt in Africa.

Greenhouse gas emissions are overwhelmingly generated by rich countries, but the impact is disproportionately severe on poor ones. The impact of global heating, while evenly distributed in Earth’s atmosphere, has the greatest impact on the poorest countries.

Wealth, whether in the form of expensive flood defences, diversified food systems, or resilient physical and financial infrastructure, protects most people from the worst impacts of climate change most of the time. This is true at a national, as well as individual level.

The fewer a country’s resources, the less resilient and more vulnerable it is to human-induced climate change. 

Hence, the more urgent the need to address it.

Corruption could be a problem

Africa has a poor track record of converting inflows of money from rich countries into improving the quality of life for its citizens. 

African countries predominate at the wrong end of Transparency Internationals’ Corruption Perception Index. Swiss banks are often the major beneficiaries of funds earmarked for national coffers.  

African countries have long pointed out that corruption simply goes by other, more palatable names in rich countries. The presence of the world’s richest man, presiding over a cabinet of billionaires in the world’s richest country does little to refute this, but two wrongs don’t make a right, and ‘whataboutery’ is often an excuse for inaction.

The Hope Bit

If this analysis appears unduly pessimistic, it’s worth reminding ourselves of the bleak hope mentioned at the start of this article: none of this makes the problem go away. 

Even if we collectively foot-drag, defer, and deny for a few more years, ‘carbon don’t care’.

The ‘good’ news is that the worse things get, the more obvious – in theory – the benefits of addressing climate change should become. 

The remedial impacts of carbon offsetting schemes, for all the imperfections in their implementation, are unambiguously good.

• sequestering carbon in soil
• keeping existing trees in the ground
• planting more trees
• preserving and promoting biodiversity
• supporting indigenous people’s interests over corporate exploitation
• promoting female empowerment 
• Promoting renewable energy at all scales
• developing sustainable practices in construction, transport and food systems

These benefits can be felt anywhere in the world, but particularly in the poorest places. 

Maybe Africa is the best place to lead the way after all.

**

If you’re the type of person who’d rather nudge rulers into changing rules, and ordinary people into changing behaviour that would promote carbon drawdown, the See Through Network may be for you. 

It’s composed of  a wide variety of different people with different expertises, experiences and degrees of commitment with the shared Goal of:

Speeding Up Carbon Drawdown By Helping The Inactive Become Active

Email volunteer@seethroughnews.org for details

and/or share this article widely.