Africa’s Path to Prosperity: Monetizing Renewable Resources as Carbon Credits

The 2024 Economic Report on Africa by the United Nations Economic Commission for Africa states that African nations could generate a new revenue stream by leveraging their abundant renewable energy sources, tropical forests, peatlands, and marine ecosystems to export premium carbon credits. Carbon markets could support Africa’s goals of resilience and prosperity, as outlined in Agenda 2063, and aid in achieving the Paris Agreement’s climate objectives.

However, the report cautions that failure to ensure credit additionality, proper governance, and sufficiently high prices could lead to counterproductive market incentives, increasing carbon emissions and slowing the climate transition in Africa.

The report explains that Africa could invest in two types of carbon markets: the regulatory compliance market and the voluntary carbon market (VCM). So far, credits from the VCM, where many African countries participate, have been only a small fraction of those supplied by the overall regulatory compliance market.

While the VCM’s value was approaching $2 billion in 2022, the value of traded carbon permits in global markets reached a record $909 billion. Estimates project the VCM reaching $10–$40 billion by 2030, but Africa contributed only 11% of the VCM’s retired credits in 2016, realizing only around 2% of its annual potential for carbon credits.

The report suggests that Africa should invest in its untapped renewable energy potential, youthful and rapidly growing workforce, available land and natural assets, and low emissions to capitalize on the potential revenue from carbon credit sales.

About Geraldine Boechat 2735 Articles
Senior Editor for Medafrica Times and former journalist for Swiss National Television. former NGO team leader in Burundi and Somalia