Africa Carbone Market

Africa
Carbon Markets
Initiative (ACMI):
Roadmap Report
Harnessing carbon markets for Africa
1
NOVEMBER
This report is meant for discussion purposes only and should not be relied on for making decisions without seeking
professional advice.
ACMI has not endorsed any companies, organizations, products or credits included in this report nor has ACMI
assessed individual companies or projects.
ACMI is not meant to be a commercial initiative. It aims to build on, supplement and reinforce ongoing efforts towards
scaling voluntary carbon markets on the continent, not to compete with any existing initiative.
ACMI intends to represent the broader voluntary carbon markets ecosystem and not individual organizations. ACMI’s
sponsors, partners and steering committee members agree to disclose any potential direct benefits and recuse
themselves from any efforts that could directly benefit themselves or their organizations.
2
Sponsors
Supporting partner
Other Steering Committee and contributors
Steering Committee Members

Yemi Osinbajo Iván Duque Márquez Annette Nazareth Samuel
Vice President, Federal Former President, Chair, Integrity Council Thevasagayam
Republic of Nigeria Government of for the Voluntary Deputy Director, Bill
Colombia Carbon Market & Melinda Gates
Foundation
Gillian Caldwell Bogolo Kenewendo David Antonioli Sitoyo Lopokoiyit

Chief Climate Officer Special Advisor, Africa CEO, Verra Managing Director,
and Deputy Assistant Director, UN Climate M-PESA Africa
Administrator, USAID Change High-Level
Champions
Ariel Perez Riham ElGizy M. Sanjayan

Managing Partner, Director, MENA CEO, Conservation
Vertree Voluntary Carbon International
Exchange
Damilola Ogunbiyi Joseph Nganga

CEO, Sustainable Vice President Africa,
Energy for All; Special Global Energy Alliance
Representative, the for People and Planet
UN Secretary-General (GEAPP)
for Sustainable Energy
for All; Co-Chair,
UN-Energy
3
3
The Global Energy Alliance for People and Planet Sustainable Energy for All (SEforALL) is an
(GEAPP) is an alliance of philanthropy, entrepreneurs, international organisation that works in partnership
governments in emerging and developed economies, with the United Nations and leaders in government,
and technology, policy, and financing partners. Our the private sector, financial institutions, civil society,
common mission is to support developing countries’ and philanthropies to drive faster action towards the
shift to a clean energy, pro-growth model that ensures achievement of Sustainable Development Goal 7 (SDG7)
universal energy access and unlocks a new era of – access to affordable, reliable, sustainable and modern
inclusive economic growth, while enabling the global energy for all by 2030 – in line with the Paris Agreement
community to meet critical climate goals during the on climate. We work to ensure a clean energy transition
next decade. In doing so, as an Alliance we aim to that leaves no one behind and brings new opportunities
enable 150 million new jobs, reduce 4 gigatons of future for everyone to fulfil their potential.
carbon emissions, and expand clean energy access to
one billion people. With philanthropic partners, Bezos
Earth Fund, IKEA Foundation, and The Rockefeller
Foundation, GEAPP works to build the enabling
environment, capacity, and market conditions for private
sector solutions, catalyse new business models through
innovation and entrepreneurship, and deploy high-risk
capital to encourage private sector solutions, and assist
just transition solutions.
United Nations Economic Commission for Africa The UN Climate Change High-Level Champions
(UNECA) was established by the Economic and Social deliver on their mandate to enhance ambition and
Council (ECOSOC) of the United Nations (UN) in 1958 strengthen the engagement of non-state actors in
as one of the UN's five regional commissions. UNECA's supporting Parties, working with the Marrakech
mandate is to promote the economic and social Partnership, to deliver the goals of the Paris Agreement.
development of its member States, foster intra-regional To connect the work of governments with the many
integration, and promote international cooperation for voluntary and collaborative actions taken by cities,
Africa's development. Made up of 54 member States, regions, businesses and investors, nations decided
and playing a dual role as a regional arm of the UN to appoint two High Level Champions, Dr. Mahmoud
and as a key component of the African institutional Mohieldin and Mr. Nigel Topping. They build on the
landscape, UNECA is well positioned to make unique legacy of their predecessors to engage with non-state
contributions to address the Continent’s development actors and activate the ‘ambition loop’ with national
challenges. UNECA’s strength derives from its role as the governments. Their work is fundamentally designed
only UN agency mandated to operate at the regional and to encourage a collaborative shift across all of society
subregional levels to harness resources and bring them towards a decarbonised economy so that we can all
to bear on Africa's priorities. thrive in a healthy, resilient and zero carbon world.
4
Contents
Foreword 6
Executive summary 7
Chapter 1: Why carbon markets matter for Africa 12
Chapter 2: Current state of voluntary carbon markets 16
Chapter 3: Obstacles to growth of African carbon markets 22
Chapter 4: ACMI’s ambition — build foundations for growth to 2030 26
Chapter 5: Proposed action programmes to support the 31

development of voluntary carbon markets in Africa
Action programme 1: Development of country 31

voluntary carbon market activation plans
Action programme 2: Scale up of multiple new and existing 36

African project developers / suppliers
Action programme 3: Scale up of programmes for micro carbon 37

credits generation involving smallholder farmers
Action programme 4: Building of additional capacity and facilitation of monitoring, reporting, 40

validation and verification activities of carbon credit generating projects in Africa
Action programme 5: Promotion of quality, equity, and marketing of differentiated 41

African carbon credits to both African and global buyers across African exchanges
Action programme 6: Deployment of financing mechanisms to de-risk 42

investment and lower cost of capital for project developers
Action programme 7: Set up of an advance market commitment for African carbon credits 44
Action programme 8: Establishment of African carbon neutral commodities 46
Action programme 9: Advocacy to build demand for African carbon credits 48
Action programme 10: Piloting of new project types and methodologies 51

relevant to decarbonisation opportunities in Africa
Action programme 11: Establishment of a biodiversity / nature credit model 54
Action programme 12: Identification of long-term, innovative 56

financing models for critical geographic areas
Action programme 13: Promotion of carbon markets integrity 58
Chapter 6: Next steps for ACMI over the next 24+ months 61
Glossary 63
5
Foreword
Climate change presents the continent of Africa with multiple challenges. African countries are
particularly exposed to the physical risks arising from the global rise in temperatures. They also face
the question of how to manage and finance the economic transformation that will be required to curb
greenhouse gas emissions and halt the destruction of nature.
One important answer is the subject of this report — namely the role that voluntary carbon markets
could play in Africa’s energy transition and commercialization of its nature assets. Voluntary
carbon markets (VCMs) represent a major opportunity to accelerate economic development and
simultaneously curb greenhouse gas emissions. But seizing this opportunity will take thoughtful and
deliberate action, especially by African stakeholders.
At the COP27 summit in Egypt, we launched a new venture which aims to help shape and harness
the potential of carbon markets in Africa. The Africa Carbon Markets Initiative (ACMI) has been
formed with the support of a coalition of organisations, including those we represent, focused
on clean energy and sustainable development. Its objective is to drive a dramatic increase in the
production of African carbon credits while ensuring that carbon credit revenues are transparent,
equitable, and create good jobs. Integrity of carbon credits is central to the mission of ACMI, as
without integrity increasing demand for credits in the VCMs will pass Africa by.
Global demand in VCMs has grown strongly in the last five years, driven principally by companies
buying credits to help meet their climate pledges. Supply and demand of African carbon credits is
also increasing, but from a low base, with the result that the continent currently generates only a
small proportion of its potential. Boosting supply of credits would enable much-needed sustainable
investment in sectors ranging from renewable energy and clean cookstoves, to agriculture and
forestry.
ACMI builds on previous efforts such as the Global impact of war in Ukraine: Energy crisis published
by the UN Global Crisis Response Group on Food, Energy and Finance in August 2022, which calls
for carbon markets as a “crucial way of funnelling finance to developing countries”.
This document is intended as a practical guide for how this immense potential could be realised. It
sets out an ambition for voluntary carbon markets in Africa and proposes action to help fulfil that
ambition. We think it will make inspiring reading for anyone with an interest in ensuring that Africa
plays its full part in the quest for net-zero. We invite African leaders and carbon market participants to
give it special attention, get behind ACMI’s important mission and share feedback. We would highly
appreciate additional perspectives. Please share inputs via the public consultation survey released
with this document.
Damilola Ogunbiyi, CEO, Sustainable Energy for All; Special Representative, the
UN Secretary-General for Sustainable Energy for All; Co-Chair, UN-Energy
Joseph Nganga, Vice President Africa, Global

Energy Alliance for People and Planet
6
Executive summary
Voluntary carbon markets are growing fast and carbon dioxide removals, and more.
becoming a crucial decarbonisation tool.
ACMI aims to address challenges to growing African
The need for global efforts to curb greenhouse gas carbon markets and achieve 4 core objectives.
emissions is increasing in order to meet goals set by the
To build vibrant and robust voluntary carbon markets
Paris Agreement. Voluntary carbon markets (VCMs)
in Africa, a number of challenges must be overcome
are starting to play an important role complementing
including fragmented projects and carbon generating
direct decarbonisation efforts. Global companies
assets, a dearth of large-scale developers capable of
are increasingly including carbon credits that reflect
mustering sufficient capital and expertise, and a complex
avoidance of CO2 equivalent (CO2e) emissions or
and uncertain regulatory landscape. Meanwhile,
removal of CO2e from the atmosphere in their efforts
intermediation and demand are being held back by
to reach net zero, while activity is accelerating to
concerns about the integrity of some carbon credits
create a robust and credible market to generate
and fair distribution of value. These are just a few of the
and trade these credits. Globally, VCMs grew at
challenges inhibiting voluntary carbon market growth.
a compound annual rate of over 30 percent from
2016 to 2021¹ (based on carbon credit retirements). ACMI aims to address these challenges and build the
foundations for a thriving voluntary carbon market
ecosystem in Africa by 2030. ACMI’s ambition includes
Africa has huge potential to use VCMs to access
4 core objectives:
climate funding and drive broader development.
• Grow African carbon credits retirements ~19-fold
This creates an opportunity for Africa to develop carbon
from ~16 MtCO2e retired in 2020 to ~300 MtCO2e
projects that could channel international investment to
per annum by 2030 and up to 1.5-2.5 GtCO2e by
address environmental challenges. Furthermore, Africa
2050;
could leverage carbon markets to drive development
priorities such as expanding energy access, improving • Create or support 30 million jobs by 2030 and
health through clean cooking, and creating jobs. more than 100 million jobs by 2050 through carbon
projects development, execution, certification, and
Yet African carbon market activity, while growing,
monitoring;
currently falls well short of its potential (22 MtCO2e
retired in 2021²), with just a few countries accounting • Raise the quality and integrity of African credits to
for the bulk of carbon credits issued to date. This is the mobilize up to US$6 billion by 2030 and more than
context for the formation of the Africa Carbon Markets US$100 billion per annum by 2050;
Initiative (ACMI), with the aim of scaling supply of and
demand for African carbon credits. • Ensure equitable and transparent distribution of
carbon credit revenue, with a significant portion of
The 2030 technical potential of Africa-sourced carbon revenue going to local communities.
credits is estimated to be up to ~2,400 MtCO2e3 per
annum based on existing, nascent, and innovative
methodologies in sectors such as forestry and land use,
agriculture, blue carbon, renewable energy, household
devices, livestock, waste management, engineered
1,2
McKinsey Vivid Economics Carbon Credit Database, drawing on Verra, Gold Standard, ACR, CAR, Plan Vivo (2022)
3
VCS, GS, ACR, CAR, and Plan Vivo registries, UNFCCC, McKinsey Vivid Economics VCM model, World Bank, Ease of doing business, IEA,
S&P Global Platts, Enerdata, McKinsey Nature Analytics, CAP-A, Griscom et. al., FAO, Biodiversity Research Institute, IPBES, CGIAR, Global
Alliance for Climate Smart Agriculture
7
Exhibit: ACMI’s ambition
Develop high-value export
commodity
Mature market
Establish market By 2050
By 2040 Develop high-value export
By 2030 commodity
Market Build market foundation and scale Mature grow
Mature market, marketnascent project Establish carbon credits as one of
Establish
supply through market
demonstrated types (blue carbon, livestock, Africa’s topBy 2050 commodities via
export
methodologies (e.g., cookstoves, By 2040
technology-based removals) and a focus on nature and technology-
nature) By 2030 expand the proportion of removal based removal credits
Market Build market foundation and scale credits
Mature (vs. avoidance)
market, grow nascent project Establish carbon credits as one of
supply through demonstrated types (blue carbon, livestock, Africa’s top export commodities via
Impact Drive economic development by Expedite green development and Build a climate-resilient economy,
methodologies (e.g., cookstoves, technology-based removals) and a focus on nature and technology-
supporting energy access, scaling
nature)
climate change adaptation through
expand the proportion of removal
achieve net-zero emissions, and
based removal credits
clean energy transition, protecting innovative
credits approaches such as
(vs. avoidance) develop a carbon removal industry as
forests, improving agriculture, creating biodiversity/nature credits, improving a major GDP contributor with high-
Impact new income
Drive sources
economic for smallholders
development by livestockgreen
Expedite productivity, carbonand
development removal quality
Build jobs
a climate-resilient economy,
Per supporting energy access, scaling technology
climate change adaptation through achieve net-zero emissions, and
year 300 energy
clean MtCO2etransition,
retired1 protecting innovative approaches such as 1.5-2.5
develop a carbon removal
GtCO2e industry as
retired
forests, improving agriculture, creating biodiversity/nature credits, improving a major GDP contributor with high-
$6 income
new Bn capital mobilized2
sources for smallholders livestock productivity, carbon removal
$120-$200 Bn capital mobilized5
quality jobs
Per 30 Mn jobs created & supported3, 4 technology 110-190 Mn jobs created/supported3,4
year 300 MtCO2e retired1 1.5-2.5 GtCO2e retired
Ensure equitable and transparent distribution of carbon credit revenue, with a significant portion going to communities
$6 Bn capital mobilized2 $120-$200 Bn capital mobilized5
1. 30 carbon
Assuming Africa’s Mn retirement
jobs created
grows&
bysupported 3, 4
~19X from ~16 MtCO2e in 2020 (14x from 22MtCO2e in 2021) 110-190 Mn jobs created/supported3,4
2. Assuming carbon price of ~$20/tonne in 2030 based on S&P and World Bank weighted average price
3. Includes direct and indirect
Ensure jobs created
equitable and and jobs supported (e.g.,
transparent income increase).
distribution of carbon Calculated
creditvia a bottom-up
revenue, estimation
with for NBS job
a significant impact leveraging
portion going to the CAP-A nature-based climate
communities
change mitigation model and a top-down estimate of non-NBS jobs based on job multipliers including direct and indirect jobs; Assumed 75% nature-based projects in 2030 and 60% nature-
based projects in 2050
4. Assuming
1. Jobs include not only
Africa’s jobsretirement
carbon created but jobsby
grows supported
~19X fromvia~16
additional
MtCO2eincome;
in 2020Nature jobs
(14x from can include
22MtCO2e temporary jobs in any given year (esp. for ecosystem restoration pathways e.g.,
in 2021)
planting trees)
3.
5. Includes
Assuming direct andprice
carbon indirect jobs createdinand
of ~$80/tonne jobsbased
2050 supported (e.g.,
on Vivid income increase).
Economics Calculated
VCM model via a bottom-up
for an accelerated estimation
policy scenariofor NBS
with job impact
projected leveraging
global warmingtheofCAP-A nature-based
1.6 - 1.7 climateagainst
ºC (Triangulated
change mitigation
additional sources: model and a top-down
Bloomberg estimationestimate
of $47 of
to non-NBS
$120/tonnejobs based
and on job
TSVCM multipliers
projection of including directfor
$150 to $250 and indirect jobs; Assumed
technology-based 75%Reuters
solutions, nature-based projects
estimates of atinleast
2030$100/tonne
and 60% nature-
to reach net
based
zero byprojects in 2050
2050, Vivid Economics VCM model price projection between $28 - 143)
4. Jobs include not only jobs created but jobs supported via additional income; Nature jobs can include temporary jobs in any given year (esp. for ecosystem restoration pathways e.g.,
planting
Source: CAP-Atrees)
nature-based climate change mitigation model, TSVCM, Bloomberg, Reuters, McKinsey Vivid Economics, McKinsey MGI Economic Research, International Labor Organization
5. Assuming
(ILO), carbonAnalysis
Global Trade price of Project
~$80/tonne in 2050 based on Vivid Economics VCM model for an accelerated policy scenario with projected global warming of 1.6 - 1.7 ºC (Triangulated against
(GTAP)
additional sources: Bloomberg estimation of $47 to $120/tonne and TSVCM projection of $150 to $250 for technology-based solutions, Reuters estimates of at least $100/tonne to reach net
zero by 2050, Vivid Economics VCM model price projection between $28 - 143)
Source: CAP-A nature-based climate change mitigation model, TSVCM, Bloomberg, Reuters, McKinsey Vivid Economics, McKinsey MGI Economic Research, International Labor Organization
(ILO), Global Trade Analysis Project (GTAP)
ACMI's proposed action programmes seek to unlock potential across the VCM value chain.
To achieve these objectives, ACMI has laid out a roadmap of 13 action programmes across the VCM value chain.
Supply (generation) and standards Intermediation and financing Demand

Exhibit: 13 action programs could be deployed to address challenges across the VCM value chain in Africa
1 Development of country voluntary 5 Promotion of quality, 7 Set up of an advance market
Supply (generation)
carbon and standards
market activation plans that Intermediation and
equity, and financing
marketing of Demand
commitment for African
stimulate the carbon credit ecosystem, differentiated African carbon credits
1 Development of country
build local capacity voluntary
and clarify regulation 5 Promotion of quality,
carbon credits to both 7 Set up of an advance market
carbon market activation plans that equity,
Africanand
andmarketing of
global buyers commitment for African
2 Scale upthe
stimulate of carbon
multiple newecosystem,
credit and existing differentiated African
across African carbon credits
8 Establishment of African
African
build localproject
capacitydevelopers / suppliers
and clarify regulation carbon credits to both
exchanges/marketplaces carbon neutral commodities
by building capabilities and capacity African and global buyers
2 Scale up of multiple new and existing across African 8 Establishment of African
3 African
Scale up project developersfor
of programmes / suppliers
micro exchanges/marketplaces carbon neutral commodities
Financing:
by building
carbon capabilities
credits and capacity
generation involving 9 Advocacy to build demand
smallholder farmers 6 Deployment of financing for African carbon credits
3 Scale up of programmes for micro mechanisms to de-risk
Financing: including advocacy for carbon
carbon
Building credits generation
of additional involving
capacity and investment and lower 9 Advocacy to build demand
credit quality, integrity and
4 for African carbon credits
smallholder farmers 6 Deployment of financing
facilitation of monitoring, reporting, cost of capital for project value for buyers and advocacy
mechanisms to de-risk including advocacy for carbon
validation and verification activities of developers for access to international
4 Building of additional capacity and investment and lower credit quality, integrity and
carbon credit generating projects in Africa compliance markets
facilitation of monitoring, reporting, cost of capital for project value for buyers and advocacy
validation and verification
10 Piloting activitiestypes
of new project of and methodologies for opportunities
developers relevant to decarbonisation access to international
in Africa
carbon credit generating projects in Africa compliance markets
11 Establishment of a biodiversity / nature credit model
10 Piloting of new project types and methodologies relevant to decarbonisation opportunities in Africa
12 Identification of long-term, innovative financing models / solutions for critical geographic areas
11 Establishment of a biodiversity / nature credit model
13 Promotion of carbon markets integrity
12 Identification of long-term, innovative financing models / solutions for critical geographic areas
13 Promotion of carbon markets integrity
1
8
1
In supply, ACMI proposes to assist scaling of project advocate to build demand for African carbon credits
developers, develop national enabling ecosystems by ensuring high integrity buyers and standards
and build validation and verification capacity on the organizations understand and account for the unique
continent. value of Africa credits, and by advocating for African
credits to be more widely integrated into international
To address limited and fragmented project development, compliance markets.
there is a need to support governments in drawing up
VCM activation plans to set national targets, clarify Cross-cutting action programmes will pilot new
regulation and create incentives to boost supply. project types and methodologies and explore
Additionally new project developers must be mobilized diversified financing models for nature assets.
and technical assistance reinforced. To help smallholder
farmers benefit from VCMs, a dedicated programme Other programmes include piloting new or nascent
focused on addressing the fragmented access to carbon project types and methodologies such as fossil fuel
markets can be deployed. There is also a need to better displacement via distributed renewable energy (DRE)
tailor certification processes to local context, reduce or savannah grasslands fire management. ACMI is also
barriers to entry and build verification and validation looking to promote new ways of valuing co-benefits of
capacity on the continent. carbon projects and Africa’s natural resources (e.g.,
through nature credits), thus potentially mobilising
In intermediation, ACMI proposes to support efforts additional investment.
to create a more integrated African carbon market
and reduce costs including cost of capital. Carbon credit integrity is an over-arching and
critical area of focus for ACMI.
There is an opportunity to harmonise trading principles
across African exchanges, marketplaces and brokers to Integrity is central to the mission of ACMI. There are
drive increased value to Africa and local communities. global concerns on integrity of VCMs, with lingering
ACMI proposes to expand financing mechanisms to questions about transparency, equity, and effectiveness.
de-risk investment and reduce cost of capital for project A lack of integrity undermines the purpose of VCMs—to
development. drive climate action—and will inhibit market growth, as
buyers will only continue to purchase African credits if
To fuel demand for African credits, ACMI proposes the public trusts that the underlying emissions reductions
to leverage an advanced market commitment, are real, permanent, and additional. Furthermore, there
carbon neutral commodities and advocacy. is a need for increased transparency on the share of
revenues received by communities. Integrity of VCMs
An advance market commitment (AMC), where multiple credits is likely to matter more as the market matures
corporations commit to purchase large quantities of and standards are refined. Integrity should thus be
carbon credits from Africa, can send a strong demand prioritised at all stages of the value chain. ACMI will work
signal and incentivise project development. ACMI is with leading bodies such as the The Integrity Council
working with several buyers and project developers to set for the Voluntary Carbon Market (ICVCM) and the
up a multi-million-dollar advance market commitment to Voluntary Carbon Markets Integrity Initiative to establish
purchase African carbon credits by 2030, build a supply transparency and benefits-sharing standards for both
pool to match this demand, and facilitate transactions. sellers and buyers assuring that as VCMs scales in
Separately ACMI proposes to support efforts to increase Africa, they scale with the right programs and projects.
African exports of carbon neutral commodities, and
Exhibit: The principles of ACMI
Create a high integrity market and ensure fair revenue sharing with local communities to deliver broader socio-economic co-benefits
Transparent and fair

High integrity suppliers should: High-integrity buyers should:
intermediation should:
 Certify credits by a reputable third-party  Ensure fair revenue sharing  Work towards setting a globally accredited net-
VVB1 (and become compliant with the Integrity with local communities and asset zero target (e.g., race to zero, VCMI claims code of
Council for the Voluntary Carbon Market owners practice) and a plan to achieve the target
(ICVCM) CCP upon finalization and review of
 Provide transparency on co-  Prioritize reducing own operational (scope 1, 2)
the Assessment Framework)
benefits as well as the revenue and value chain (scope 3) emissions, in line with
 Provide accurate and transparent reporting split between market participants science-based targets
for MRV2 entities, buyers, and the public to
 Set quality and integrity  Only use carbon credits simultaneously to direct
make informed decisions on integrity
standards for credits traded emissions reduction efforts (e.g., to neutralize
 Prioritize the supply of recent vintage over and, require data disclosure from residual emissions to reach net-zero, or to compensate
older vintage to accelerate new climate impact buyers and sellers emissions during the transition to net zero)
Building on:
1. Validation/verification body – 2. Measurement, Reporting and Verification
9
Exhibit: Proposed next steps for ACMI post COP 27
Directly related action programme Indirectly supported action programme
Refine Conduct a public consultation to collect comments and refine the proposed roadmap All
roadmap accordingly
Conduct additional deep-dive analysis on selected topics (e.g., guidelines for All
smallholder farmers agroforestry, market-potential analysis for selected carbon neutral
commodities, biodiversity credit pricing and marketing)
Pursue Support interested governments in the development of VCM activation plans: 1

support to • Provide supporting material to help countries understand potential benefits of VCM
governments • Provide a blueprint for the development of national VCM plans and help countries
define their ambitions for VCM over the next years
• Connect countries with technical assistance providers and funding partners to support
implementation of national VCM activation plans
Build African Conduct active reach out and sensitization activities to mobilize developers to scale 2 3 8
carbon credit up existing or develop new projects, especially focusing on differentiated project types and
relevant aggregation mechanisms 10 11
projects
supply Support the development of flagship projects / pilots , especially on new/nascent 3 8
methodologies that are especially relevant for Africa (e.g., agroforestry projects involving
smallholder agriculture and community forestry, fossil fuel displacement via DRE, 10 11
savannah fire management, biodiversity / nature credit)
Collaborate with VVBs and other stakeholders (national/ domestic members of the 4
International Accreditation Forum, universities) to scale-up validation/verification
capacity on the continent
Advocate for governments to support project development through reinforced 2 3

technical assistance to project developers, data-sharing to build Africa data baseline,
creation of incentives for local financial institutions to fund carbon projects development, 6 8
and detail best practices to support specific project types (e.g., agroforestry, carbon-neutral 10 11
commodities, coal decommissioning – especially by expanding renewable energy capacity)
Mobilize Encourage financial institutions to develop and scale adequate instruments to fund 6
financing and and de-risk carbon credit projects development in Africa, and enable communities’
participation (e.g., smallholder farmer finance) 12
demand
Progress an advance market commitment for African carbon credits with African and 7
international corporations
Advocate for African carbon credits quality and value for buyers and for access to 9
international compliance markets
Spread understanding of the different long -term innovative financing options for 12
critical geographic areas, to help governments and communities identify what
instruments are most relevant to their situation and to the asset they are trying to protect
Collaborate Encourage funding partners and technical assistance providers including DFIs, 1 2 3
with other key philanthropies, NGOs to reinforce key supporting activities including funding early-
stage projects, scale up of blended-finance programs, reinforcing technical assistance to 6 10 11
stakeholders governments and project developers, sharing data to build an Africa data baseline
to facilitate
and support Coordinate / support established, recognised global standards and integrity 13
VCM organisations (e.g., ICVCM, VCMI SBTi) to establish transparency and benefits-sharing
development standards for both sellers and buyers for ACMI-endorsed credits
Encourage standards to adapt methodology requirements and provide more 2 3 8 10 11

standardized methods for Africa (i.e., performance benchmarks, positive lists)
Collaborate with new / existing carbon credit exchanges and marketplaces to 5

establish commitments on common standards supporting suppliers & communities
Mobilize other Call for organizations to lead and participate in proposed actions / working groups, All
action leaders and support implementation by framing roles, responsibilities and focus areas for the
coming year. These actions include:
• Set up of an accelerator/incubator to support high-potential new/nascent project types
• Set up of a technical facilitation programme focused on reducing barriers to entry for
carbon credit certification for project developers in Africa
• Coalitions to support the development of the first biodiversity/nature credit and to
support agroforestry for food security and carbon credits
22
10
Chapter
11
Chapter 1: Why carbon markets matter for Africa
As the Paris Agreement targets set goals to reduce countries, and the bulk of these come from a few large
global greenhouse gas emissions, it has become projects. It is estimated that Africa currently generates
critical for countries and organisations to focus on direct only ~2 percent of its maximum annual potential of
decarbonisation of their activities. To complement these carbon credits⁸.
efforts, voluntary carbon markets (VCMs) are also
starting to play a significant role. Global companies are “Carbon markets represent a
increasingly adding carbon credits that reflect avoidance
of CO2 equivalent (CO2e) emissions or removal of CO2e transformational economic and
from the atmosphere as part of their efforts to reach net development opportunity for Africa”
zero. In parallel, activity is accelerating to create a high
quality and high integrity market to generate and trade All of this represents a transformational economic
these credits. This is complemented by the role voluntary and development opportunity for Africa. High integrity
carbon markets can play in broader development goals carbon credit projects could not only reduce emissions
by creating jobs, expanding energy access, improving and remove CO2e from the atmosphere, driving
livelihoods, and protecting biodiversity. on-the-ground climate impact, but they also offer an
immense opportunity to drive development priorities
Globally, VCMs grew at a compound annual rate of such as expanding energy access, improving health
over 30 percent from 2016 to 2021⁴ (based on carbon through clean cooking, and creating jobs. They are also
credit retirements⁵). Last year alone saw a 50 percent gaining traction as a crucial way of funnelling finance to
increase in real demand, and the value of carbon credit developing countries⁹ and have the potential to become a
retirements is estimated to be over US$700 million⁶. meaningful commodity in their own right. The emergence
of carbon credits as a new product allows for the
Demand for African-origin carbon credits has been
monetization of Africa’s large natural capital endowment,
growing too — at a compound annual rate of 36 percent
while enhancing it. This large unrealised potential and the
between 2016 and 2021. Yet this growth is from a low
opportunity for diverse development impact is the reason
base, and last year the retirement value of African carbon
credits was only $123 million⁷, well below its potential why a group of African leaders, CEOs, carbon market
level. Out of total credits issued worldwide between experts and broader climate champions have come
2016 and 2021, only about 11 percent stem from African together to launch the Africa Carbon Markets Initiative.
Exhibit: Voluntary carbon markets could provide significant development benefits to Africa
Forestry and land use: Africa is one of the most All: Africa’s working-age population is
biodiverse regions on Earth, hosting a quarter6 of expected to grow by 450 million people by 20357,
global biodiversity that could benefit from and could benefit from new job opportunities
increased protection and community across the voluntary carbon market ecosystem
awareness
Nature Workers
Agriculture & Soil sequestration: Africa’s Livestock: Africa’s pastoralists, covering over
farmers, including 33 million smallholder farms5, 40% of the continent’s land area3, could benefit
could receive direct payments and improved from direct payments for their role in managing
soil and shade cover from planting trees and carbon sinks4
improving soil management practices
Farmers Pastoralists
Renewable energy: Approximately half of Africa’s Household Devices: ~200 million people2 in
population lives in cities1 and could benefit from Africa using charcoal for cooking fuel could see
increased energy access and improved air significant health benefits from switching to
quality from decommissioning of diesel and other highly efficient coal stoves, natural gasifier stoves,
fossil fuel solutions liquid petroleum gas stoves and renewables
City dwellers Households stoves such as solar
1. World Bank (2022)
2. Rose, Julian; Bensch, Gunther; Munyehirwe, Anicet; Peters, Jörg. "The forgotten coal: Charcoal demand in Sub-Saharan Africa"
3. African Union 2010 estimates
4. However, because of insecure land rights, pastoralists risk having their rights violated by private sector and government carbon credit developers
5. IFAD, Invest more in smallholder agriculture
6. UN report "The state of biodiversity in Africa“
7. World Bank publication "Creating Jobs for Africa’s Growing Population"
4
5
Carbon credit retirement happens when the credit is purchased and removed from the market. In this instance we reference retirements, as they
represent the closest proxy to carbon credit purchases
6,7
McKinsey Vivid Economics Carbon Credit Database, drawing on Verra, Gold Standard, ACR, CAR, Plan Vivo; Ecosystem marketplace. (2022)
8
9
Global impact of war in Ukraine: Energy crisis, UN Global Crisis Response Group on Food, Energy and Finance, August 2022; UN Brief No. 3
12
What is the Africa Carbon Markets Initiative integrity African carbon credits, to supplement direct
(ACMI)? decarbonisation and deliver real climate action while
creating millions of jobs and supporting energy access,
The Africa Carbon Markets Initiative (ACMI) has been biodiversity, livelihoods and more. For this purpose,
launched by a coalition of organisations focused on high ACMI is developing a roadmap of action programs
integrity climate impact, clean energy, and sustainable that could be implemented over the coming years,
development, to accelerate the growth of Africa’s covering every part of the VCM ecosystem including
voluntary carbon markets. The initiative was launched on the ground project developers and communities,
by the Global Energy Alliance for People and Planet buyers, intermediaries, financiers, technical assistance
(GEAPP), Sustainable Energy for All (SEforALL) and providers, validation/verification bodies, registry
the United Nations Economic Commission for Africa agencies and governments.
(UNECA) with support from the UN Climate Change
High-Level Champions. It is led by a 13-person steering Integrity is central to the mission of ACMI. Voluntary
committee of influential African leaders and carbon carbon credit integrity will only matter more as the market
market experts. matures and standards are refined and should thus be
prioritised at all stages of the value chain. ACMI will work
“ACMI aims to support a significant rise with leading bodies such as the The Integrity Council
for the Voluntary Carbon Market (ICVCM) and the
in supply and demand of quality carbon Voluntary Carbon Markets Integrity Initiative to establish
credits” transparency and benefits-sharing standards for both
sellers and buyers ensuring that as VCMs scale in Africa,
ACMI aims to support African governments, they scale with projects that drive meaningful climate and
communities, project developers and other stakeholders development impact.
to significantly scale the supply and demand of high
Exhibit: ACMI is led by a 13-persons steering committee of influential leaders with deep carbon markets
experience
African
Yemi Osinbajo Vice President, Federal Republic of Nigeria
governments
Global Iván Duque
expertise Former President, Government of Colombia
Márquez
Annette Nazareth Chair, Integrity Council for the Voluntary Carbon Market
Samuel
Deputy Director, Bill & Melinda Gates Foundation
Thevasagayam
Gillian Caldwell Chief Climate Officer and Deputy Assistant Administrator, USAID
Bogolo Special Advisor, Africa Director, UN Climate Change High -Level

Kenewendo Champions
Verification /
registry agencies David Antonioli CEO, Verra
Suppliers,
financiers, Sitoyo Lopokoiyit Managing Director, M-PESA Africa
intermediaries
and buyers Ariel Perez Managing Partner, Vertree
Riham ElGizy Director, MENA Voluntary Carbon Exchange
M. Sanjayan CEO, Conservation International
Sponsor Damilola CEO, Sustainable Energy for All; Special Representative of the UN
partners Ogunbiyi Secretary-General for Sustainable Energy for All; Co-Chair, UN-Energy
Vice President Africa, Global Energy Alliance for People and Planet
Joseph Nganga
(GEAPP)
13
Chapter
14
Chapter 2: Current state of voluntary carbon markets
Definition of voluntary carbon markets (VCMs)
Exhibit: Carbon markets are only one type of climate financing source among others
Equity
Debt
Grants
Guarantees
Carbon markets
Compliance Voluntary
Carbon credits (sometimes called offsets) are certificates which voluntary carbon credits can be incorporated.
representing one tonne of CO2e that has either been For example, South Korea, California, Quebec, and
prevented from being emitted or removed from the China allow for a certain portion of voluntary carbon
atmosphere. Projects need to be independently credits to be used to meet compliance obligations
validated and must meet a set of standards to verify (depending on the country between 4-10 percent of
their climate impact (e.g., demonstrate the impact is company’s emissions). In Singapore 5 percent of CO2
permanent, demonstrate the impact would not have tax obligations can be offset using voluntary carbon
happened without income from the carbon credit). The credits. Finally, the aviation compliance scheme CORSIA
certificates generated can be traded and ultimately sold mandates the offsetting of growth above 2019/2020
to individuals or corporates who wish to compensate for baselines using voluntary carbon credits10.
their emissions by “retiring” carbon credits and make
claims towards their climate targets. In voluntary markets, a project developer sets up a
project that avoids certain emissions (e.g., landfill gas
There are two types of carbon markets: compliance treatment and management) or removes CO2e from the
markets and voluntary markets. In compliance markets, atmosphere (e.g., afforestation or direct air capture).
companies and governments must account for their Projects are validated by an independent validation/
greenhouse gas emissions as required by regulation. verification body to meet a set of requirements provided
There are different types of compliance markets. For by a standard setter. Once certified, carbon credits are
example, in a ‘“cap-and-trade system” regulators set a issued to the project, in a quantity that is equivalent to
fixed upper limit on total emissions (‘cap’) and auction the mitigation impact achieved. The developer then
or distribute allowances. Typically one allowance grants sells the carbon credits to companies, governments, or
the right to emit one tonne of CO2e. Under a “baseline- individuals. These carbon credits can be traded multiple
and-credit system” each individual entity is required times on secondary markets via intermediaries. A credit
to reduce emissions at a certain rate. Companies that exists until it is retired. Retirement occurs when an
reduce emissions faster than they are obliged to can earn organisation uses the carbon credit towards its climate
‘credits’ which they can sell to entities that do not meet target(s), essentially ‘claiming’ the climate impact towards
their required obligations. Regulators can also set a tax, its goals.
a fixed price, on each tonne of CO2e emitted. Across
all three systems, there are examples of instances in
10
The World Bank State and Trends of Carbon Pricing, 2022
15
Exhibit: Illustration of the lifecycle of a carbon credit in distributed renewable energy project.
Based on Gold Standard-certified project in LDC
Project design Validation and Development and Credit sales and Maintenance
certification verification retirement
Monitoring of the
Project enters a phase of
project continues
revenue generation: credit
Credits are issued to to ensure there is
can be sold through a
Project is reviewed, the developer on an no leakage or
broker or an exchange, or
classified, and annual basis by the reversal
directly to end-buyer (e.g.,
Project validated under a private standard, Local personnel
corporate, individual)
developer plans private standard1 after emissions are trained to
avoidance is verified Credit can be sold to
to install battery- Project is certified maintain the solar
to have happened intermediaries or investors
charged solar based on home systems
(e.g., only after solar multiple times over several
home systems to avoidance offsets and ensure
home system years before being retired
provide basic from the permanence
lighting service to substitution of fossil is active and in use) Once sold to end buyer,
households fuel-based lamps credit is retired and
removed from circulation
Supply (generation) and standards Intermediation Demand

1. For renewable energy projects, often only countries on the UN's list for least developed countries can qualify for
carbon credit generation.
Note: Based on methodology AM0019 Renewable energy project activities replacing part of the electricity production of one single
fossil-fuel-fired power plant that stands alone or supplies electricity to a grid, excluding biomass projects
ACMI is initially focused on VCMs since most African- 203011, driven by an increasing number of corporate net
origin carbon credits are sold on these markets (South zero commitments and increasing availability of point-
Africa being the sole country on the continent to have of-sale offsetting, such as carbon-neutral products,
a compliance market) and since VCMs enable cross- which bundle a physical product with carbon credits to
border financing transfers from Global North to Global offset the physical product’s footprint (especially residual
South and support projects that help Africa achieve its emissions). In the long term, demand will be driven by the
development priorities (e.g., expanding energy access). need for carbon removals to address residual emissions
While initially focused on VCMs, many elements of the in hard-to-abate sectors. VCMs are expanding beyond
ACMI roadmap will touch on compliance markets (e.g., in traditional demand centres in Europe and North America,
action programmes 1 and 9). and new markets are developing in Asia, the Middle East,
and Latin America.
By using the term voluntary carbon markets (VCMs)
throughout this document, we refer to the generation and “Demand for voluntary carbon markets
retirement of carbon credits through voluntary carbon
markets. is expected to grow 15x by 2030”
State of voluntary carbon markets (VCMs) globally Shift of project types: Voluntary carbon markets are
seeing an emergence of new project types and shifting
Carbon credits can be generated from a wide range buyer priorities for some project types over others. Newer
of project types, encompassing forestry and land use, technology-based removal projects are complementing
agriculture, blue carbon, renewable energy, household traditional nature-based methods. For example, Direct
devices, transport, livestock, waste management, Air Carbon Capture and Storage (DACCS) uses chemical
industrial gases, and engineered carbon dioxide removal. processes to capture and separate carbon dioxide
directly from the air.
Globally, voluntary carbon markets are being shaped by
4 key trends.
Volume growth: Demand for voluntary carbon markets

is increasing steadily and expected to grow 15x by
11
Taskforce on Scaling Voluntary Carbon Markets, Final Report, January 2021.
5
16
Exhibit: There are 10 significant types of carbon credit projects
Avoidance offsets Removal offsets

Examples of new or nascent opportunities for Africa
Nature-based solutions
Forestry and land Agriculture and soil Renewable energy

use sequestration Blue carbon (incl. energy efficiency) Household devices
Afforestation / Cover crops Saltmarsh Biomass Clean cookstoves

Reforestation Fertilizer / N2O Mangrove Geothermal / Hydro / Solar home
Revegetation(ARR) Grassland and Seagrass Solar / Wind systems
Improved Forest sustainable land Kelp forests Energy efficiency
Management (IFM) management Bottom-trawled Waste heat recovery
Conservation No- and low-till sediments Fossil fuel
(REDD+, other) agriculture Seaweed farms decommissioning
Peatlands Agroforestry Distributed renewable
Savannah fire energy
management
Industry gases (incl. Engineered

industrial Carbon Dioxide
Transport Livestock Waste management manufacturing) Removal (CDR)
EV charging Rotational grazing Waste N20 from nitric acid Direct Air
Synthetic fuels Food additives management and adipic acid plants Capture (DAC)
Landfill gas (e.g., Ozone-depleting Bio-Energy with
landfill methane) substances CCS (BECCS)
Wastewater Carbon capture and Biochar
treatment storage
Coal mine methane
In addition to the emergence of newer project types, 2025 as today. Additionally, some specific credit types
there are growing trends amongst carbon credit buyers are expected to see significant price increases as buyers
that favour removal credits (e.g., reforestation, Direct prioritise high integrity removal credits. For example,
Air Capture) over reduction or avoidance credits the emerging category of engineered carbon dioxide
(e.g., renewables, REDD+). This is likely driven by removal credits – through Direct Air Capture and Storage
confusion around the role avoidance credits can play (DACS), Bio-Energy with Carbon Capture and Storage,
in a company’s decarbonisation journey and a need for or BioChar – are already selling at an average price of
guidance clarification from target setting organisations. ~$350-400 per tonne13 .
Price growth: Carbon credit pricing varies substantially Increased government activity: A growing number
by project type, with nature-based projects currently of countries are exploring opportunities to engage with
fetching higher prices than other traditional project types. voluntary carbon markets, an area in which many had
The average global price per credit across all projects little to no previous role, whether by issuing jurisdictional
types as of 2021 was reported to be $4.08 by Ecosystem credits or by executing bilateral country to country credit
Marketplace12 . Prices are expected to rise. Futures sales.
prices quoted in the Chicago Mercantile Exchange, show
nature-based credits to be worth three times as much in
12
Ecosystem marketplace, State of the Voluntary Carbon Markets 2021 Installment 1. Based on data for January to August 2021
13
Average price per tonne for 30 days prior to October 17, 2022.
6
17
Exhibit: Prices vary substantially by project type
Higher end of price range Lower end of price range
Average global price (2021)

Project type $ / tCO2e
Agriculture and soil sequestration 9 15
Forestry and land use 6 18
Household devices 5 9
Waste management 4 8
Industry gases
(including industrial manufacturing) 3
Renewable energy
2 8
(incl. energy efficiency)
Transportation 1
Blue Carbon No data available
Livestock No data available
Engineered carbon dioxide removal No data available
Source: Price ranges come from Ecosystem Marketplace’s and S&P Global Platts, Nori.com, and Indigoag.com
State of voluntary carbon markets in Africa Mechanism (CDM), which is being replaced with the
Paris Agreement’s Article 6.4 mechanism.
African voluntary carbon markets are growing, and at
a slightly faster pace than global markets (36 percent Voluntary carbon markets in Africa are fragmented with
CAGR14 from 2016 to 2021 vs. 31 percent for global a significant number of global players across the value
markets)15. Despite this, the opportunity to deliver chain. Project developers are few, generally small scale
climate finance through carbon markets remains under- and show limited diversification. About a hundred project
realised. Just 5 countries account for ~65 percent of developers have been active on the continent over
credits issued over the past 5 years (Kenya, Zimbabwe, the past 10 years. The market is relatively fragmented
DRC, Ethiopia, Uganda). There is also something of a (average carbon credit issuance for project developers
mismatch between project activity in different countries not in the top 15 was only ~140 ktCO2e in 2021). Project
and their carbon credit potential: many of the countries developers have also been focusing on similar types
with the highest potential have seen low levels of of projects, with ~97 percent of African carbon credits
activity. Of the highest-potential countries, which include issued in agriculture, forestry and land use, and energy
Madagascar, Angola, Nigeria, Sudan, and Tanzania, only (out of the total number of credits issued over 2016-
the Democratic Republic of the Congo has announced a 2022), using ~65 different methodologies15.
significant carbon credit deal.
There are almost no local validation/verification bodies
(VVBs) and almost all credits from Africa are certified
“The opportunity to deliver finance
by global bodies (~80+ percent from Verra, ~20 percent
to Africa through carbon markets is from Gold Standard, <1 percent from other players15).
7
under-realised” Similarly, there have been essentially no active African-

based exchanges or marketplaces to date, although
Data and statistics in this report focus on projects multiple initiatives are working on developing such
producing voluntary carbon credits via 3rd party platforms, including a collaboration between AirCarbon
standards organisations.The report thus excludes carbon and the Nairobi International Financial Center16 , an effort
credits produced under the UN’s Clean Development initiated by the Johannesburg Stock Exchange17 , and an
14
Compound Annual Growth Rate
15
McKinsey Vivid Economics Carbon Credit Database, drawing on Verra, Gold Standard, ACR, CAR, Plan Vivo, 2022
16
Businesswire, “Aircarbon Exchange Signs Collaboration Agreement with the Nairobi International Financial Centre and the Nairobi Securities
Exchange”, 2022.
17
MyBroadband, Prior, B., “JSE considers carbon credits trading”, 2022
18
announced effort by the Egyptian Government and the recognising their potential. The space is occupied by
Egyptian Stock Exchange18 . national, regional, continental and global initiatives with
some efforts focused on specific sectors, others focused
With regards to demand, most demand for African credits on broader carbon markets and a few focused on overall
is driven by major international companies. climate solutions of which carbon markets is just one.
Momentum is building around Africa’s voluntary carbon
markets, and African governments are increasingly
Exhibit: Summary of main market players along the carbon credit value chain in Africa
Supply (Generation) and standards Intermediation & financing Demand
A Top 15 project developers B Standards C Intermediaries D Top buyers of African credits
African-origin offsets by developer African-origin credits African-origin offsets retired by

MtCO2e all years (2010 – 2022)1 by registry, 2021 Exchanges & marketplaces buyer, KtCO2e 2021
Wildlife Works Carbon LLC 45

81% 1,164
Carbon Green Investments (Guernsey) 21
Oromia Forest and Wildlife Enterprise 9 1,109
19%
Impact Carbon 7 900
Brokers
CO2balance UK ltd 6
785
Relief International 5 <1%
Vestergaard Frandsen Group SA 4 699
Africa carbon exchange initiatives
Clean Air Action Corporation 4 375
myclimate Foundation 4 NIFC and AirCarbon
Exchange initiative in Kenya 200
CI-ENERGIES 3
Northern Rangelands Trust 3 Egyptian Environment Ministry 200
and the Egyptian Exchange
Toyola Energy Services Limited 2 initiative 192
Chyulu Hills Conservation Trust 2 South Africa government and 145
The Paradigm Project 2 Johannesburg Stock
BioCarbon Partners 2 Exchange
73% of African credits issued over 2010-22 26% of African credits retired in 2021
E Funders, both public and private

1. First issuance year of African based projects was 2010
Source: Data extracted from VCS, GS, CAR, ACR and Plan Vivo registries; Analysis of news articles and company websites.
Exhibit: Initiatives related to carbon markets and climate change (non-exhaustive)

National Regional Continental Global
Article 6.4
Supervisory Body
Clean
Development
Mechanism
18
Enterprise: The State of the Nation, “Local carbon credit exchange in the works”, 2022
19
Chapter
20
Chapter 3: Obstacles to growth of African
carbon markets
Several challenges still need to be overcome for also have significant physical requirements (e.g.,
Africa to fulfil its carbon market potential. These seedlings for a reforestation project) that can require
challenges spread across each stage of the value chain. upfront investment.
Supply c. Besides capital intensity, new projects may

struggle to develop a strong business case. For
Several issues limit carbon credit supply on the continent. example, local communities may be faced with high
opportunity costs when leveraging land resources
a. Carbon credit project developers operating in Africa
(e.g., a community owning forest land may face an
are few, relatively small scale and show limited
opportunity cost between maintaining the forest and
diversification. About 100 project developers have
replacing it with farmland).
been active on the continent over the past 10 years,
of which 15 have issued ~70 percent of total credits; d. African carbon credit project developers also face
over 60 percent of project developers have operated regulatory challenges. There is often a complex
just a single project and over 70 percent have been and uncertain regulatory landscape for carbon
active in only one country19 . credit projects. Regulation can vary from country
to country when it comes to critical topics such as
b. Starting a carbon credit project often requires
land rights and ownership of credits. For example, in
significant up-front capital. Project developers
some countries, all carbon rights are owned by the
indicate significant expense is involved in setting up
state, and private developers need permission to sell
a project and moving it to the point of validation and
credits before reporting transactions. Similarly, many
verification, due in part to the complexity of topic
African landowners do not have formal titles to their
and data, tools and time required. Many projects
land and/or rely on informal land tenure customs,
Exhibit: Key challenges must be addressed to scale voluntary carbon markets in Africa
Supply (Generation) and standards Intermediation and financing Demand
Project development: l High reliance on relationships, r Concerns on the integrity of

a Limited number of project developers operating in Africa brokers and traders to bring certain credit types (e.g., emissions
and low capacity of existing developers (gaps in carbon supply to market reduction/ avoidance related to fossil
market expertise, implementation capabilities, local expertise fuel transition)
and core business capabilities) m High intermediation costs,
reducing revenue share for carbon s Shifting and confusing demand
b High capital intensity for project development trends that could impact common
credits suppliers
c Low economic viability for many projects due to insufficient African carbon credit types (e.g.,
confusion around the role of
carbon credit revenues or high opportunity costs n No standardized processes for avoidance credit types for high
rating/assessing important integrity offsets)
d Complex / unfavourable regulatory landscape (e.g., related
carbon credit co-benefits (e.g.,
to land rights/ concessions, credits ownership, Article 6, split
community impact)
between nationally determined vs. voluntary contributions) t Pricing may not accurately reflect
e Fragmented ownership of / access to credit generating assets the value of Africa carbon credits
o High reliance on continuous and their co-benefits (e.g., energy
cash flow for small project access, biodiversity)
f High degree of local relationships and/or community buy-
developers (small developers
in required to ensure project success
cannot wait for higher prices or
delay credit sales) u Limited local demand (except for
g Distrust of project-based REDD+ opportunities vs.
South Africa) across the credit
jurisdictional projects
ecosystem (e.g., compliance
Financing: markets, local voluntary purchasing)
h Lower ease of doing business in some areas due to factors
such as lack of infrastructure p Limited mechanisms to de-risk
and enable investment in
Validation / certification:
project development and supply
i Methodologies not always relevant for Africa (e.g., limited (e.g., futures contracts, project
methodologies related to pastureland or diesel replacement, supply-chain financing, insurance)
technology use not designed for Africa)
j High cost and long lead times for certification, validation and q High cost of capital for financing
verification
k Insufficient local validation/verification capacity including

lack of African-based validation/verification bodies (VVBs) and
local expertise
Source: Interviews and surveys with experts Significant challenges
19
21
making it difficult to prove that a project could protect many methodologies. Similarly, Africa has immense
carbon sinks for the 25+ years often required by potential to decommission fossil fuels and transition
standards, as well as the right to sell the resulting to clean energy, another opportunity not effectively
carbon credits. captured by existing methodologies.
e. In Africa, assets that have the potential to generate j. Validation and verification of carbon credit projects
carbon credits are often fragmented. For example, can have a high cost and require long lead times.
approximately 80 percent of the agricultural land On average, projects in Africa had an average of 2-7
is comprised of smallholder farms of ~2 hectares years (varied by project type)22 from start date to first
in size20 . This makes it incredibly difficult to deploy credit issuance, resulting in a significant period of
large, at-scale carbon projects. This is not only the initial investment prior to receiving returns. Once up
case for land but also for other credit generating and running, projects must continually monitor and
assets such as livestock. validate CO2e emissions reductions or removals.
This can be costly as it may rely on expensive
f. On top of this, many projects require community buy- technology or techniques that are hard to deploy in an
in or a grassroots approach. For example, deploying African context.
a cookstoves project requires working closely with
local communities to educate community members k. Verifying a carbon credit project requires
about the stove product, distribute and sell stoves. collaborating with a third-party validation/verification
Similarly, project developers have noted the need body (VVB) to adhere to a methodology set out by a
to ensure on-the-ground teams speak the local standards organization. Africa lacks capacity and
language which can vary within a single country. capabilities when it comes to VVBs. Very few of the
existing players certified by standards such as Gold
g. Globally, there are signs of increasing distrust Standard or Verra have offices in Africa. Additionally,
towards project-based REDD+ efforts vs. project developers indicate a lack of technical
jurisdictional REDD+ efforts (for example the LEAF expertise required to verify projects in Africa.
Coalition that uses the independent TREES standard
from ART, or programs under Verra’s Jurisdictional
and Nested REDD+ or JNR). Global critics indicate
that jurisdictional projects may be less at risk of Intermediation and financing:
leakage (e.g., given government controls land use) Challenges are not limited to carbon credit supply.
and easier to do at scale. This distrust of project-
based approaches could potentially impact Africa’s l. There is a high reliance on intermediaries who own
opportunity to protect its full set of natural assets. At the relationships to bring African credits to the
the same time though, ACMI recognizes the criticality market, and therefore often extract a significant
of ensuring projects are high integrity whether portion of the value. Without the capabilities,
jurisdictional or project based. time, and contacts it can be difficult for individual
project developers to identify buyers without the
h. African projects also face general challenges due to support of an intermediary. Project developers
a lower ease of doing business. Approximately 85 say, “relationships are key” to finding buyers and
percent of African countries score in the lower half of “intermediaries have access to top sustainability
the Ease of Doing Business Index 202021 . executives, even if the mark-up is frustrating.”
i. In the design of carbon credit projects, many of the m. Intermediaries can charge significant fees, at times
methodologies laid out by standards organizations taking up to 70 percent of the value of a credit. These
do not fit the African context. Existing methodologies fees can vary significantly from less than 5 percent
for proven project types may not be well adapted on the lower end (often exchanges) to 10-70 percent
to measuring and monitoring in Africa where on the higher end (often marketplaces, brokers)23.
assets can be more fragmented, infrastructure Because most of the active intermediaries in Africa
can be a challenge and technology may not be as to date are international players, these high fees
accessible. On top of this, Africa has decarbonization and lack of transparency reduce financing coming
opportunities and carbon sinks that are not currently to Africa and, more importantly, reduce revenues to
well captured by existing methodologies. For local communities. Moreover, project developers
example, many of Africa’s jurisdictions are high often indicate difficulty understanding and breaking
forest low deforestation (HFLD) which may not meet down required fees due to a lack of transparency with
20
FAO
21
World Bank
22
McKinsey Vivid Economics Carbon Credit Database, drawing on Verra, Gold Standard, ACR, CAR, Plan Vivo, 2022
23
Based on interviews with carbon market experts (October 2022)
22
many intermediaries. accounted for and addressed to ensure that African
carbon markets develop with high integrity.
n. There is also a lack of standardized processes for
assessing carbon credits to account for important s. There is some misunderstanding and confusion
co-benefits. Buyers indicate that “you have to do a amongst global buyers regarding the role of
lot of due diligence on projects to understand social avoidance credits, which are particularly relevant
impact.” This can hinder African carbon credits for African projects. Buyers may interpret demand
where co-benefits such as energy access and focused initiatives and guidance (e.g., Science
improved livelihoods are a key value driver. While a Based Targets initiative, Oxford Principles for Net-
few international rating agencies such as Sylvera Zero Aligned Carbon Offsetting) to indicate that
or BeZero do assess carbon credits beyond the only removal credits are valid and of high integrity
criteria set by standard organizations, these can add for offsetting. Currently, ~70 percent of Africa’s
an additional layer onto intermediation for project nature-based potential is avoidance based25 and
developers and there is no global consensus on the all household devices and energy projects are
validity of these co-benefit ratings. avoidance based. In total, ~80 percent of the 2,400
MtCO2e technical potential for Africa in 2030 is
o. When it comes to financing, there are limited active estimated to be avoidance-based. These trends
mechanisms in Africa to help de-risk investment could inhibit Africa’s ability to capture financing
into project development and supply (e.g., futures for these types of projects or reduce the financing
contracts, insurance). There are multiple risks received.
associated with project development including
country, counter party, project, physical, and market t. Additionally, African credits’ pricing may not always
risks. Many of these risks can be heightened for reflect credits’ value and thus lack transparency
project development in Africa such as country risk for buyers, driven in part by inability to effectively
or project risk (e.g., lack of required infrastructure). price the co-benefits. While African credits were
“Most of the international banks wouldn't even have on average priced above global average in 2021
any country risk or credit risk rating for some African ($5.52 vs. $4.08),26 this value may not fully reflect
countries,” one project developer noted. the immense co-benefits African credits can offer.
Carbon credit projects can drive impact in energy
p. On top of this, most project developers in Africa do access, improving livelihoods, supporting health and
not have the scale to hold credits / delay their sales wellness, and creating jobs.
for higher prices, as they often rely on a continuous
cash flow. Comparatively, large intermediaries can u. Finally, Africa relies almost entirely on international
better flex with the market, again earning mark-ups demand. There are no local demand markets on
that reduce on the ground community earnings. the continent, except in South Africa. While a few
Africa-based companies purchase carbon credits
q. Finally, project developers often face a high cost of (e.g., Nedbank), most of the largest buyers are
capital for the financing they do receive, given the international organisations.
multitude of risks (real and perceived by financers).

Demand:
Finally, demand is also being held back by several

growing trends.
r. There are significant global concerns over the

integrity of carbon credits (e.g., greenwashing) –
whether from Africa or from other regions. Certain
credit types are criticised for being low integrity,
either because the underlying emissions reductions
are difficult to confirm, likely to be temporary, or
would have happened regardless. “The biggest
problem with carbon offsetting is that it doesn’t really
work,” declared one Greenpeace UK article24. There
are broader concerns that the existence of voluntary
carbon markets acts as a license for companies to
continue emitting carbon. These concerns must be
24
Al Ghussain, Alia. “The biggest problem with carbon offsetting is that it doesn’t really work,” May 2020; Greenpeace Organization
25
McKinsey Nature Analytics (2022); Griscom et al. Nature Climate Solutions, January 2020
26
Ecosystem marketplace, State of the Voluntary Carbon Markets 2021 Installment 1
23
Chapter
24
Chapter 4: ACMI’s ambition — build
foundations for growth to 2030
Opportunities to generate carbon credits in Africa
The technical potential of Africa-sourced carbon credits Some existing methodologies already have a clear
is substantial — estimated at up to ~2,400 MtCO2e path to project certification or are already active on
in 2030, based on existing, nascent, and innovative the continent. They include nature-based solutions
methodologies which could be worth up to $50 billion27 such as forestry and land use, and agriculture and soil
or more, if all credits were sold. Capturing just a fraction sequestration projects, projects involving household
of this total potential could channel billions of climate devices such as cookstoves, renewable energy projects,
financing into Africa, supporting jobs and livelihoods waste management projects and some livestock projects
while improving energy access, biodiversity, and health. (although only nature-based solutions and household
devices projects have been meaningfully implemented).
“Capturing just a fraction of the Out of the maximum technical potential of up to 2,400
MtCO2e in 2030, ~2,000 MtCO2e (i.e., 85 percent of
potential could channel billions of the total) could be generated leveraging these existing
climate financing into Africa” methodologies.
Exhibit: Leveraging existing methodologies, there is potential to generate close to 2,000 MtCO2e
which could be worth up to $40+ billion per annum by 2030 INITIAL PERSPECTIVE
Nature-based solutions2
Industry
Agriculture gases (incl.
Forestry and soil Household Waste industrial Trans-
Project type1 and land use2 sequestration2 devices3 Renewable energy4 management5 Livestock manufacturing) port
Description Implementation of Implementation of Deployment of clean Deployment of solar Deployment of landfill Improved manure
better forestry practices better agricultural cookstoves to renewable energy solutions that better management
including natural forest practices including replace non-forest solutions to supply manage and utilize
management, trees in cover crops, product fuels (e.g., electricity in least landfill gas
cropland, avoided extending legume Kerosene) & a developed countries
deforestation plantations portion of forest
product fuels (e.g.,
charcoal)
Relevant DRC Sudan Nigeria Sudan Nigeria Ethiopia

countries
Madagascar South Africa DRC Angola Egypt Chad
Congo Chad Tanzania Tanzania DRC Sudan
Angola Nigeria Kenya Guinea Tanzania Tanzania

Estimates to be
Zambia Zambia Mozambique Benin Kenya Kenya determined
Nigeria Angola Madagascar Mozambique South Africa Nigeria
Cameroon Algeria Ghana Zambia Sudan Niger
CAR Mozambique Cameroon Ethiopia Algeria Uganda
Mozambique Cameroon Sudan DRC Angola South Sudan
Sudan Tanzania Angola Chad Mozambique Mali
Technical potential of 1,160 160 200 360 55 40

methodologies
(MtCO2e/y) ~2,000
Total opportunity6 ($
Bn/y) ~30-50
1.Considers existing methodologies with highest potential of carbon credit generation and medium to high feasibility
2.Africa’s total NBS potential of ~1.4 Gt including blue carbon (under nascent methodology), which is based off of the Griscom et.al estimation of ~1.5 Gt and adjusted to better capture
the 2030 specific maximum for Africa; Significant share of nature opportunity linked to energy provision. High and Medium economic feasibility only; Countries with the most credits
issued in 2020 (e.g., Kenya) are not those with the largest technical potential
3.Cookstove sized based on CO2 emissions avoidance of 2.2 tCO2/ year from deploying cookstoves to replace (1) Kerosene, Coal/Lignite, and animal waste for household cooking
fuel, and (2) 1/3 of households currently using forest-related fuels like charcoal (to avoid overlap with forest and land use potential, where the estimation assumes 2/3 reduction in
deforestation)
4.Estimates the amount of solar energy required to reach 10% of energy capacity by 2030; Excludes non-LDC and countries with RE technology penetration greater than 3.5% of the
total grid installed capacity
5.Sized based on the potential of landfill-related carbon credits generation (i.e Turkey at 33 tCO2e credits /'000 inhabitants per year) scaled across Africa according to population
6.Assumes an average carbon credit price in 2030 of $15-25 per tonne
Sources: VCS, GS, CAR, ACR and Plan Vivo registries, UNFCCC, McKinsey Vivid Economics VCM model, World Bank, IEA, S&P Global Platts, Enerdata, Ease of doing business,
McKinsey Nature Analytics, CAP-A, Griscom et. al.
27
McKinsey Vivid Economics Carbon Credit Database, drawing on Verra, Gold Standard, ACR, CAR, Plan Vivo., UNFCCC, World Bank, IEA, S&P
Global Platts, Enerdata, McKinsey Nature Analytics, CAP-A, Griscom et al. Nature Climate Solutions, January 2020, FAO, Biodiversity Research
Institute, Biodiversity Research Institute, IPBES, CGIAR, Global Alliance for Climate Smart Agriculture
25
Africa can also explore developing carbon projects management. It also includes project types that exist
based on new or nascent methodologies and innovative globally but have not yet been unlocked in Africa such as
products. New or nascent methodologies include engineered carbon dioxide removals, blue carbon, and
projects where there is no clear path to verification additional livestock opportunities. Africa has a maximum
and validation such as diesel decommissioning and technical potential to produce ~400 MtCO2e annually in
nature project types such as savannah grasslands fire 2030 from new and nascent methodologies.
Exhibit: Implementing additional, new or nascent methodologies could create an additional ~400 MtCO2e
across the continent worth ~$7+ billion per annum by 2030
INITIAL PERSPECTIVE
Renewable energy (incl. Agriculture & soil

energy efficiency) sequestration Blue carbon Livestock Engineered removals
Methodology Coal power Diesel Savannah Mangrove and Improvement in Multiple engineering
plant generator grasslands seagrass (doesn’t breeding, feeding, and removal technologies
decommissi retirements3 include saltmarsh, productivity gains incl. bioenergy with
oning2 kelp forests, carbon capture and
bottom-trawled storage (BECCS), direct
sediments, air capture with carbon
seaweed farms) storage (DACCS)
Description Acceleration Retirement of Improved fire Accelerate carbon Assuming 15% livestock Assuming ~100 Mt
of coal plant diesel-based management that is stored GHG emission engineered removal
decommissio gensets practices to help naturally by marine reduction from improved globally by 2030 and
-ning restore degraded and coastal breeding, feeding, & between 10-30%
savannas ecosystems productivity gains4 coming from Africa
Relevant countries South Nigeria Zambia Guinea Bissau Ethiopia Egypt

Africa
Ghana Tanzania Guinea Chad South Africa
Morocco
South Africa Mozambique Nigeria Sudan
Technical potential of 20 50 80 75 120 20

new methodologies
(MtCO2e/y) ~400
Total opportunity1
($Bn/y)
~5-9
1. Assumes an average price of $15 - $25 per tonne CO2e in 2030

2. Cumulatively, potential of coal plant decommissioning amounts to 106 MtCO2e/y by 2030; assumes acceleration of coal plant decommissioning by 3 years
3. Assumes retirement of gensets to exceed Nigeria’s climate strategy targets (i.e., 20% reduction of emissions in 2030)
4. Triangulation of 3 data points: GHG reduction from improved breeding between 11-26%, improved feeding between 6 to 27 % and productivity gain up to
70% (estimated based on the difference between the maximum and average GHG emission per Kg of meat produced in African countries)
5. Approximately 14 per cent (4 million km2) of total Africa land area is protected, including 6 per cent of biodiversity-rich tropical evergreen broadleaf forests.
Sources: FAO, Biodiversity Research Institute, IPBES, CGIAR, Global Alliance for Climate Smart Agriculture
Project example: iRise (carbon project development company)
iRise is a mission-driven business created by Future Earth. In partnership with Community Development Initiative and
Imperative, a high-quality carbon offset project development company, iRise has a mission to transform rural Malawi
through high-quality integrated climate projects that create lasting sustainable development. These projects include:
1. Access to clean cooking for rural communities, reducing emissions, preventing deforestation, and improving
community health
2. Native-species reforestation to sequester carbon and restore biodiversity
3. Agroforestry to restore degraded land, sequester carbon and provide local employment
4. Affordable housing with solar power, waterless toilets, and digital access
These projects create thousands of jobs in rural areas with significant long-term unemployment and provide
significant benefits to some of the least advantaged people in Malawi.
26
Project example: Octavia Carbon (Direct Air Carbon Capture company)
Octavia Carbon is a Kenyan company building machines that filter CO2 from air using Direct Air Carbon Capture
(DACC) technology. One such DACC machine the size of a car has the potential to capture as much carbon as 10
hectares of forest. What is more, CO2 captured this way can be pumped deep underground, where it turns into rock
and locks up carbon for millennia. With 92% renewable grid electricity, available infrastructure for CO2 injection, and
strong co-benefits, Kenya is an ideal epicentre of a global DACC industry.
Project example: Cella Minera Storage (carbon mineralization company)
Cella is an early-stage carbon mineralization company that provides durable storage services to direct air capture
(DAC) companies. Cella turns CO2 into rock by accelerating natural processes, storing it away forever. Cella is
deploying carbon storage in new environments that allow them to rapidly scale carbon removal to meet the climate
crisis–while simultaneously developing technology to make mineralization the safest, most effective, and cheapest
option for permanent carbon storage. Cella is currently exploring initial deployment targets. One of their primary
candidates is the Kenyan Rift Valley, where an ideal geologic context meets plentiful renewable energy.
Ambition of the Africa Carbon Markets Initiative portion of temporary jobs. These jobs will cover
(ACMI) all aspects of the value chain including carbon
projects development, execution, certification, and
ACMI aims to capture more of Africa’s potential in carbon monitoring.
markets by addressing the challenges to voluntary
carbon market growth and building the foundations for 3. Raise the quality and integrity of African credits,
a thriving voluntary carbon market ecosystem in Africa increasing prices from ~$5 per tonne in 202128 to
by 2030. This initiative will focus not only on driving ~$20 per tonne and mobilising up to ~$6 billion in
decarbonization activities but also on driving economic capital from carbon credits by 2030.
development by supporting energy access, scaling the
clean energy transition, protecting forests, improving 4. Ensure equitable and transparent distribution
agriculture, and creating new income sources. of carbon credit revenue, with a significant portion
of the revenue going to local communities. ACMI
“ACMI aims to build the foundations intends to work with leading bodies to establish
transparency and benefits-sharing standards for
of a thriving voluntary carbon market both buyers and sellers, assuring that the market
ecosystem in Africa by 2030” scales with the correct balance of speed and
effectiveness.
ACMI’s ambition includes 4 core objectives.
Looking beyond 2030, ACMI’s long term ambition is
1. Grow African credit retirements to ~300 MtCO2e to grow Africa’s carbon market to 1.5-2.5 GtCO2e
by 2030 — a ~19-fold increase from the ~16 and mobilise ~$100+ billion per annum by 2050, while
MtCO2e retired in 2020. This may sound like a tall ensuring equitable and transparent distribution of carbon
order, but we believe it is realistic since this is in credit revenue with a significant portion going to African
line with Africa capturing its fair share of the global communities. This would deliver material benefits (e.g.,
potential by 2030 and with Africa’s current growth cleaner air) to African people, helping to drive expansion
trajectory. The Taskforce on Scaling Voluntary of renewable energy resources for city-dwellers,
Carbon Markets estimates that global markets healthier cooking for households, improved farming and
will grow 15x from 2020 to 2030. Because Africa’s forestry practices, and job opportunities for the growing
potential is underrealized, Africa will capture a population.
growing share of this growing market.
The rest of this report is devoted to spelling out the
2. Create or support ~30 million jobs by 2030 concrete actions required to realise this vision.
including new direct jobs, jobs that will receive
income increases, new indirect jobs, and some
28
Average price for African credits in 2021, from Ecosystem Marketplace. “Markets in Motion: State of the Voluntary Carbon Markets 2021 Installment 1.”
(January to August 2021)
27
Exhibit: ACMI’s ambition
Develop high-value export
commodity
Establish market Mature market
By 2030 By 2040 By 2050
Market Build market foundation and scale Mature market, grow nascent Establish carbon credits as one of
supply through demonstrated project types (blue carbon, livestock, Africa’s top export commodities via a
methodologies (e.g., cookstoves, technology-based removals) and focus on nature and technology-based
nature) expand the proportion of removal removal credits
credits (vs. avoidance)
Impact Drive economic development by Expedite green development and Build a climate-resilient economy,
supporting energy access, scaling clean climate change adaptation through achieve net-zero emissions, and
energy transition, protecting forests, innovative approaches such as develop a carbon removal industry as a
improving agriculture, creating new biodiversity/nature credits, improving major GDP contributor with high-quality
income sources for smallholder farmers livestock productivity, carbon jobs
removal technology
Per
year 300 MtCO2e retired1 1.5-2.5 GtCO2e retired
$6 Bn capital mobilized2 $120-$200 Bn capital mobilized5
30 Mn jobs created & supported3, 4 110-190 Mn jobs created/supported3,4
Ensure equitable and transparent distribution of carbon credit revenue, with a significant portion going to communities
1. Assuming Africa’s carbon retirement grows by ~19X from ~16 MtCO2e in 2020 (14x from 22MtCO2e in 2021)
3. Includes direct and indirect jobs created and jobs supported (e.g., income increase). Calculated via a bottom-up estimation for NBS job impact leveraging the CAP-A nature-
based climate change mitigation model and a top-down estimate of non-NBS jobs based on job multipliers including direct and indirect jobs; Assumed 75% nature-based
projects in 2030 and 60% nature-based projects in 2040
4. Jobs include not only jobs created but jobs supported via additional income; Nature jobs can include temporary jobs in any given year (esp. for ecosystem restoration pathways
e.g., planting trees)
5. Assuming carbon price of ~$80/tonne in 2050 based on Vivid Economics VCM model for an accelerated policy scenario with projected global warming of 1.6 - 1.7 ºC
(Triangulated against additional sources: Bloomberg estimation of $47 to $120/tonne and TSVCM projection of $150 to $250 for technology-based solutions, Reuters estimates
of at least $100/tonne to reach net zero by 2050, Vivid Economics VCM model price projection between $28 - 143)
Source: CAP-A nature-based climate change mitigation model, TSVCM, Bloomberg, Reuters, McKinsey Vivid Economics, McKinsey MGI Economic Research, International Labor
Organization (ILO), Global Trade Analysis Project (GTAP)
28
Chapter
29
Chapter 5: Proposed action programmes to support the
development of voluntary carbon markets in Africa
Action programme 1: Development of a minimum carbon price through a carbon tax
of country voluntary carbon market and the creation of a national carbon credit registry.
The government of Mexico created a voluntary carbon
activation plans credit exchange with assistance of the UN Environment
Context Programme (UNEP) and the UK PACT (MEXICO2). It
also implemented capacity building activities including
A tactical starting point for any country seeking to build training sessions, market simulations and study tours
a carbon ecosystem is to draw up a plan for developing for project developers. Mexico’s VCM retirement volume
the market. Colombia and Mexico’s recent efforts grew to 620 ktCO2e (~$2.5 million) in 2021 from ~30
provide good examples. The Colombian Voluntary ktCO2e in 201129.
Carbon Market Platform (CVCMP)28a was launched in
2016 in cooperation with the Ministry of Environment Experiences of Colombia and Mexico demonstrate
and Sustainable Development, the Colombian Stock that focused country-level approaches to VCMs can
significantly expand climate projects and highlight
Exchange and with technical support from Fundación
the opportunity for African countries to develop such
Natura, aiming to activate the Colombia carbon market
purposeful approaches to activating carbon market
through regulatory framework and supply and demand
ecosystems. To this end, ACMI encourages African
stimulation. The CVCMP launch was part of an effort countries to develop voluntary carbon market activation
by the Colombian government to meet its Nationally plans. Plans would set a country-level ambition,
Determined Contribution targets by stimulating integrate VCMs into broader climate plans, align relevant
demand for home-grown carbon credits verified governance structures, clarify regulation, develop
in accordance with recognised carbon standards. demand incentives, and support the local market
Initiatives pursued included the establishment of a ecosystem.
working group with State representatives, the definition
Opportunity
ACMI considers seven areas that need to be addressed in a voluntary carbon market activation plan:
Exhibit: Key potential components for a country voluntary carbon market (VCM) activation plan
Dimension Description
1 Ambition 1.1. Carbon credit volume targets
1.2. Volume targets by project types and sectors
1.3. Sustainable development targets
2 Integration into 2.1. Contribution to overall climate and energy transition goals
climate plans
3 Governance 3.1. Role of governmental entities (central and regional)
structure 3.2. Coordination mechanism between governmental units and national entities for carbon market policy
3.3. Integration across sectorial strategies and national strategies
3.4. Ownership of key actions to expand carbon markets at the regional, local, and sectoral levels
3.5. Role of external expertise
4 Regulation 4.1. Carbon market regulatory requirements
4.1.1. Carbon credit rights
4.1.2. Registration and/or commercialization of carbon credits
4.1.3. Emissions reporting
4.2. Land regulatory requirements for nature-based projects
4.3. Framework for voluntary carbon markets / Article 6 mechanisms interactions (corresponding adjustments, ITMOs)
4.4. Fiscal policies for carbon credits (e.g., transfer pricing, carbon credit taxation)
5 Demand incentives 5.1. Carbon tax on emissions to create local demand
5.2. Reporting and tracking mechanisms
5.3. Carbon registry
6 Supply ecosystem 6.1. Capability and capacity-building initiatives
enablement 6.2. Technical assistance initiatives
6.3. Specific funding lines to support project developers
7 REDD+ jurisdictional 7.1. Jurisdictional REDD+ framework on accounting, verification and governance
projects
28a
Verra, "Launching Colombia’s Voluntary Carbon Market," August 2016
29
Ecosystem Marketplace, "Mexico Retirements from 2011 to 2021", 2022
30
1. Ambition: Governments need to define concrete were to be applied. Additionally, consulting bodies
targets to increase their carbon credit volume at composed of project developers, experts and
national and sectoral levels. Targets will inform academics were created. In 2021, Brazil organised
actions that need to be pursued to unlock potential meetings with national and international institutions
in sectors and project types that are most relevant such as the International Energy Agency to discuss
for the country. Quantitative targets for carbon a framework for building carbon markets.
credit retirements should be complemented by
sustainable development targets to maximise the 4. Regulation: To foster the growth of voluntary
societal benefits of carbon market activation efforts. carbon markets, there is a need to clarify regulation
Additionally, defining an ambition can involve to create an enabling environment for VCM
establishing a goal for the demarcation of specific development including:
protected areas in the country (e.g., demarcation
a. Carbon market rights and commercialization
of 30 percent of the country’s natural resources).
of carbon credits: Guidelines to define the
ownership model for carbon credits, including
One example of a setting a country-level ambition
the rights to revenues from commercialization of
is Brazil. Brazil announced in 2021 a series of
carbon credits for project developers, investors,
decrees30 establishing a goal to grow the national
local communities, and regional governments
voluntary carbon market.
b. Registration of carbon credits: Adherence
2. Integration into climate plans: Carbon markets
to international carbon credit integrity and
can contribute towards the pursuit of climate and
certification standards for the registration of
energy transition goals. A VCM activation plan
carbon credits
should clarify the ways in which carbon markets
can be leveraged to support climate targets, c. Emissions reporting: Requirements for
including the potential for emissions reductions mandatory reporting and transparency for
and expansion of clean and reliable electricity. actors in the carbon market ecosystem
VCMs should be just one way countries finance
the reduction of their emissions towards their NDC d. Land regulatory requirements: Clarification
goals. International financing from carbon markets of land use regulation for developers and
can be combined with national financing to drive communities operating in nature-based projects
meaningful climate action for African countries.
e. Fiscal policy: The fiscal regime that is applicable
to carbon credit transactions (e.g., exemptions
For example, Colombia revised its NDC with more
applicable to carbon credit transactions)
ambitious targets than the first NDC and committed
to strengthening and developing carbon pricing f. Article 6: Clarification of relevant Article
mechanisms to implement NDC targets at both 6 accounting requirements, safeguarding
sectoral and territorial levels. against double-counting in carbon credit
trading between countries and clarifying
3. Governance structure: Roles and accountability
VCM activities eligible for corresponding
regarding the VCM activation plan need to be
adjustments within the country’s jurisdiction
clarified at all levels of central and regional
government. Actions proposed in the plan
For example, Mexico updated its National Law
should be coordinated centrally at the national
for Climate Change to establish the basis for
level. Additionally, these plans should set out
a mechanism allowing the commercialization
mechanisms to ensure collaboration across other
of carbon credits: this (i) established the
government units (e.g., Ministry of Energy, Ministry
right to generate carbon credits, (ii) clarified
of Agriculture). Coordination will ensure existing
the mechanisms for transactions of carbon
sectoral strategies integrate into the national
credits, (iii) established the requirements for
carbon market plan. Governments can also explore
transparency, reporting and verification of CO2
opportunities to pull in private sector and non-
emissions.
governmental entities (e.g., via an independent
advisory unit composed of academics, private-sector
players, local community representatives, etc.).
“Having a focused country-level
For example, Colombia created a coordination approach can significantly expand
mechanism between the central government, climate projects”
regional governments, ministries, and national
agencies – defining how carbon market regulations
30
Including decree 11.075. Source: Ecosystem Marketplace
31
Article 6 c. Carbon registry: Depending on the maturity
of its carbon market, the country may develop
One of the major diplomatic achievements of COP 26 a national registry or use existing registries.
was the finalization of Article 6 of the Paris Agreement,
the portion of the treaty that deals with trading of For example, Colombia’s national carbon tax
emissions reductions. This includes a mechanism was introduced in 2016 to set a minimum price
for preventing multiple countries from counting the for carbon credits. By 2020, the carbon tax
same emissions reduction towards their NDCs. Under and the offset mechanism had generated 42.8
the new rules, when one nation sells carbon credits MtCO2e of carbon credits worth COL$1.42
to another, a “corresponding adjustment” must be billion31 . Peru developed its own registry,
made to transfer the mitigation outcome from the Huella de Carbono Perú, to provide transparent
seller to buyer country. When it comes to corporate measurement and verification of carbon credits,
use of the voluntary carbon market, Article 6 allows and to recognise the efforts of public and private
for two paths, credits can either come with or without organisations in managing their GHG emissions.
corresponding adjustments.
6. Supply ecosystem enablement: Countries
A corporate approach without using corresponding should identify specific actions to promote the
adjustments is fully consistent with driving additional development of capabilities and capacity for
climate impact. Given most African countries have project developers and validation/verification
made it clear that without international finance their bodies, whether locally or in collaboration with
NDCs cannot be met, impact which otherwise would regional entities, including training and provision
not have taken place is created by providing the of technical assistance. Additionally, specific
needed international climate finance. This approach funding lines can be established to provide financial
allows a company to compensate / neutralize their support for developers in initial project stages.
emissions as well as claim there are supporting
African nations in meeting their NDCs. For example, in Mexico, the National Institute of
We recognize that some companies may request a Nuclear Research organizes training opportunities
corresponding adjustment associated to their credits and workshops to develop technical capacity for
to rather support the NDC of the country they are direct carbon capture projects.
located in. Other companies may take a view that 7. REDD+ jurisdictional programs: Where relevant,
current NDCs are not ambitious enough and want to countries can pursue alignment with existing
ensure their impact goes beyond the host country’s REDD+ standards (e.g., ART’s TREES – The
existing NDC. Some African countries may choose REDD+ Environmental Excellence Standard,
to meet the needs of this group of companies, by Verra Jurisdictional and Nested REDD+ standard)
allowing specific project types to generate carbon to enable jurisdictional REDD+ programs,
credits with corresponding adjustments, with an including guidelines on how to scale up sources
expected premium in price. of demand, develop monitoring, reporting and
verification (MRV) and trade infrastructure, and
support compliance with standards organisation
5. Demand incentives: Establishing clear and
requirements (e.g., Forest Reference Emissions
transparent market rules can help encourage both
Levels [FRELs]; crediting, allocation, and
local and international demand for country carbon
aggregation rules; buffers, deductions, and
credits.
other assurance mechanisms; and safeguards).
a. Carbon tax on emissions to create local
demand: Countries can set a carbon tax on For example, Ghana has established a national
emissions for specific sectors (e.g., oil and REDD+ governance structure, with broad
gas). By enabling the use of eligible carbon government buy-in and strong multi-stakeholder
credits to comply with carbon tax obligations participation. DRC is at the forefront of Congo Basin
/ requirements, countries can create local countries engaged in the REDD+ process which
demand for carbon credits. Additionally, a local includes a large jurisdictional REDD+ programme.
carbon tax can provide a natural price floor for Additionally, a number of African countries have
project developers seeking financing. submitted proposals to the LEAF Coalition, an
advance market commitment for jurisdictional
b. Quantification of emissions: Countries can REDD+ programs, including Ghana, Nigeria, DRC
promote transparency and clear reporting to and Burkina Faso.
enable emissions trading and purchases and
inspire buyer confidence.
31
Ecosystem Marketplace, S&P Global, Terra Global Capital “Colombia’s Carbon Market Revolutionizing Rural Development
32
Proposed actions
Country deep dive: Gabon
To encourage the acceleration of carbon market activity,
ACMI proposes to: Gabon has shared an unconditional commitment to
remaining a carbon-neutral country beyond 205031b.
1. Build a blueprint for a voluntary carbon market
With international support, the country pledges to
activation plan;
maintain its net carbon absorption of at least 100
2. Identify African countries committed to scaling million tCO2e per year beyond 2050. Gabon also
voluntary carbon markets and: plans to issue a large volume of carbon credits.
a. Reach out to countries to provide supporting To build on this momentum, Gabon could add to
material explaining the importance and potential existing regulation to ensure a comprehensive
benefits of developing VCM activation plans; voluntary carbon market activation plan.
b. Support countries in setting an ambition for To illustrate the impact voluntary carbon markets
voluntary carbon markets based on technical could have, Gabon could support retirements of
potential, as well as climate and energy 9-12 MtCO2e by 2030 by capturing just 20-30% of
transition goals; its maximum annual technical potential of 35-40 Mt
CO2e). While the vast majority of Gabon’s potential
c. Connect countries with technical assistance
is related to forestry projects, Gabon could also
providers and funding partners (e.g.,
leverage projects in areas such as blue carbon and
philanthropic organisations) to support the
household devices.
implementation of national voluntary carbon
market activation plans. By growing its voluntary carbon credit supply
and associated demand, Gabon could mobilize
up to $250 million per annum in capital by 2030
considering an average price of $20 per tonne and 12
Country deep dive: Nigeria MtCO2e.
Nigeria recently passed the Climate Change Act In this example, expanding the carbon market
(2021) and the Energy Transition plan (2022) which ecosystem in Gabon could support more than ~3
establish a target to reduce GHG by 47 percent million jobs (e.g., project development and carbon
in 2030, relative to base case, achieve carbon generation monitoring) and economic growth.
neutrality by 2060 and generate 30 GW of energy by
2030 with 30% renewable energy31a.
To progress towards these targets, Nigeria could

develop a comprehensive voluntary carbon market
activation plan.
For example, Nigeria could set an ambition to grow

retirements to a total of 30-40 MtCO2e by 2030
(corresponding to ~25-30 percent of its maximum
annual technical potential of ~130+ Mt CO2e) and
expand from a focus on household devices to other
project types including forestry, agriculture, DRE and
livestock.
By growing its voluntary carbon credit supply and

associated demand, Nigeria could mobilize ~$0.6-
0.8 billion per annum in capital by 2030 considering
an average price of $20 per tonne.
In this example, expanding the carbon market

ecosystem in Nigeria could support more than 3
million jobs (e.g., project development and carbon
generation monitoring) and economic growth.
31a
CAT Climate Governance Series, 2022
31b
UNDP, "Gabon: NDC Status", July 2022
33
Country deep dive: Togo Country deep dive: Mozambique
Togo’s NDC established an unconditional target to Mozambique has shared a commitment to

reduce emissions up to 6 Mt CO2e, 21% below BAU by reduce emissions by 40 MtCO2e until 202531d.
203031c.
To illustrate the impact voluntary carbon markets
To progress towards these targets, Togo could develop could have, Mozambique could produce up to
a comprehensive voluntary carbon market activation 25 MtCO2e annually by 2030 by capturing just
plan. Currently there is just one ongoing certified ~30% of its maximum annual technical potential
carbon-generating waste management project certified of ~90 MtCO2e
in Togo, which generated 550 tCO2e in 2021.
Mozambique has high potential in project
To illustrate the impact voluntary carbon markets could types including forestry, renewable energy and
have, Togo could grow retirements to a total of 2-3 household devices.
MtCO2e by 2030 (corresponding to ~30% of maximum
annual technical potential of ~4-10 Mt CO2e). This By growing Mozambique’s voluntary carbon
would expand projects from waste management to credit supply and associated demand,
other sectors such as forestry, household devices, Mozambique could mobilize up to $500 million
renewable energy, and livestock. The corresponding per annum in capital by 2030 considering an
reduction in emissions could cover 40-50 percent of average price of $20 per tonne for 25 MtCO23.
Togo’s NDC target. Mozambique could also support more than
In this example, Togo’s could mobilize up to $60 million ~500,000 jobs (e.g., project development and
per annum in capital and support more than ~100,000 carbon generation monitoring) and economic
jobs (e.g., project development and carbon generation growth
monitoring) by 2030.
Country deep dive: Malawi Country deep dive: Kenya
Malawi’s NDC established a target to reduce emissions Kenya’s NDC established a target to reduce
by 12.8-18.1 MtCO2e below BAU by 203031e. emissions by 32% below business-as-usual by
2030, corresponding to 46 MtCO2e31f.
To progress towards these targets, Malawi could
develop a comprehensive voluntary carbon markets To progress towards these targets, Kenya could
activation plan. develop a comprehensive voluntary carbon
market activation plan that builds on the high
In 2021, Malawi supplied 605 ktCO2 from agriculture, levels of existing carbon credit activity. From
renewable energy and household devices projects. 2016 to 2021, Kenya issued ~26 MtCO2e, more
To illustrate the impact voluntary carbon markets than any other African country (~20 % of total
could have, Malawi could grow retirements to a total African credits). 90% of these projects were in
of 3-5 MtCO2e by 2030 (corresponding to ~25-35% of the agriculture and household devices sectors.
maximum annual technical potential of ~15 MtCO2e) If Kenya were to capture its 100 percent of its
and expand from a focus on agriculture and household technical potential by 2030, ~30 Mt CO2e, it
devices to include forestry, and waste management could mobilize up to $600 million per annum in
projects. The corresponding reduction in emissions capital by 2030 considering an average price of
could cover up to 30 percent of the NDC target of 18.1 $20 per tonne. This would require expand from
MtCO2e. a focus on agriculture and household devices to
In this example, Malawi’s could mobilize up to $100 include other project types such as forestry and
million per annum in capital by 2030 (considering an livestock projects.
average price of $20 per tonne) and support more than In this example, expanding the carbon market
~300,000 jobs (e.g., project development and carbon ecosystem in Kenya could support more than
generation monitoring). ~600,000 jobs (e.g., project development and
carbon generation monitoring) and economic
growth.
31c
Togo's NDC
31d
Mozambique's NDC; Master Plan for Disaster Risk Reduction 2017-2030
31e
Malawi's NDC; National Resilience Strategy 2018-2030
31f
Kenya's NDC
34
Action programme 2: Scale up of • Limited capabilities and capacity to develop
mitigation projects and support monitoring tasks;
multiple new and existing African
project developers / suppliers • Lack of clarity on stakeholders’ roles and
responsibilities (e.g., how to involve local
Context and opportunity communities and local authorities).
As described in Chapter 2, carbon credit project • Additional challenges arise based on project type.
developers operating in Africa are few, relatively small
scale and show limited diversification. Overall, there is • Scaling of nature-based projects often faces
room for Africa to support the scaling of existing carbon- complex land-use regulations, and the difficulty of
credit projects developers, as well as the emergence compensating for opportunity costs (e.g., community
of new issuers, including players that already run owning forest land may face an opportunity cost
successful at-scale projects (e.g., renewable energy between maintaining the forest vs. replacing it with
projects, cookstoves projects) but are not currently farmland).
issuing carbon credits. To reach the ~300 MtCO2e
retirement target by 2030, and assuming project • Household devices projects can be hindered by
developers scale on average to ~3 MtCO2e per year a lack of local capabilities to introduce and repair
(i.e., average number of credits issued by top 10 project devices, and supply-chain infrastructure challenges
developers in 2021)31g, there could be a need for ~100 (e.g., poor access to remote areas, disruptions due
project developers to issue such number of credits per to climate conditions).
year (~2 times the number of issuers in 2021). • Renewable energy projects face a lack of capabilities
to navigate complex energy regulations, and of
Challenges infrastructure support for connections to the grid.
Several challenges are generally underlined as inhibiting

development or scale of carbon credit projects on the Proposed actions
continent, with variation of intensity by country and To foster carbon project development on the continent,
project type: ACMI proposes to support several actions.
• Lack of regulatory clarity (e.g., regarding claims on 1. Set up an accelerator / incubator to support high-
carbon revenues); potential new or nascent project types, especially
• Lack of or limited access to sources of financing for technology-based projects by providing technical
projects development – especially early-stage, due assistance and facilitating access to potential
to various issues including projects attractiveness investors and international developers of similar
(size, sector), local cost of capital, investors’ lack of projects.
expertise and of historical data regarding carbon Potential partners: large international buyers
projects – limiting project developers’ ability to meet
high upfront capital requirements and sustain long 2. Reinforce targeted on-the-ground technical
lead times to return (up to 10 years for projects to assistance to support project developers throughout
generate credits); the project life cycle.
• High cost of existing financing given project, Potential partners: technical assistance could
country-specific and market-related risks (e.g., be embedded in country planning (under action
legal certainty, land tenure) and lack of financial programme 1) or offered through regional initiatives
instruments to mitigate those risks, undermining for carbon markets or large pan-African technical
projects’ bankability; assistance providers
• Complexity of meeting standard organisations’ 3. Establish a technical facilitation programme
requirements given difficulty of applying technical focused on reducing barriers to entry for carbon
requirements to the African context, lack of credit certification for project developers in
standardised methods for Africa, limited baseline Africa, with main objectives to:
data to measure project value (e.g., initial soil data
for soil carbon projects) and lack of capacity and a. Work with standards organisations to provide
technology to enable consistent monitoring and more standardised methods for Africa (i.e.,
reporting; performance benchmarks and positive lists);
• Lack of validation and verification capabilities on b. Establish an Africa data baseline, by reinforcing
the continent, given limited number of accredited and consolidating data collection efforts across
validation/verification bodies (VVBs) who can the continent or regionally (in cooperation with
provide the verification service (e.g., only 2 of the carbon-credit project developers, governments,
VVBs, listed by Verra, Gold Standards and CDM and other local stakeholders such as farmer
organisations, industrials) and working with
have local offices in Africa)32 ;
31g
32
Organization’s websites
35
standards organisations to incorporate this Action programme 3: Scale up of
data;
programmes for micro carbon credits
c. Facilitate knowledge sharing for the generation involving smallholder farmers
development of adapted tools and
methodologies in collaboration with technical Context and opportunity
solution providers (e.g., satellite imagery to Although smallholder farmers contribute up to 70
measure biomass); percent of Africa’s food supply33 , it is difficult for them to
d. Create a public-access repository of template access and benefit from carbon markets, as high upfront
project design documents, available tools, certification costs to create carbon credits and project
and online training materials to help project monitoring costs require scale and access to financing/
developers navigate standard requirements; buyers.
e. Create a curriculum (e.g., project development Micro-carbon credit supply models can enable
bootcamp), in partnership with universities, for smallholders to individually earn income from carbon
the development of carbon credits, including credit projects by leveraging:
a frame of reference mapping the role of the • Aggregation of farmers into larger carbon credit
different stakeholders in project development programs to spread costs of certification and project
and carbon credit revenues sharing (e.g., development;
detailing how to engage with governments and
local communities). • Technology such as satellite imagery and remote-
sensing tools (e.g., to monitor biomass growth
Potential partners: world-leading nature analytics by smallholder farmers and issue carbon credits
/ geospatial data providers, organizations that can accordingly) to further bring monitoring costs down);
provide data (e.g., international organisations,
regional-focused climate groups, local • Local field force to train and onboard farmers and
governments), standards organisations, universities track impact (e.g., Acorn34 uses partner field force
and/or technical schools organisations to enrol farmers as well as to collect
real data on sample plots to train AI models and
4. Actively mobilise new project developers, conduct sample checks);
by reaching out to potential candidates (e.g.,
organisations that have developed eligible solutions • Digital platforms / marketplaces to connect credits
at scale without deriving any carbon credits from originated by smallholder farmers with international
these) and conducting awareness-raising activities buyers.
(e.g., conferences, workshops).
Across the world, such models have especially
Challenges in regulation will be addressed through been developed for agroforestry, conservation, and
action programme 1, challenges in project monitoring, sustainable agriculture projects.
reporting, validation/verification through action
programme 4, and challenges in financing through action Several standards have developed methodologies to
programme 6. certify agroforestry projects, including Verra, the Gold
Standard and Plan Vivo. Plan Vivo’s “PM001 Agriculture
and Forestry Carbon Benefit Assessment” methodology
in particular, indicates a use case for smallholder
Project example: KOKO Networks (climate agriculture and community forestry projects.
technology for forest protection)
In Africa, only a handful of agroforestry carbon credit
KOKO Networks is a technology platform that generation organisations collaborate with smallholders,
aims to protect tropical forests and transform mainly in East Africa.
lives. With 1,600 staff across East Africa &
India, KOKO operates renewable fuel utilities “Smallholder-based carbon credit
that retail clean cooking fuel as a low-cost
alternative to deforestation-based charcoal. projects represent a meaningful
As of COP 27, KOKO serves over 700,000 opportunity for Africa”
households – including over 30 percent of all
Nairobi homes – and over 10,000 new homes There is significant potential to scale up carbon credit
join its clean fuel and carbon platform each generation with smallholder farmers. As smallholder
week.
33
Agriculture holds great promise for Africa. More than half of the Earth’s arable land – roughly 600 million hectares – is in Africa, 2022; IFAD
34
FSD Africa and Rabobank ACORN/Rabobank Foundation to fund sustainable farming for African small-scale farmers with loans for carbon
credits, July 2022; FSD Africa press release
36
Exhibit: Example of micro-carbon credit supply models (non exhaustive)
Project Aggre- T
ech K
ey figures (scale,
type Player Player type Description Geography gation use revenue)
Conserva Private for profit Online platform where small land-owners can apply to qualify NA
tion (forest project their land for a forest carbon project. A free carbon inventory is
developer) carried out by the company’s forest technicians to determine
the annual payment for the land-owner
Private for profit Online platform where small land-owners can enroll for free 1.8k landowners for 1.6
(forest carbon with no acre-minimums for one year-contracts, getting Mn acres 8$/acre paid to
market-place) revenues if they delay harvesting. Carbon potential of the land landowners
is estimated remotely through an AI model called Basemap (As of start of 2022)
Agro- Acorn Financial Program supporting smallholder farmers to switch from 3+ countries 2022: 24k farmers, ~ 24k
forestry , by institution monoculture to agroforestry, using satellite imagery to monitor in LatAm acres, 80-90% revenue to
biomass for smallholder farmers and issuing carbon removal farmers (min price 20$/t)
units when biomass increases 4+ countries Target: 15 Mn farmers, 4
in Africa Bn trees, 150+ Mn
tCO2eq
Private (e- Agroforestry and restoration accelerator, boosting the Target 2024: 3k farmers
commerce) & non implementation of agroforestry practices by smallholder and 50k acres
for profit NGO farmers in Brazil. Carbon removal is quantified and monitored
with satellite-based technologies and credits are generated
through a platform
Xylo Private for profit Market platform that measures and aggregates the carbon NA
(forest carbon offsets of small farmers that have planted a forest and sells
market-place) them to buyers. The company intends to leverage technology
for carbon measurement process in the long run
Private for profit Program encouraging small groups of farmers (6-12 farmers) 135k+ farmers, 23 Mn+
(carbon market- to improve local environment and farms by planting and trees planted, 9 Mn+
place) maintaining trees on unused and/or degraded land. Carbon tCO2 offset, 70% of
credits are dual-verified by 3rd party auditors (live online profits shared with
tracking) and sold to buyers. Small Groups form Clusters (200- farmers
400 farmers) and are led by participating farmers.
NGO non for Supports smallholders to grow trees on unused/degraded 19+ countries 500k farmers per country,
profit farmland. Managed by central team using VERRA SALM in Africa 1Mn ha of land, 10-year
methodology and Gold Standards Cool Farm Tool to quantify participation period, 32
GHGs and market potential per farm. Trained community- Mn tons carbon credits
based extension agents monitor on-farm activity and onboard over 10-years
farmers (revenue sharing model to incentivize agents to
onboard more farmers)
NGO non for PUR Project is working with Nestle and TechnoServe to run 3+ countries 4.5+ Mn native trees
profit agroforestry programs in coffee farms. The coffee is grown in Africa grown in coffee farms
under the canopy of trees to enhance coffee cultivation and 4+ countries since 2014.
provide a diverse source of income to farmers. in LatAm
1+ country in
South Asia
NGO non for Running an agroforestry program and piloting a scheme to give 7+ countries 1 Mn farmers supported
profit farmers access to carbon credits (e.g., in collaboration with the in Africa across programs, 20 Mn
Rwanda government) trees distributed in
Sustainab Rwanda in 2021
le ag Private for profit Pilot for growers launched in 2020 offering a yearly payment 1k+ farmers in pilot
practices (chemicals) per hectare for climate-smart practices. Bayer’s digital Climate phase (2021)
FieldView, along with remote-sensing satellite-based data, 5-6$/acre/practice
verify whether the practices have been followed and calculate adopted1 paid to farmers
carbon sequestration (2022 prices)
IBO has a platform to connect growers directly with buyers. It
Private for profits C NA
(technology) uses modelling to calculate carbon credits and validates them
through satellite imagery and remote-sensing technology.
1. Available only for 2 practices: No-till/Strip-till and Cover crop, and depends on state
Source: Press research, company websites
farmers work on ~80 percent of Africa’s agricultural estimated to be ~26 MtCO2e (assuming agriculture
land35, they could be associated to a similar share of grows to its share of the total ACMI ambition). This
the credit issuance target for agriculture (including means smallholder farmer projects could contribute 21
cover crops and crop rotation, regenerative grazing MtCO2e36 towards ACMI’s ambition, which could benefit
management, decreased tillage) and tree planting in up to 5 million smallholder farms or 10-15 million jobs37 .
cropland by 2030. This total agriculture ambition is This could be even greater if agriculture projects account
35
FAO
36
McKinsey Nature Analytics
37
Assuming max. potential of ~2 tCO2e sequestrated per year per hectare through better agriculture practices including agroforestry, regenerative
agriculture practices; assuming average farm sizet of 2 ha and 2-3 jobs supported per farm
37
for more than their technical share of African carbon Proposed actions
credit generation in 2030.
To support the development of smallholder farmer-based
Beyond sustainability goals, smallholder farmer- carbon credit generation on the continent, ACMI proposes
based carbon credit generation projects represent a several actions.
meaningful opportunity for Africa as they could allow
farmers to generate revenue from carbon credits that 1. Create a continent-wide coalition to support
reflect increased carbon sequestration on their land, agroforestry for food security and carbon credits
while also providing co-benefits such as increased through advocacy to financers and regulators,
yields and improved food security. awareness raising, knowledge sharing and technical
support for project development, facilitation of
partnerships.
Coalition could facilitate the development of different
Project example: Acorn (Agroforestry Carbon models for community-based carbon credit projects
Removal Units for the Organic Restoration of tailored to local context, including mechanismst to
Nature with smallholder farmers) ensure that communities benefit from carbon credit
revenues, guidelines to favour positive externalities
Acorn has developed a scalable, Plan Vivo (e.g., type of crops adapted to soils and climate
certified methodology to measure and monitor conditions), and adapted validation/verification
carbon sequestration on individual smallholder methodologies and tools.
plots via remote sensing technology, leading
to significant cost reductions in MRV and Potential partners: development partners/DFIs,
certification. This allows Acorn to channel 80% agriculture input providers and farmer-support
of carbon proceeds back to farmers through NGOs to facilitate access to smallholder farmers and
cash and in-kind benefits. The typical result is provide inputs and additional field services; agri-food
a 40 – 80% increase in farmer income due to companies to ensure investment in their supply chain
carbon credit revenues, reduced input spending, by using VCMs/insetting; governments to approve
and higher crop yields. Carbon markets are a large-scale projects; and carbon-credit project
powerful tool to finance the transformation to facilitators.
agroforestry so that smallholders can reap these 2. Encourage partnerships to scale up existing
long-term benefits while enhancing climate and new programs between project developers
resilience and soil quality. Acorn currently and organisations that have significant access to
supports >25.000 farmers across 10 countries in smallholder farmers.
Latam, Africa and Asia and aims to onboard 10
million farmers onto its platform by 2030. Partners could provide technical support, high-quality
agriculture inputs such as seeds and fertilizers, and/
or financing solutions (e.g., cooperatives, NGOs, agri-
food companies, agriculture input providers).
3. Work with standards to develop adapted

Project example: The Export Trading Group methodologies to certify micro carbon credit projects.
(ETG)’s African Emerging Farmer Carbon
Abatement Program Potential partners: standards organizations, project
developer representatives; the coalition could provide
Building on the vast footprint of ETG in Africa, technical support.
ETG’s African Emerging Farmer Carbon
Abatement Program aims to create carbon 4. Work with financial institutions to develop and
abatement as a by-product of farming at scale. scale financial solutions for smallholder farmers to
By combining latest technology, relevant carbon participate in carbon-credit generation (e.g., lending
abatement interventions, and ETG's global based on credit revenue potential, community-based
reach, the program aims to bring cost efficient carbon finance models allowing for joint repayment
quality emissions reductions and long-lasting and thus lowering interest costs for farmers, mobile
community benefits to some of the world’s most money schemes to pay unbanked farmers).
vulnerable farming communities. ETG’s ambition
is to drive this program to scale across the entire Potential partners: financial institutions, (e.g., banks,
continent, improving livelihoods and contributing microfinance institutions, development funds, fintech);
to the global fight against climate change. the coalition could provide technical support.
5. Embed agroforestry as a priority in country

planning (addressed under action programme 1).
38
Action programme 4: Building of Proposed actions
additional capacity and facilitation ACMI proposes to support several actions to help
of monitoring, reporting, validation address barriers in validation, verification, and
and verification activities of carbon monitoring in the continent.
credit generating projects in Africa 1. Scale up validation/verification capacity on the
continent:
Context and opportunity
a. Signal the opportunity, by conducting deeper
Carbon emissions reductions or carbon removals only
analysis to estimate staff needs to verify and
become carbon credits when certified by a standard
validate African projects, especially given
upon successful verification by a third-party validation/
ACMI’s ambition in terms of project development
verification body (VVB). Due diligence is necessary
on the continent, to encourage local capability
to validate carbon credits and determine their quality.
building and recruiting efforts.
Standard setters often require that the impact from a
carbon emissions reduction or carbon removal is real, b. Encourage national/domestic members of the
measurable, permanent, additional, independently International Accreditation Forum (IAF) to build
verified (by a VVB), unique and traceable. out accreditation programmes for local auditors,
to set the framework for allowing local auditors
Two main types of bodies play a role within the
to be trained, making sure there is at least one
certification process: standard setters and validation/
accreditation programme in French and one in
verification bodies (VVBs). Standard setters include
Arabic (potentially located in respectively French
organisations such as Verra (Verified Carbon Standard)
and Arabic-speaking countries).
or the Gold Standard. These organisations support
and accept methodologies for different project types to c. Develop and provide dedicated validation
develop carbon credits. The VVBs are independent third and verification curriculum and trainings to
parties which are approved to perform verification and build local capabilities, in partnership with
validation. Currently, Verra alone has approved close to universities, technical schools, standard setters
30 validation/verification bodies across 5 continents38 and existing VVBs.
Once a project has been registered under a standard and d. Encourage existing accredited VVBs to set up
validated by an independent VVB, project developers locations on the continent, train and recruit local
must continue to report data on a frequent basis for agents.
ongoing monitoring, reporting and verification (MRV).
e. Support the creation of new local VVBs by
Challenges advocating for standard setters to facilitate
accreditation processes for Africa.
Project developers indicate challenges in validation,
verification and monitoring processes including: Potential partners: VVBs, standard setters,
universities / technical schools, (national)
• For many African project developers, it is difficult to
accreditation bodies that are members of the
meet the requirements for existing methodologies.
International Accreditation Framework
This is because methodologies were often not
designed with an African context in mind. For 2. Review most common standards likely to
example, African projects often lack the baseline be used in Africa and work with standard
data required for project certification (e.g., historical organizations to adapt methodology
data going back multiple years) that might be requirements to the African context and provide
available in other locations. more standardised methods for Africa (i.e.,
performance benchmarks and positive lists)
• There is limited capacity on the continent for
(addressed under action programme 2).
validation/verification bodies (VVBs). Of the ~40
VVBs listed as accredited by Verra, Gold Standard Potential partners: world-leading nature analytics /
– and even when extended to CDM, only 2 have geospatial data providers, standard setters, Africa
offices on the continent39 . project developers
• Project developers indicate there is a high cost for 3. Incubate emerging technologies that can
validation and verification. This is driven by a few facilitate faster and easier verification,
aspects including: travel cost for technical VVB monitoring, and reporting (e.g., satellite tools).
officers, fees charged by VVBs and consultancies
that support certification, need for technology/ Potential partners: analytics / data providers,
equipment/surveys to collect required data technology providers
(reinforced by lack of data availability in Africa) and
long lead times to get a project certified.
38
Organizations’ websites
39
Rina Services in South Africa and TÜV Nord in Egypt
39
Action programme 5: Promotion of quality, Exchanges convert carbon credits into highly
Discounted commoditisedSustainable
assets. As a result, they often attract
equity, and marketing
Creditors 3 debt of differentiated
buyback Government tax stream 6
buyers that are not looking for a detailed “story”
African Nature-
carbon credits to both African and accompanying a project but instead looking
(e.g., Paris
to purchase
Club creditors)
global buyers across African exchanges conservation
a commodity. On the other hand, carbon credit
Annual program /
2 Loan 4
marketplaces are more suitable for project developers
Context funding department
seeking the ability to showcase their unique projects to
buyers. Consequently, they attract (e.g., Blue
buyers willing to pay
The voluntary carbon credit intermediation market in Economy,
Africa is fragmented with a significant number of global a higher price than on a carbon credit exchange to be
Donors able to Disburse
communicate project
about the Seychelles)
project that generates
players. Many African project developers rely heavily
5b credits they purchase. Relative to carbon
on brokers and traders Grant market, the carbon grants
to bring supply to theImplementing
which can increase1 intermediation costs, lower agencyprice credit exchanges, carbon credit marketplaces generally
transparency, have fewer barriers to participation (e.g., wide array
Financialand reduceLoanrevenue share for suppliers
of assets can be used as collateral for transaction)
andinstitutions
asset owners
/ (including local communities). This
Repayment 5a lack of and are 5c better suited to Endowment carbon
less commoditised
could beDFIdue to some African project developers’ Capitalize
scale or marketing and networking capacity for executing credits, i.e., to a greater diversity of carbon credit types
bilateral (bespoke) deals. Also, project developers may and buyers valuing the “story” behind a carbon credit.
Source: Press search, reports: Convergence; TNC
not have full awareness of how to navigate the various
intermediation channels. Feedback from stakeholders Opportunity
in the market indicates that brokers and traders can take
10 to 70 percent of the carbon credit revenue40, reducing ACMI could collaborate with existing initiatives on the
Africa’s share of important climate financing. continent that are attempting to establish a carbon credit
exchange or marketplace to harmonize trading principles
Companies or individuals can buy African carbon credits on African carbon credit quality, integrity, and pricing and
either directly from a supplier or project developer to better help retain revenue that might otherwise end up
(primary market) or indirectly through intermediaries going outside the continent.
(secondary market). Intermediaries can take different
forms, from brokers and traders operating through Multiple initiatives across Africa are working to establish
their relationships with buyers (OTC) to carbon credit a carbon market exchange, including:
platforms, including carbon credit marketplaces and
carbon credit exchanges. These platforms have varying • The Kenyan government’s Nairobi International Financial
degrees of commoditisation, barriers to participation, Centre (NIFC) and AirCarbon Exchange (ACX) are
liquidity, and transaction transparency, among other partnering to develop a carbon ecosystem in Kenya.
characteristics. ACX is planning to utilize its existing blockchain-
based global platform and establish a presence in
Exhibit: Pros and cons of different intermediation channels
Exchanges Marketplace & brokers/ traders Bilateral
Pros • Higher price transparency • Greater flexibility as contracts • Greater flexibility as contracts
• Ease of oversight can be tailored can be tailored
• Limitation of counterparty risk • Lower barrier to entry • Lower transaction cost
• Increased market liquidity • Wider array of assets accepted • Ability to choose how credits are
as collateral for transactions used by buyers (trading vs
retirement)
Cons • Potential for speculation or • Lower liquidity • Large scale transaction

market manipulation • Higher counterparty risk requirement
• Commoditization of carbon credit • Lower price transparency • Higher counterparty risk
(standardized contracts only) • Need for an inhouse marketing
• Higher transaction cost
• Significant collateral and transaction facilitation team
• Limited regulatory oversight
requirements • Longer negotiation time
40
Interviews with project developers and buyers
40
21
Kenya to source transactions and support project
developers. NIFC and ACX are currently in talks Project example: Verst Carbon (blockchain-based
with different stakeholders and the project is likely to carbon project aggregator and marketplace)
benefit from a new tax incentive for carbon trading
Inspired by the need to create a robust African-based
under Kenya’s Finance Act of 202241.
carbon market for quality Africa-sourced carbon credits,
• The Egyptian government in collaboration with Verst Carbon is a blockchain-based carbon project
the Egyptian Exchange (Egypt's stock exchange) aggregator and marketplace aimed at increasing
is in the early stages of developing a carbon credit participation in climate action for the people on the
exchange42. African continent. They leverage blockchain technology
to increase the transparency and integrity of carbon
• The Johannesburg stock exchange piloted a trading markets. Their platform ensures the proceeds from the
system to 120 leaders in business, government, sale of carbon credits, that often go to intermediaries and
and civil society at a launch event in partnership brokers, are funnelled directly to project developers and
with Promethium Carbon and the High Commission the community. Additionally, their governance structure
Prosperity Team in January 201943. enables community participation beyond the buyers and
sellers of carbon credits empowering the community to
Other private initiatives such as Xange and Verst Carbon be part of the climate action initiative.
have also been developing exchange platforms or
marketplaces on the continent.
Project example: Xange.com Ltd (securities exchange)
Proposed actions Xange.com aims to provide a centralized, transparent

conduit for enhancing the engagement of developing
To help African carbon credit exchanges and countries with carbon markets. Xange.com partnered
marketplaces drive demand for differentiated African with the UN Development System to bring to market
carbon credits to both African and global buyers while a carbon credit solution under SDG 17 for the African
supporting African suppliers and communities, ACMI Great Green Wall (8,000 km of trees planted in the
proposes several actions. African Sahel Region). Xange.com is engaged with tier
1 technology providers to create a platform for Carbon
1. Coordinate and collaborate with new or existing Credit Buyers and Sellers. Compliance, scalability and
carbon credit exchanges and marketplaces to standardization are key themes in Xange’s end-to-end
establish commitments on common standards blockchain powered framework.
for the continent. Standards could include the
type of credits sold, transparency on fee levels
and structure, quality and integrity expectations Action programme 6: Deployment
and more. For example, ACMI proposes that all of financing mechanisms to de-risk
exchanges cotmmit to transparency in fee structures
and to establishing clear principles around quality
investment and lower cost of
and integrity of carbon credits. There are also capital for project developers
opportunities to support new African exchanges and Context
marketplaces in defining a shared methodology for
tracking and reporting critical co-benefits (e.g., the High cost of capital and lack of access to adapted
value provided to communities). financial mechanisms to provide early-stage capital and
to de-risk investments are critical challenges for African
2. Consult project developers to understand their carbon project developers.
ability to meet such standards and principles
and share the pros and cons of different sale High cost of capital is mainly due to relatively high risks
options to make an informed decision on the most associated with Africa carbon projects development.
There are four common types of risk.
appropriate option.
• Country risk is related to political, regulatory, and
Potential partners: Local carbon credit exchanges,
administrative challenges (cf. 85 percent African
project developers
countries scoring in lower half and more than half
in bottom quartile of Ease of Doing Business Index
202044) and foreign exchange risk.
• Counter party risk is related to project developers

defaulting on their debt obligations, which is
especially a concern when project developers
41
Reuters, Kenya plans to set up emissions trading system, by George Obulutsa, May 2021
42
Daily News Egypt, EGX works on launching carbon certificates market soon, by Fatma Salah, Sept. 2022
43
Government of UK, South Africa-ready for carbon trading, Feb. 2015
44
The World Bank, Doing Business Index, 2020.
41
cannot provide track records of past repayments. “Multiple financing instruments could
• Project risk is due to physical risk, potential lack of be mobilised to unlock Africa’s carbon
scale, capabilities, and adapted technologies to drive
efficient project development and implementation.
credit supply potential”
Opportunities
• Market risk is related to the carbon credit market’s
price variations over time and by project type and Multiple financing instruments could be mobilised to
quality, and related to the nascent stage of hedging unlock Africa’s carbon credit supply potential.
mechanisms. For example, the international
framework Basel III, through its Fundamental Review • Among funding instruments, blended financing
of the Trading Book (FRTB) to be implemented in can help reduce the cost of capital by leveraging
January 2023, allocates a 60 percent risk weighting development finance to lower the investment risk for
to carbon credits. This is one of the highest ratios for private (for-profit) capital. For example, the Africa
any commodity (e.g., twice as much as crude oil), Agriculture and Trade Investment Fund (AATIF),
impairing banks’ ability to act as intermediaries and a public-private partnership, has been founded by
increasing overall transaction costs. development finance institutions to improve Africa's
agricultural potential, relying on a blended finance
Moreover, there is a lack of access to adapted financial vehicle that invests in agricultural production and
instruments for project developers to access early- businesses along the agricultural supply chain.
stage financing (without a track record of carbon credit
issuance) and for investors to de-risk investment and • Pre-financing off-take agreements is also an
hedge against country, counterparty, project, and interesting mechanism to provide early-stage
market risks. Given this, many project developers rely on financing and reduce risk on carbon credit projects
philanthropic or NGO support in early stages as they lack by hedging a borrowing/lending facility through
access to capital from financial institutions a future offtake agreement. Success of such
Exhibit: Set of potential financial instruments to help unlock Africa’s carbon credits supply potential
(non-exhaustive)
Potential to address the challenge Indirectly addresses challenge
Reduce De-risk Provide

cost of invest- early stage
Instruments (non-exhaustive) Description capital ment funds Examples
Funding Grant Mechanism to fund early-stage non-commercial activities which ADB’s Future Carbon
instruments are crucial in allowing new projects and technologies to Fund
become bankable
Equity or debt Enables projects to establish operating performance data by DFI concessional
financing providing funding at different stages of project development loans, VC and PE
funding
Green or carbon Fixed-income instrument issued by a government or private World Bank Green
bonds entity designed specifically to support specific climate-related or Bond
environmental projects
Pre-financing Borrowing/lending facility hedged by a future off take

offtake contract/ agreement with a buyer who agrees to buy the carbon credit
agreement generated by the project for a fixed price
Blended financing Strategic use of development finance for the mobilization of Africa Agriculture and
additional finance towards sustainable development in Trade Investment
developing countries Fund
YieldCos Entity formed to own operating assets, such as solar or wind Revego Africa Energy
power, and to raise funds by issuing shares to investors Limited
Stock exchanges Entity that provides relevant market infrastructure and rules to London Stock
support the listing of designated carbon funds investing in Exchange’s VCM
climate mitigation projects
Trading and Derivatives Financial instruments such as futures, index, swaps or options ICE NBS carbon credit
risk hedging contracts that are based on the values of their underlying futures contract
instruments assets
Guarantees and Instrument used to help overcome a wide range of risks incl. MIGA political risk
insurance political and counterparty risks, and enhance the insurance
creditworthiness of an investment
Carbon buffer Buffer reserve pool of individual projects, which functions as an World Bank climate
reserve insurance mechanism to address the risk of GHG reductions warehouse
mechanism being reversed
42
also be mobilized to further mitigate investment • Promote products enabling market “tradability”,
risks, such as futures / options contracts, guarantees creating market liquidity, providing price
and insurances. transparency and de-risking mechanisms (e.g.,
guarantees to financiers against borrower
Deploying these mechanisms requires collaboration
default, to project developers against buyer
with financial institutions and philanthropic/NGO
organizations to deploy Africa specific initiatives, support default, to buyer in case of project execution
early-stage projects and further deepen global carbon issues, spot and future contracts, insurance
markets (e.g., availability of derivative markets for mechanisms).
hedging). • In the longer term, established products
Financial institutions can play a structuring role in carbon could be evolved to more complex
credit projects financing by: structures, expanding alternatives for
different usages of carbon credits such
• Supporting carbon credit project origination by as hedging (index and options contracts).
developing relevant financing instruments, directly
providing funds, or acting as subordinate lender, and
Potential partner: Financial institutions active on
arranging pre-financing for offtake agreements;
the continent (e.g., banks, PE funds, insurance
• De-risking project performance and execution companies), carbon credit exchanges and
by developing and providing relevant guarantee marketplace platforms
instruments;
5. Integrate financing in country planning,
• Facilitating carbon credit sales and knowledge focusing on incentives and support for local
sharing. financial institutions to fund carbon projects
Philanthropies and NGOs can play a crucial role in development. This will require cooperation between
financing carbon credit projects on the continent by governments and local financial institutions, as
continuing to provide early-stage financing. well as a best practices framework that can be
developed by the continental working group.
Proposed actions Addressed under action programme 1

To de-risk investment and lower cost of capital for project
developers, ACMI proposes to support several actions.
Action programme 7: Set up of an advance
1. Encourage financial institutions to value carbon market commitment for African carbon
revenue like other revenue streams and to
credits
adjust their risk frameworks to enable lending and
provision of working capital against carbon revenue Context
streams.
To grow the supply of carbon credits on the continent,
2. Advocate for philanthropies and NGOs to the demand for credits must grow in tandem. In 2021
continue supporting high quality carbon credit there were 22 MtCO2e retired from Africa out of total
projects with significant biodiversity and community supply of 39 MtCO2e45. An advance market commitment
focus, especially in early stage. (AMC), where multiple corporations commit to purchase
large quantities of carbon credits from Africa, can send
Potential partner: Philanthropies and NGOs, a strong demand signal and incentivise suppliers to
especially focused on nature-based solutions develop projects.
3. Encourage the scale-up of DFI-led blended
Existing AMCs like Frontier, First Movers Coalition
finance programs for Africa-carbon credits. (FMC), and Lowering Emissions by Accelerating Forest
Potential partner: DFIs and other capital providers Finance (LEAF) coalition have already demonstrated
impact in catalysing demand for the voluntary carbon
4. Establish a continental working group of market. Frontier is working to accelerate the development
financial institutions focused on facilitating the of carbon removal technologies, has mobilized $925
development of adequate financial instruments million in advance commitments to purchase permanent
to fund and de-risk carbon credit project carbon removals and already purchased ~2.5 ktCO2e
development in Africa in the mid-long term. to date46 . FMC is facilitating decarbonization of the
industrial sector and has 50+ member companies that
• Develop and promote tailored made financing
have committed to purchasing a proportion of their input
solutions for VCMs (e.g., support offtake materials from suppliers using zero-carbon solutions,
agreements). despite the premium cost47 . Frontier and FMC account
45
McKinsey Vivid Economics Carbon Credit Database, drawing on Verra, Gold Standard, ACR, CAR, Plan Vivo. (2022)
46
Frontier (2022)
47
World Economic Forum (2022)
43
Exhibit: Example AMCs in the voluntary carbon market (non-exhaustive)49
Examples Members/entities Impact
Frontier mobilized $925 million in advance

market commitment for permanent carbon
removals and purchased ~2ktCO2e to date.
Frontier and First Movers Coalition account for
50+ ~90% of total commitments to purchase
companies removal credits which is 4.5X the total
including: removals purchased to date (~0.8 MtCO2e).
The LEAF Coalition mobilized a pledge of +$1

Bn for jurisdictional-scale forest protection.
for ~90 percent of total commitments to purchase confidence from financiers and demonstrate project
removal credits. Likewise, LEAF Coalition aims to halt viability. It can also help ensure sufficient income
deforestation by financing large-scale tropical forest goes to project developers for the sale of credits.
protection and has mobilized a pledge of +$1 billion for This can, in turn, help increase the income for on the
jurisdictional-scale forest protection48 . ground communities and implementors.
“Once we knew there could be a floor price for the

“An advance market commitment purchase of our credits, we were able to quickly raise a
can incentivise suppliers fund to support expansion.” -Project Developer
to develop projects” 3. Facilitating connections between buyers and
suppliers: African project developers rely on
AMCs have been effective in increasing demand for
intermediaries with high fees or need to spend
projects based on established methodologies including
heavily on in-house marketing and sales
nature-based solutions like afforestation, reforestation,
departments to bring their credits to market.
and conservation (e.g., REDD+), as well as more
Similarly, buyers indicate that there is often a
innovative project types like engineered removals.
significant amount of work required to identify and
An AMC can help boost Africa’s voluntary carbon market vet projects in the African continent (e.g., hard to
ecosystem by: validate the quality and ensure integrity). AMCs can
build a network of project developers and easily
1. Unlocking financing for project developers: connect buyers to relevant suppliers.
project developers in Africa have indicated that
difficulty accessing early-stage capital and “We have been working to figure out a route to market
the high cost of capital are among the biggest and build a sales team, but we didn’t know this before,
challenges to scaling. AMCs start as a none binding so we had to rely on brokers or marketing consultants or
commitments; however, over time, buyers could other intermediaries.” -Project Developer
establish legally binding purchase contracts with
project developers. These agreements can be for 4. Ensuring a supply of high-quality, high-integrity
immediate purchase (providing financing on the spot credits for purchase: Stakeholders have indicated
to project developers) or future purchase (providing that sourcing quality credits from Africa with
documentation that project developers can leverage transparency on co-benefits to local communities
to access traditional financing like bank loans). and asset owners is usually challenging. An AMC
can set strict guardrails for building supply pools and
“If advance offtake agreements or something like this vet carbon projects to ensure high-quality and high-
existed to cover the initial project development phase, integrity credits.
this could really boost carbon project development.”
-Project Developer “You have to do a lot of due diligence on projects to
understand the integrity, quality and social impact.
2. Ensuring sufficient income for credits: Additionally, Existing rating systems aren’t always accurate.” -Buyer
AMC’s can provide support by setting a floor price Opportunity
for the purchase of credits. Project developers have
indicated that being able to demonstrate a potential ACMI, together with several buyers, is setting up a multi-
floor price for credit purchases can help increase million-dollar advance market commitment to purchase
African carbon credits between now and 2030. The
48
The LEAF Coalition (2022)
49
Press search
44
list of the AMC founding buyers will be announced on emissions during the transition to net zero).
ACMI’s landing page (SEforAll.org/ACMI). ACMI intends
to increase the total commitment size in the coming year. 2. Build a supply pool: ACMI is engaging with project
To join the AMC, companies sign a non-binding letter of developers on the continent to build a continuous
intent (LOI) to purchase African carbon credits between supply of credits. ACMI intends to launch annual
now and 2030. Companies will be expected to finalize RFPs to solicit proposals from African project
a formal purchase of carbon credits from a project developers and then vet proposals based on specific
developer within two years of signing the LOI. The terms criteria. Certified credits in the supply pool will be
for the purchase contract are negotiated directly between expected to meet a set of requirements including
the buyer and the project developer (including when the having been verified by a reputable third-party
carbon credit will be delivered). validation/verification body and meeting ACMI’s
ambition of fair and transparent revenue sharing
As part of joining the AMC, companies accept ACMI’s with local communities and asset owners. The AMC
buyer integrity principles, including: intends to prioritize the purchase of recent vintages
over older vintages to drive new climate impact.
• Working towards setting a globally accredited net- Furthermore, ACMI aims to adopt the Integrity
zero target (e.g., race to zero, VCMI claims code of Council for Voluntary Carbon Market (ICVCM),
practice) and a plan to achieve the target; Core Carbon Principles (CCPs) (once finalized and
• Prioritizing reducing the organisation’s own reviewed) to set standards for high-quality, high-
operational (scope 1, 2) and value chain (scope 3) integrity carbon credits.
emissions, in line with science-based targets; The AMC supply pool will include projects from
• Only use carbon credits simultaneously with direct existing methodologies and innovative products
emissions reduction efforts (e.g., to neutralize across all project types. Africa has huge untapped
residual emissions to reach net-zero, or to potential to generate more credits from existing
compensate emissions during the transition to net methodologies including nature-based solutions,
zero). renewable energy projects (e.g., Geothermal / Hydro
/ Solar / Wind), cookstove projects, and more. The
Companies must also be aligned with ACMI’s ambition AMC also looks to facilitate purchases of carbon
to grow the voluntary carbon market in Africa and credits based on new methodologies and innovative
transparent and fair revenue sharing with communities. projects. By focusing on innovative projects like
ACMI will also encourage buyers to adopt more diesel decommissioning, biodiversity credits, and
ambitious net-zero targets (e.g., the VCMI’s provisional more, the AMC will send a strong demand signal for
Claims Code of Practice that requires aggressive products that don’t yet have a market.
emissions reduction to net zero before 2050). However,
ACMI will not conduct diligence or vet buyer net-zero 3. Facilitate transactions: ACMI proposes to
commitments. These principles will continue to be develop a mechanism (e.g., auctions) to match
reviewed and revised over the coming years. buyers and suppliers based on preferences (e.g.,
project type). ACMI also plans to work with key
stakeholders to inspire trust and confidence in the
market, by ensuring credible listing of projects on
Proposed actions global registries to avoid fraud and double counting,
developing mechanisms to avoid mis-channelling
To launch a successful AMC, ACMI proposes to execute
of financial flows and minimise transaction risks
three main activities over the coming years.
(e.g., buffer pool, escrow, blockchain-based smart
1. Convene buyers: ACMI is engaging with additional contract tools), and developing best practices for
buyers to garner more commitments and increase arranging pre-financing purchase contracts to unlock
the total commitment size. ACMI plans to assess financing for project developers.
the interest of buyers including project types, quality,
ACMI, in collaboration with the AMC founding buyers, will
and integrity requirements to develop a deeper
develop the detailed activities and resources required to
market insight and shape the AMC operating model.
run day-to-day AMC operations.
ACMI aims to engage with a variety of buyers from
buyers with an African footprint to significant global
or African carbon credit purchasers to buyers with
especially strong net zero targets. To join the AMC,
companies must set (or work towards setting) a
globally accredited net-zero target (e.g., race to zero,
VCMI claims code of practice). Moreover, they must
prioritize reducing their own operational (scope 1, 2) Action programme 8: Establishment of
and value chain (scope 3) emissions, and only use
carbon credits simultaneously to direct emissions African carbon neutral commodities
reduction efforts (e.g., to neutralize residual Context and opportunity
emissions to reach net-zero, or to compensate
45
Carbon neutral commodities are products whose scope exports. High potential commodities to focus on could
1 and 2, and potentially scope 3 CO2e emissions have be identified based on export value, carbon intensity of
been fully eliminated or compensated for (in case of production, emissions reduction potential, and existing
residual emissions, by bundling sales with carbon demand for greener products.
credits).
For illustration, cocoa, coffee, tea, copper, iron, steel,
The global carbon neutral commodities market has and gold might be good candidates to develop carbon
been and is expected to continue growing, as B2B neutral commodities projects in Africa, based on their
customers are increasingly seeking to decarbonise weight in exports, emissions reduction potential, and
their value chains and align with changing customer existing programs. Copper, cocoa, and iron and steel
preferences. Global examples show that carbon neutral rank amongst top 10 exports in US dollar values in
and more largely ‘green commodities’50 can attract a Africa in 202153. In terms of existing methodologies and
price premium compared to ‘grey’ ones. For example, in potential to reduce emissions, tea, coffee, and copper
the plastics market, recycled polyethyle ne terephthalate are the object of carbon neutral commodity projects
(PET) has reached an average price premium of $300 globally (e.g., Dilmah’s carbon neutral tea, monteCCer’s
per tonne over virgin PET51 . carbon neutral arabica coffee, and BHP and Southwire
carbon neutral copper cathodes)54, which could be
Africa has also seen development of carbon neutral replicated for Africa. Finally, gold has been highlighted
commodities projects, such as Cotton made in Africa as its production involves multiple energy intensive
(CmiA)’s Carbon Neutral Initiative, supported by the processes such as ore mining, crushing, milling, and
Aid by Trade Foundation in partnership with Atmosfair, refining, resulting in significant CO2e intensity55. To
aiming to steadily reduce the greenhouse gas emissions illustrate the potential for carbon neutral commodities,
caused by cotton cultivation and ginning while also these six commodities could together create demand for
compensating for residual emissions that cannot up to ~170 Mt CO2e, assuming 100 percent of emissions
be avoided52. Yet there are still few of these efforts. was curbed through decarbonization efforts or offset (for
There is an opportunity for Africa to create carbon- residual emissions).
neutral commodities to build demand for its voluntary
carbon markets and add a premium to the continent’s Identification of the most relevant commodities to
Exhibit: Estimated technical potential from selected carbon neutral commodities (illustrative)
Estimated Estimated Carbon credits Potential

Example carbon volume carbon required to offset all value for
neutral exported, ‘000 intensity, commodity these credits,
commodities tonnes 20211 tCO2e/tonne emissions, MtCO2e2 $ Mn3
Agricultural Tea 700 2.84 2 11
commodities
Coffee 1,400 2.85 4 22
Cocoa 4,000 1.56 6 33
Metals Copper
2,500 2.57 6 33
commodities concentrate
Iron and steel 70,000 1.98 135 743
Gold 0.6 25,6009 15 83
Total ~168 ~925

1. Based on estimated $ value of Africa exports per product (Trademap 2021, UN Comtrade) divided by an estimated price per tonne (based on press search)
2. Assuming 100% CO2e emissions curbed through decarbonation efforts, and potential offsetting of residual emissions
3. Assuming $5.5 per carbon credit, based on average price for African credits in 2021, from Ecosystem Marketplace
4. Source: ETHOS Research, "Climate Change the Tea Sector in Kenya: Impact Assessment and Policy Action National Multi-Stakeholder Workshop”, April 2013
5. Source: Maina, J., Gareth, K., Mutwiwa, U., & Githiru, M., "Evaluation of Greenhouse Gas Emissions along the Small-Holder Coffee Supply Chain in Kenya”, 2016
6. Source: Vervuurt, W., Slingerland, M., Pronk, A., & Van Bussel, L. "Modelling greenhouse gas emissions of cacao production in the Republic of Côte d'Ivoire”, 2020
7. Source: Desai, P. "Metals recycling to be a key plank for cutting emissions“, July 2021
8. Source: Hoffman, C., Van Hoer, M., & Zeumer, B. "Decarbonization challenge for steel”, June 2020
1. Gold production involves multiple energy intensive processes including ore mining, crushing, milling and refining. Source: McKinsey Catalyst Zero, July 2022
50
Green commodities may not be carbon neutral but are produced in an eco-friendly way with lower emissions
51
Cramer, D., Smeets, B., Van Hoey, M., & Wiebes, E., The new imperative for green commodities, August 2022.
52
Cotton made in Africa, CmiA Carbon Neutral: A New Initiative by the Aid by Trade Foundation for CO2-Neutral Cotton, 2021
53
Africa Exports 2021; UN Comtrade (2021).
54
Companies’ websites
55
Gold production involves multiple energy intensive processes incl. ore mining, crushing, milling, and refining. Open pit mining is common in Africa as it is
preferred in areas with lower grade ores. The World Bank and World Gold Council classify a high-quality underground mine as having a gold ore density
between 8 and 10g/t, while a low-quality underground mine has a gold ore density of between 1 to 4g per tonne. In Africa, for example, Namibian gold ore
averages 1.4g per tonne
46
develop carbon neutral projects would require more ensuring that buyers and high integrity standards
in-depth analysis, especially in terms of feasibility to organizations understand and account for the unique
reduce direct CO2e emissions. To ensure high integrity, value of Africa credits and by advocating for African
commodities producers should indeed create carbon credits to be more widely integrated into international
neutral commodities that lean first on the reduction of compliance markets.
direct emissions before leveraging carbon credits to
offset residual emissions. “Higher credit quality will help to build
Moreover, decarbonisation efforts could be combined
public and corporate confidence in
with projects that involve more processing in Africa. For carbon markets”
example, a recent BloombergNEF study has showed that
the Democratic Republic of the Congo could leverage
Advocacy for carbon credit quality, integrity and
its abundant cobalt resources and hydroelectric power
value for buyers – Context and opportunity
to become a low-cost and low-emissions producer
of lithium-ion battery cathode precursor materials56. Carbon credit quality and integrity is critical to ensure
credits are legitimately contributing to achieving Paris
Agreement goals. Higher credit quality will also help to
Proposed actions build public and corporate confidence in carbon markets,
increasing demand and growing market size.
ACMI proposes several actions to foster development
and growth of African carbon neutral commodities. Ever since the Kyoto protocol entered into force in
2005, marking the beginning of carbon trading, various
1. Conduct preliminary market-potential analysis organizations have sought to standardize and evaluate
to help commodity suppliers understand the value of carbon credits. These include:
developing carbon-neutral commodities.
• Standards, like the Gold Standard (which launched
Potential partners: large commodity exporters on the for voluntary projects in 2006) or the Verified Carbon
continent, international buyers Standard (2007);
2. Showcase international and continental • Meta-standards, like the International Carbon

examples of successful carbon neutral commodities Reduction & Offset Alliance (ICROA), which
projects and how they could be scalable / assesses standards (2008); or the recently launched
Integrity Council for the Voluntary Carbon Markets
transferable to Africa.
(ICVCM), which sets benchmarks for quality credit
Potential partners: international and continental types and credits;
project developers • Claims guidance providers, like the Voluntary
3. Work with standards organisations to ensure Carbon Market Integrity (VCMI) Initiative, which
standards are applicable to Africa’s key provides guidance to organisations on the legitimate
use of carbon credits and awards gold, silver, and
commodities, promoting integrity, legitimacy, and
bronze accreditation. Their guidelines require that
adoption of standards.
organisations set a science-based net-zero target
Potential partners: Standards organisations and reduce or mitigate emissions where possible
before purchasing credits.
4. Support the development of 2-3 flagship
The number of organisations and principles in the space
projects or pilots focused on high potential carbon
reflects the fact that norms around carbon credits are
neutral commodities.
evolving rapidly. Several potential buyers have told ACMI
Potential partners: large commodity exporters on the that they’re waiting to purchase carbon credits until there
continent, buyers ready to commit to purchase these is more agreement on best practices.
carbon-neutral commodities It’s crucial that standards evolve in a way that works
for carbon markets in Africa. For example, many
Integrate carbon neutral commodities in
African countries are endowed with vast carbon sinks.
country planning, encouraging countries to
Preventing the degradation of these areas could result
identify and support a set of high-potential projects
in carbon credits to meet globally growing demand while
(potential to be addressed under action programme 1). avoiding the release of enormous amounts of carbon.
Standards need to rigorously maintain integrity without
Action programme 9: Advocacy to build setting requirements that functionally make critical credit
demand for African carbon credits types, such as avoided deforestation, impossible to
certify. Changing standards are also reflected in buyer
ACMI aims to build demand for African credits by
56
BloombergNEF, “Producing Battery Materials in The DRC Could Lower Supply-Chain Emissions and Add Value to The Country’s Cobalt”, Nov. 2021
47
preferences, such as the increasing preference for of obligations to be covered with carbon credits from
carbon removal credits over carbon avoidance credits domestic projects or from CDM projects where Korean
and a growing momentum around innovative carbon companies participate. In California and Quebec’s ETS,
removal technologies. This could negatively impact emitters can offset a small portion of their cap-and-trade
African credits where there is significant potential in obligations, and offsets can come from approved sector-
avoidance credits and a need to protect forests and other based crediting programs57. Carbon Offsetting and
large carbon sinks. There is a need to advocate for the Reduction Scheme for International Aviation (CORSIA)
value of high quality, high integrity avoided emissions accepts the use of credits verified by Gold Standard,
credits from Africa. Verra, and several other standards to fulfil member
airlines’ carbon neutral growth commitments58. Yet more
Offsetting best practices should set a high bar for than 50 other carbon pricing instruments operating today
integrity while recognising the substantial climate do not accept carbon credits. Furthermore, Africa has no
benefits Africa is providing to the world, including through local compliance markets, except in South Africa. South
its natural carbon sinks and by pursuing a low carbon Africa’s carbon tax was introduced in 2019 and as of
development pathway. The lack of climate finance 2022, the tax rate was R144 (~US$8-9 per tonne)59. Up to
flowing to Africa, and developing countries more broadly, 10 percent of carbon tax obligations may be covered with
is acknowledged by both developed and developing carbon credits from domestic projects that follow CDM,
countries as a glaring climate injustice. It is crucial for the Verra, or Gold Standard methodologies.
success of global climate action that carbon markets help
to correct this imbalance rather than reinforce it. Africa also hasn’t fully explored bilateral country deals
to create additional demand for its carbon credits. In
ACMI will look to coordinate with and support 2021, Switzerland signed a climate change mitigation
recognized global initiatives (e.g., ICVCM, VCMI, agreement under the Paris Agreement with Senegal
SBTi) while ensuring these efforts adequately and Ghana60. The deal includes the transfer of mitigation
capture integrity and quality for African projects. outcomes to Switzerland to help it meet its national target
under the Paris Agreement in return for Switzerland’s
Advocacy for carbon credit quality and value for support for implementing climate change mitigation
buyers – Proposed actions projects in West African countries. Such bilateral deals
can help other African countries to strengthen their
Building understanding around the value of Africa climate financing and VCM.
credits will require outreach across the carbon markets
ecosystem. ACMI thus proposes to: Opening access for African suppliers to sell into the
global compliance markets can significantly boost
1. Conduct roundtables and structured demand for African credits. For example, in 2021 alone,
discussions with carbon market experts, the EU ETS traded more than 1,300 MtCO2e emission
international and local exchanges, and global units61—enabling access to even a tiny portion of this
buyers, to raise awareness of African credit market could create a vast opportunity for project
types and understand current barriers that developers across Africa. Furthermore, compliance
limit demand. These roundtables should happen markets often have floor prices that can help mitigate
on a recurring basis and should take place on the the price fluctuations in the voluntary carbon market,
continent, in different African countries. Currently, increase market confidence and unlock more financing.
many of international climate-focused round tables,
discussions or conferences take place outside Africa.
2. Engage with global standards organisations to

ensure that emerging guidelines on integrity
appropriately value African credits and support
the development of African voluntary markets.
Advocacy for access to international compliance

markets – Context and opportunity
Opening international compliance markets to African

project developers and fostering bilateral country to
country purchases can significantly scale demand
for African credits. Currently, only a few compliance
markets accept carbon credits generated outside of
their jurisdiction including from Africa. South Korea’s
Emissions Trading System (ETS) allows up to 5 percent
57
The World Bank, “State and Trends of Carbon Pricing 2022”, May 2022
58
International Civil Aviation Organization, CORSIA Eligible Emissions Units, Nov. 2020
59
National Treasury, Republic of South Africa, Budget 2022 Speech
60
Foundation for Climate Protection and Carbon Offset KliK, “West Africa strengthens international cooperation for climate change mitigation”, July 2021
61
European Environmental Agency (2022)
48
Exhibit: Overview of compliance markets that allow carbon credits
Beijing Parking Offset

Saskatchewan GHG Crediting Mechanism
Offset Program Beijing Forestry Offset
Saitama Target Setting
Mechanism
Alberta Emission Emissions Trading System
Offset System Québec Offset Crediting Saitama Forest Absorption
Mechanism Certification System
British Columbia
Offset Program
Tokyo Cap-and-Trade
Program
Chongqing Carbon Fujian Forestry Offset

Offset Mechanism Crediting Mechanism
Guangdong Pu Hui Offset

RGGI CO2 Offset Crediting Mechanism
Mechanism
Canada Federal
GHG Offset System
Republic of Korea Offset

Switzerland CO2 Kazakhstan Crediting Credit Mechanism
Attestations Crediting Mechanism
Mechanism
Joint Crediting
California Mechanism
Spain FES-CO2
Compliance Program J-Credit Scheme
Offset Program
China GHG Voluntary
Emission Reduction Program
Mexico Crediting
Mechanism
Thailand Voluntary Taiwan GHG Offset
Emission Reduction Management Program
Program
Colombia Crediting Sri Lanka Carbon

Mechanism Crediting Mechanism
Chile Crediting Indo-Pacific Carbon

Mechanism Offsets Scheme
South Africa
Crediting Mechanism Australia Emissions
Implemented Reduction Fund
Under development
Source: The World Bank, “State and Trends of Carbon Pricing 2022”, May 2022
49
Advocacy for access to international compliance Action programme 10: Piloting of new
markets – Proposed actions
project types and methodologies relevant
ACMI proposes several actions to advocate for access to to decarbonisation opportunities in Africa
international compliance markets.
Context
1. Advocate and engage directly with decision-
makers to build lasting, global demand As previously mentioned, carbon credit projects in Africa
for African credits by opening access to have been mainly focused on agriculture, forestry and
international compliance markets. Advocacy land use, and household devices and energy (more
is also important to raise awareness and ensure than 95 percent of credits issued over 2016-202262).
Africa unlocks the full potential of bilateral deals and Although there is a significant potential to further scale
Global South-North collaboration on climate change and develop these types of projects, they don’t account
mitigation under the Paris Agreement. for the full potential for carbon credit generation on the
continent.
2. Convene experts to establish best practices
for how compliance markets can, with high To better capture specific decarbonisation opportunities
integrity, incorporate international carbon on the continent, new types of projects could be
credits. Giving regulators more comfort in how to developed across multiple sectors (e.g., renewable
ensure international carbon credits are high quality energy, waste management, engineered carbon dioxide
would eliminate a major barrier to market integration. removals, transport, agriculture and soil sequestration,
livestock, blue carbon), as well as methodologies that are
3. Create transparency and awareness among better adapted to the local context.
African project developers on the requirements
of the different compliance markets, for them to In particular, fossil fuel displacement via distributed
be able to design projects accordingly. renewable energy (DRE), coal decommissioning and
savannah grasslands fire management projects are
good examples of Africa’s specific decarbonisation
opportunities.
Exhibit: Africa total credit issuances by project type, by year, MtCO2e

Forestry and landuse Energy Blue carbon Industry gases
Agriculture Household devices Waste Others 38.9
6.7
7.1
24.9
21.6
2.8 6.6
0.7
15.5 1.1
3.5
10.6 24.0
0.9
17.7
5.1 16.0
4.8
1.0 9.9
2.7
0.5 4.3
1.5
2016 17 18 19 20 2021
Source: Vivid Economics carbon credit database including data from Verra, Gold Standard, and Plan Vivo registries
62
McKinsey Vivid Economics Carbon Credit Database, drawing on Verra, Gold Standard, ACR, CAR, Plan Vivo. (2022)
50
Exhibit: Potential diversified projects types and methodologies for Africa (non exhauative)
Opportunity Leakage
Methodologies space Additionality Permanence prevention Co-benefits
Fossil fuel Promote off-grid Depending on the n/a, no storage No Improved access
displacement technologies to country, off-grid leakage to electricity,
through reduce carbon systems may already expected health benefits
distributed emissions from be deployed (or and energy
renewable fossil fuel power planned for transition support
energy (DRE) sources deployment) as part
of efforts to extend
electricity access
Coal decommis- Accelerate coal Accelerating plans to n/a, no storage Dependent Energy transition
sioning decommis- decommission on energy support and
sioning efforts emission intensive sources associated health
coal power could be selected to benefits
enabled via carbon substitute
credit revenue; May coal power Need to consider
depend on current plants income and job
limiting factors for implications due
accelerated to accelerated
decommissioning decommissioning
Savannah Implement fire Carbon credit Better fire No Employment

grasslands fire management for revenue would be management leakage opportunities
management savannah the sole financial practices may be expected (esp. for local
landscapes incentive for better reversed and communities) and
savannah grassland saved CO2 emitted biodiversity
fire management to the atmosphere protection
practices (e.g., by fire)
Opportunity and proposed actions to encourage Standards organisations have different requirements
fossil fuel displacement via distributed renewable for renewable energy projects, including countries
energy (DRE) projects and types of projects eligible for certification.
There is a need to clarify existing methodologies
In Western Africa, petrol and diesel generators provide that provide a pathway to certify and register DRE
up to the equivalent of 40 percent of grid capacity. These projects. Moreover, should it be required, standards
generators are expensive, inefficient and produce organisations could collaborate with on-the-
significant CO2 emissions (e.g., up to 30 percent of CO2
ground DRE project developers to develop new,
emissions in Nigeria) 63.
fit-for-purpose methodologies that better reflect
Carbon revenues can finance projects to expand the realities of DRE deployment and fossil fuel
distributed renewable energy solutions to displace decommissioning in Africa.
fossil fuel generators at the point of use for households
and businesses, as well as expand access to clean and Potential partners: standards organizations, ~1-2
reliable electricity. For example, in Nigeria alone there is pilot project developers
an estimated annual maximum technical potential of ~20
2. Call for project developers to pilot a new
Mt CO2e from the displacement of fossil fuel generators.
methodology: Once a pathway to validation/
There is no meaningful precedent for DRE-related verification is identified in collaboration with
carbon revenues in Africa. This is largely driven by a lack standards organisations, there is a need to pilot the
of awareness and lack of clarity on pathways to certify mechanism with 1-2 existing on-the-ground project
DRE projects for carbon credit generation. developers.
ACMI proposes to expand opportunities to obtain Potential partners: ~1-2 pilot project developers
carbon credits for the displacement of fossil fuels and
deployment of DRE solutions through three main actions. 3. Set up aggregation mechanisms for small-
scale developers to achieve the scale of emissions
1. Work with standards organisations to clarify avoidance required for credit issuance: Historically,
certification pathways for DRE projects: DRE deployment has been pursued at small scale
19
63
International Finance Corporation, The Dirty Footprint of the Broken Grid, 2019
51
(e.g., deployment one household at a time) which Opportunity and proposed actions to develop coal
limits project developers’ ability to generate carbon decommissioning projects in Africa
credits. Some existing business models (e.g., project
Accelerated coal decommissioning in Africa (particularly
finance through special purpose vehicles) or support
South Africa) could potentially benefit from carbon credit
models (e.g., grant mechanisms through donor
revenues (or other innovative products), as thermal
support) could potentially be utilized to aggregate
projects to a larger scale. generation capacity is replaced with renewable energy
generating projects in the region (e.g., leverage from
Potential partners: funder organisations, energy- hydroelectric power plants in Mozambique). South
related aggregation mechanisms already in Africa’s electricity capacity is primarily coal-based
operation (e.g., aggregation of financing), project (~80 percent). South Africa is the 14th largest CO2
developers emitter in the world (452 Mt CO2 in 2020), responsible
for 1.3 percent of total emissions, and the power sector
4. Support the development of automated accounts for ~45 percent of South Africa’s emissions64.
monitoring capabilities: Certification of carbon
credit-generating projects can involve time- In September 2021, the Government of South
consuming manual reporting and auditing if the Africa submitted its updated Nationally Determined
project developer does not have data capabilities to Contribution (NDC) which aims to reduce all greenhouse
track usage of DRE systems. Automated monitoring gas emissions to 366-436 MtCO2e per annum65. For
capabilities could be developed to enable project South Africa to meet emissions reductions goals, the
developers to continuously validate impact in a Government would likely need to retire plants earlier
cost-effective way. Monitoring processes should than the timeline established in its 2019 power sector
be developed in collaboration with international blueprint, the Integrated Resource Plan (IRP). Carbon
standards and integrity bodies to ensure high credits could potentially be utilized to finance large-
integrity of DRE carbon credits. scale emissions avoidance projects that expand
access to clean and reliable electricity through early
Potential partners: funder organisations, large- decommissioning of coal power stations.
scale energy focused NGOs, technical assistance
providers, project developers, international ACMI proposes to assess the development of a pathway
standards organisations, integrity bodies. for carbon credit revenues (or another innovative
products) for coal decommissioning, through three
actions.
1. Convene working groups that have been focusing

Project example: SunCulture (off-grid solar on this topic to join efforts in assessing the most
technology-based irrigation and power provider) appropriate way to address coal decommissioning
(i.e., carbon credits or alternatives) and conduct
Climate change and unpredictable rainfall results in a detailed assessment of the financial and non-
limited access to water and lower yields for African financial additionality of a coal decommissioning
smallholder farmers who must resort to cheap
project.
fuel pumps, thus perpetuating climate change
further. SunCulture breaks the current vicious Potential partners: Experts, coal plant operators,
circle by introducing solar irrigation. The purchase renewable energy project developers
of carbon credits helps to enable this by lowering
the cost of solar irrigation to a price below existing 2. Potentially identify a pilot project and collaborate
diesel and petrol water pumps. The accompanying with standards organisations to develop a dedicated
co-benefits of the project touch on 13 Sustainable methodology for coal decommissioning
Development Goals (SDGs).
Potential partners: standards organisations, ~1-2
pilot project developers
3. Encourage expansion of renewable

energy capacity to enable accelerated coal
decommissioning (whether locally or in neighbouring
countries).
Potential partners: national entities (e.g., ministries of

energy), renewable energy project developers
64
CSIR “Setting up for 2020s”, Conference Publication, Wright Jarrad G, Calitz Joanne R, 2020; Eskom, Annual Reports, 2021; Enerdata Global Energy and
CO2 Database, consulted in December 2021
65
South Africa’s Revised NDC, 2021
52
Opportunity and proposed actions to develop technical support to local project developers, and
savannah fire management projects in Africa incubating early-stage projects (in collaboration with
action programme 2).
Savannah fire management is based on the observation
that fires in the early dry season burn cooler and emit Potential partners: experts (e.g., an Australian
relatively fewer emissions than late dry season fires. project-developers), accelerator / incubator to
Thus, by shifting fire regimes to earlier in the dry season, support high-potential nascent project types
there is an opportunity to lower carbon emissions and (cf. action programme 2).
thus generate carbon revenue, especially towards the
financing of protected areas. Moreover, improved fire Beyond these 3 examples, other opportunities need to be
management can reinforce ecosystem resilience and explored (e.g., livestock methane reduction).
reduce threats to biodiversity.
Australia is the only country to have issued savannah

fire management carbon credits so far, with ~10 Action programme 11: Establishment of a
million tCO2e of emissions avoided since 2013 across biodiversity / nature credit model
approximately one hundred projects. Australia has
Context
defined requirements for savannah burning projects:
project areas must fall in government mapped high VCMs can be an effective mechanism to support
rainfall areas (>600mm per annum) and include specified equitable economic development and enable Africa’s
fuel types; annual project management plans must large natural capital endowment and its associated
be prepared before burning; projects should use a global climate benefits to be sustainably monetised
specific tool to calculate emissions abatement of long- by communities without depleting it. However, carbon
lived greenhouse gases including methane and nitrous absorption and storage is but one of many ecosystem
oxide (SavBAT 3, Savannah Burning Abatement Tool services that nature provides, other benefits range from
developed by the Emissions Reduction Fund); and filtering freshwater, pollinating crops, to harbouring
projects must apply for Australian Carbon Credit Units biodiversity that may yield future scientific discoveries
and pharmacological advances.
via the ERF client portal66. Australian projects are driven
by several organisations including ALFA NT (Arnhem With nature degraded and under threat in many places,
Land Fire Abatement Northern Territory), an organisation conservation and restoration efforts are now more critical
created by Aboriginal landowners to support their than ever. Increased and sustained funding of such
engagement in the carbon industry67. efforts is necessary, especially in developing economies.
Given the biodiversity hotspots present in African
Some of the countries with the greatest carbon countries, and the global biodiversity crisis, investments
abatement potential through savannah fire management in conservation work that protects and restores nature
worldwide are in Africa: Zambia, Tanzania, Mozambique, need to be prioritized as a complementary solution to
Central African Republic, Angola, Botswana, DRC, carbon credits.
Zimbabwe, South Sudan, and Namibia. Together these
countries have a potential of ~80 MtCO2e per annum (50 VCMs offer funding for some conservation and
restoration efforts that qualify as Natural Capital
percent of the global abatement potential estimated to
Solutions, such as REDD+ projects (Reducing Emissions
range between 150 and 180 million tCO2e per annum68).
from Deforestation and forest Degradation, including
To capture this potential for Africa, ACMI proposes conservation, sustainable management of forests and
several actions. enhancement of forest carbon stocks). However, many
critically important nature conservation efforts do not
1. Clarify existing methodologies or develop a new easily, or at all, qualify for VCMs funding. For example,
methodology with a standards organisation to there are limited pathways (e.g., ART TREES 2.0 is
certify savannah fire management projects in Africa one of only a few options) for carbon credit production
and launch an associated pilot project. for forests in high forest cover, low deforestation rate
countries. These forests could be better monetized by
Potential partners: standards organisations, layering other mechanisms on top of carbon credits.
~1-2 pilot project developers Other ecosystems, such as coral reefs may not currently
provide any carbon benefits yet provide essential
2. Create a working group to support the ecosystem services and require support.
development of carbon projects through
savannah fire management by advocating with The lack of adequate global funding support for valuable
international organisations for the need to invest, conservation poses a risk especially for countries looking
establishing guidelines on best practices, providing to accelerate economic growth, where conservation may
be perceived to be an obstacle to such growth. Nature
66
Australian Government ERF
67
ALFA NT
68
McKinsey Nature Analytics/ACRE, 2022
53
protection is key, but conservation must be balanced • Limited funding options for critical ecosystems:
with human needs. Rewarding and financing ecosystem governments currently funding the protection of
protection is critical to enable continued conservation critical ecosystems receive little to no external
alongside sustainable economic development. funding for this; without additional revenue sources,
these ecosystems risk being sold as resources to
Conservation projects and other stakeholders around companies and other developers, resulting in further
the world have been innovating in different ways to biodiversity loss.
overcome this challenge and ensure fair reward for
• Volatile funding of nature protection for many
both the carbon benefits and the biodiversity benefits
national parks: the dependence of national
provided by protecting natural capital. Simultaneously,
parks on ecotourism to cover their operation and
corporates are beginning to recognize the importance of
conservation costs (such as anti-poaching patrols)
a nature-positive footprint, in addition to climate targets. risks loss of funding for critical conservation
They are eager to make global commitments but have no work when travel limitations prevent tourism.
transparent mechanism to help them evaluate and act on
these commitments.
Opportunity
Building on existing efforts, a new system to quantify
nature contributions, in the same way that carbon credits A biodiversity/nature credit could be developed as
have enabled VCMs, could unlock financing for high- a finance mechanism to bridge the gap between
quality nature conservation efforts implemented by local conservation projects, carbon credits and corporates.
communities and countries across Africa and the world. High-quality projects could monetize their contributions
towards global nature targets by selling “credits” for their
Such a standard, a definition of a biodiversity/ work, whether bundled with carbon credits or sold as a
nature credit, would help high-quality conservation standalone product. Corporates could then purchase
projects monetise their contributions to global nature these “credits” as a tool to invest in meeting nature and
targets. These credits could provide corporates with biodiversity targets. By verifying credits with a third party,
a verified channel to invest in nature and implement equitable conservation work. This ensures corporates
nature positive goals in conjunction with emissions have a reliable mechanism for their funding.
reductions targets. Creating a readily accessible
and easy-to-understand credit can appeal to new Core elements are needed within the biodiversity/nature
actors and increase the volume and accountability of credit to ensure the needs of Africa are met.
funding for nature conservation. This would support
• Credits need to ensure there is inclusion of
additional income potential for existing carbon and non-
Indigenous Peoples and Local Communities in
carbon conservation projects and enable equitable
conservation work. Economic benefits from the
economic development for the communities involved.
conservation work, including part of the funding
from the sale of credits needs to be channelled back
Challenges into these communities to ensure operations are
equitable and just.
Nature conservation in Africa faces several critical
challenges. • Credits should be applicable across ecosystems.
Africa has diverse ecosystems from tropical
• Some good conservation projects are not rewarded rainforests, to savannahs, to critical marine
as they cannot prove additionality: impactful coastlines that require protection. Conservation work
ecosystem protection projects are often excluded across geographies and ecosystems should qualify
from carbon credit financing due to low-deforestation for biodiversity/nature credits.
rates in their countries and lack of evidence of
additionality. • Funding should go directly to the on-the-ground
teams protecting nature. While a small portion of the
• Unequal burden placed on local communities: funds from the sale of the credits would go towards
individual communities are facing a choice between funding the system, the majority (80-90 percent)
continued protection of nature with limited economic of proceeds from the sale need to go directly to the
benefit or leaving the conservation space in search teams doing the work.
of better financial opportunity; this trade-off between
conservation and economic development needs to • Projects should not have to follow all the same
be addressed. requirements seen in the voluntary carbon markets.
Additionality should be defined differently for
• Lack of recognition of the global public service nature credits, given that they are not used as
to nature by African nations: many countries are carbon offsets. The aim needs to be rewarding
protecting nature that benefits not only the local, but good conservation work whether standalone or in
the global community, often at the expense of their conjunction with carbon credits. Nature-positive
own economic development. countries should qualify as easily as countries
engaging in restoration and re-wilding projects.
54
• A methodology validated by leading experts in Africa avoided deforestation) but also general conservation
needs to be followed before projects can receive benefits. Products can also be used in conjunction with
accreditation. Corporate buyers want to know that carbon credits (e.g., if one portion of a project is eligible
they are directly funding good conservation work, for carbon credits but the remaining portion may be
thus a process is required to check that the projects better suited by an alternative product). Finally, these
are protecting and/or restoring nature holistically and products can stand alone. For example, if conserved land
with a net-positive impact. stops generating carbon credits, it could be transitioned
• Over time verification capacity for accreditation to use an alternative financing instrument.
should be developed and provided locally at country
A wide array of financing instruments for nature
level – ensuring jobs and skills development.
protection beyond carbon credits exist today and can be
• Collaboration should be central. The biodiversity/ broken down into 4 archetypes:
nature credit should focus on collaboration
with scientists, governments, funders, and • Grant-based instruments include government
Indigenous Peoples and Local Communities. budget allocations, philanthropic grants, Official
While this is central within the operating model, Development Assistance (ODA), including results-
this should extend to the development of the based ODA and Project Finance for Permanence
credit to ensure all voices are equally heard. (PFP), crowdfunding, and debt-for-nature-swaps.
These instruments focus primarily on the ecological
impact of their donations and req level of governance
Proposed actions to report on the results. Conservation finance
ACMI believes several actions could help develop a is still dominated by grants-based instruments,
biodiversity/nature credit. mainly through government budgets and ODA (for
developing countries). Philanthropy and NGOs also
1. Set up a consortium of players including play a critical role in funding protected areas. There
conservationists, standard setters, and nature are strong trends towards results-based financing
analytics organisations to develop the first and use of public funding to leverage private finance.
biodiversity/nature credit.
• Investment-based instruments include blended
2. Define and pilot a methodology for verifying
finance, bonds, including impact bonds and bonds
conservation efforts: identifying a few pilot projects
linked to specific ecosystems, and Public Private
in different ecosystems (e.g., savannah grasslands
vs. rainforest), countries and regions will provide the Partnerships (PPP). These instruments are designed
basis to test and evolve a relevant methodology. to channel public capital or private capital (or a
combination of both) toward projects with potential to
3. Conduct interviews and focus groups with generate both financial returns and positive social or
potential corporate buyers to validate credit environmental impacts. They require strong ability to
pricing and marketing. monitor impact and report on use of funds. Most of
4. Launch the first biodiversity/nature credit. them are still underrepresented in nature protection
finance and need to be proven at scale.
• Ecosystem value-based instruments include

sustainable use fees, payment for ecosystem
Action programme 12: Identification
services (PES) and insurance premium discounts.
of long-term, innovative financing These instruments are based on the monetisation
models for critical geographic areas of sustainable ecosystem value while targeting
self-sustaining returns. For example, ecotourism-
Context and opportunity
derived fees are a critical source of income for many
In conjunction with carbon credits, Africa may need to projects yet decreased dramatically during periods
leverage a larger set of innovative financing solutions affected by travel restrictions. Levies and other PES
or products to secure long-term financing for critical mechanisms can work well at a local level but remain
geographic areas (e.g., Congo basin, coral reef, to be proven at a global scale.
mangroves). Conservation areas do not always qualify
• Compensation-based instruments include eco-
for carbon credits as they may not contain significant
taxes, extractive fees, royalties and permits, as well
carbon absorption or stocks or fail to meet additionality
as regulatory offset schemes for ecosystem impacts.
requirements. Given this, there is a need for alternative
These instruments enable voluntary or compulsory
financing mechanisms to complement carbon credits.
compensation for actual or potential negative
These financing mechanisms can be bundled with
environmental impacts. They are often used to
carbon credits for certain geographies to monetise
complement other funding sources.
not only the reduction in carbon emissions (especially
55
Some of these financing instruments have been the Blue Economy, through converting $21.6 million of
deployed at scale to protect critical geographic areas in national debt via the world’s first Blue Economy debt for
the long run. For example, the Seychelles was left with nature swap, mobilising capital for marine conservation69.
substantial debts following the 2008 financial crisis,
creating significant barriers for investments in its marine
and coastal assets. In 2015, the Seychelles pursued an
ambitious plan to finance sustainable development of
Exhibit: Overview of nature financing instruments (beyond carbon credits)

Type of Financing
funding instrument Description Noteworthy examples
Grant- Domestic government Direct budgetary provisions for nature protection by domestic
based budget allocations governments
Philanthropic grants Charitable grants provided by NGOs or wealthy individuals
ODA, incl. climate Government aid programs and climate finance targeted at nature
finance protection
Results-based ODA Form of ODA where results are defined in advance and subject GCF provided $100M to Indonesia REDD+
to an independent verification process and funding is only program
released upon the achievement of these results
Project Finance for Project financing approach in which sources of financing are $140M PFP deal to protect 167,000 km2 of
Permanence (PFP) contingent on other critical elements of the project being in Peruvian Amazon in 2019
place, only released simultaneously at closing of deal
Crowdfunding Raising typically small individual amounts of money, either Numerous crowdfunding campaigns to
donations or investments, from a large number of people via protect endangered species
online platforms
Debt for nature swap Instrument that reduces or restructures a developing country’s Seychelles debt for nature swap in 2015
debt in exchange for commitments to protect nature, often resulted in $1.4M of debt relief and $5M in
facilitated by NGOs donor grants
Investment- Blended finance Combining capital from investors with different risk/return profiles Investment of the Urapi Sustainable Land
based funds in a single fund to increase investment in sustainable Use Fund into the Sierra Nevada Project,
development Colombia in 2020
Bonds and loans Debt instrument for projects that yield environmental benefits as Seychelles government raised $15M
well as cashflows to repay capital and interest. Can include through blue bonds in 2018
sovereign, project and corporate bonds
Public Private Contract between a government and a private party given some PPP partnership in 2017 in Mozambique,
Partnership (PPP) level of conservation management responsibility, in which concession to African Parks to manage
remuneration is typically linked to performance Bazaruto Archipelago National Park
Ecosystem Levy on sustainable Collection of levy from those who affect the environment by the
value- use means of nature use
based
Payment for System that enables financial compensation for undertaking Great Barrier Reef Credit Scheme
ecosystem services actions that ensures or increases the provision of ecosystem established in 2020
(PES) services to beneficiaries
Insurance premium Arrangement to monetize the value that natural ecosystems AXA XL assessment of flood-risk reduction
discount provide in terms of reducing the risk of insured losses (e.g., by restoration & protection of mangroves
coastal property storm damage) across the Caribbean
Compensat Eco-taxes Ecological taxes levied on activities that are considered harmful
ion-based to the natural environment
Extractive fees, Fees, royalties and permits targeted directly at users both
royalties, permits commercial and private users of nature
Regulatory offset Financing protection & restoration of ecosystems via mandatory BIOFUND biodiversity offset scheme in
schemes or voluntary compensation of non-point pollution or nearby Mozambique
ecosystem damage
Sources: WWF and ASL, Securing Sustainable Financing for Conservation areas; Biofund; The Commonwealth, Case Study: Innovative Financing – Debt for Conservation Swap,
Seychelles’ Conservation and Climate Adaptation Trust and the Blue Bonds Plan, Seychelles (on-going); Press search
69
The Commonwealth, Case Study: Innovative Financing – Debt for Conservation Swap, Seychelles’ Conservation and Climate Adaptation Trust and the
Blue Bonds Plan, Seychelles (on-going)
56
Figure 1: Illustrative debt for nature swap structure
Discounted Sustainable
Creditors 3 debt buyback Government tax stream 6
(e.g., Paris Nature-
Club creditors) conservation
Annual program /
2 Loan 4
funding department
(e.g., Blue
Economy,
Donors Disburse project Seychelles)
Grant 5b grants
Implementing
1
agency
Financial Loan
institutions / Endowment
DFI Repayment 5a 5c Capitalize

Proposed actions market requires building integrity into each stage of the
value chain.
All these mechanisms have different potential and
implications. Some of these mechanisms have a high
potential to attract additional funding, such as PFP,
“Carbon standards play a critical role
green and blue bonds and PPP. These instruments setting the rules to assess integrity of
have been designed to mobilise funding from various
sources, which require an intermediary or a lead
carbon credits”
operating partner to manage the negotiation process and Integrity in demand
the financial structuring (e.g., blended finance funds).
Other instruments such as PES and eco-taxes require High integrity credits begin with high integrity suppliers.
regulatory interventions to establish the basis of the The evaluation of carbon projects requires accurate,
financing scheme. transparent reporting by developers. Suppliers should
be transparent not just in their technical reporting during
ACMI proposes to work with countries, project project verification, but also in the information they
developers and potential funding partners (e.g., funds, provide to buyers and the public about the social benefits
conservation agencies, financial institutions, corporates) a project provides, including the portion of project
to: revenues that benefit local communities.
1. Raise awareness and spread understanding Carbon standards play a critical role setting the rules
of the different existing mechanisms and their to assess integrity of carbon credits, and over the past
implications, to help governments and communities few decades, standards organisations have slowly
identify what instruments are the most relevant improved their rigor. The ICVCM’s core carbon principles
to their situation and to the asset they are trying to (CCPs), currently in draft form, have the potential
protect; to push standards to a new level of rigor and could
significantly raise the bar for what is acceptable as a
2. Identify 3-4 key geographic areas on the
carbon credit. The draft CCPs include ten principles,
continent that are eligible for new projects
including additionality, programme governance, and
leveraging alternative financing mechanisms
robust quantification of emissions reductions, as well
and support the launch of such projects.
as an assessment framework for evaluating a crediting
programme against the principles. For example, the
framework lists eight criteria for evaluating additionality,
Action programme 13: Promotion including financial attractiveness, legal requirements,
of carbon markets integrity and expectation of carbon credits70 .
Integrity is essential to ensuring that voluntary carbon Integrity in intermediation
markets drive real climate action and achieve meaningful
scale. The market will only continue to grow if the public Carbon credit exchanges and brokers also have a role
trusts that carbon credits are genuinely contributing to to play in integrity by setting standards for the quality of
emissions reductions. Building a high integrity carbon credits traded and the information sellers are required
to provide. ACMI proposes that exchanges and brokers
70
Integrity Council for the Voluntary Carbon Market CCP publication
57
Create a high integrity market and ensure fair revenue sharing with local communities to deliver broader socio-economic co-benefits

Council for
support the Voluntary
integrity by Carbon Market
adhering ownersprinciples
to a few core and reportingpractice)
publiclyandona plan to achieve the target
progress.
such as (1) requiring transparency around carbon
 Provide credit
transparency on co-  Prioritize reducing own operational (scope 1, 2)
the Assessment Framework) In addition, and companies should use carbon credits
revenues and the portion that benefits localbenefits as well as the revenue
communities; value chain (scope 3) emissions, in line with
Provide
(2) accurate and transparent reporting split
requiring disclosure of the data that purchasers need between market as a
participantssupplement—not
science-based an
targets alternative—to reducing
for MRV2 entities, buyers, and the public to emissions  from their operations and value chain.
tomake
make an decisions
informed informed decision on integrity,
on integrity including
 Set quality and integrity Only use carbon credits simultaneously to direct
compliance with the ICVCM guidelines; (3) setting standards for credits Credits
traded should
emissionsprimarily
reduction be
effortsused
(e.g., to to neutralise
neutralize
 Prioritize the supply of recent vintage over and, require data disclosure from emissions
residual residual emissions to reach net-zero,
to reach net-zero, or to compensate
or as a
minimum integrity
older vintage guidelines
to accelerate for traded
new climate impact credits.
buyers and sellers emissions during the transition to net zero)
temporary solution during the transition to net-zero.
Integrity in demand
Building on:
Buyers have several critical roles to play in upholding
Proposed actions
the integrity of voluntary carbon markets. First, buyer
demands will strongly influence the kind and quality ACMI aims to coordinate with, and support
of credits produced. However, buyers also need to established, recognised global standards and integrity
recognise that higher integrity credits will cost more. organisations—such as the ICVCM, VCMI SBTi—and
Indeed, almost by definition, credits are only likely to be to implement these standards in its programmes. ACMI
truly additional if the price is sufficiently high—otherwise will also push carbon standards to ensure that, as the bar
it’s unlikely that carbon credit revenue was instrumental for integrity increases, their methodologies accurately
in a project’s success. account for the unique aspects of African credits. ACMI
is committed to building a high-integrity voluntary carbon
Another element of integrity is how credits are used. market and will build integrity concerns into all thirteen
This begins with setting a credible goal for emissions action programmes.
reductions, ideally with a net-zero, science-based target,
Exhibit: The Principles of ACMI
Create a high integrity market and ensure fair revenue sharing with local communities to deliver broader
socio-economic co-benefits
Council for the Voluntary Carbon Market owners practice) and a plan to achieve the target
the Assessment Framework)  Provide transparency on co-  Prioritize reducing own operational (scope 1, 2)
benefits as well as the revenue and value chain (scope 3) emissions, in line with
 Provide accurate and transparent reporting split between market participants science-based targets
for MRV2 entities, buyers, and the public to
make informed decisions on integrity  Set quality and integrity  Only use carbon credits simultaneously to direct
standards for credits traded emissions reduction efforts (e.g., to neutralize
 Prioritize the supply of recent vintage over and, require data disclosure from residual emissions to reach net-zero, or to compensate
older vintage to accelerate new climate impact buyers and sellers emissions during the transition to net zero)
Building on:
58
Chapter
59
Chapter 6: Next steps for ACMI over the
next 24+ months
To summarise, ACMI has identified a set of actions to ACMI will also call for partners to endorse and support
help unlock the potential of voluntary carbon credits the proposed actions, and to lead specific programs (e.g.,
in Africa. These include the mobilisation of supply technical facilitation programme focused on reducing
and demand through active outreach and technical barriers to entry for carbon credit certification for project
assistance activities for project developers, boosting developers in Africa, accelerator for support high-
available financing mechanisms, promoting quality potential nascent project types, continent-wide coalition
and integrity via intermediaries, convening African to support agroforestry).
and international corporations to develop an advance
market commitment for African carbon credits, adapting
Through this roadmap, ACMI aims to drive the
methodologies to better fit an African context, advocating
development of a vibrant and robust voluntary carbon
for increased global demand for African carbon credits
market in Africa over the next decades, with the ambition
and other products (e.g., biodiversity/nature credit),
to significantly grow African carbon credits retirements to
and ensuring integrity along the end to end value chain.
~300 MtCO2e by 2030, create millions of jobs, ensure the
Furthermore, ACMI proposes to collaborate with African
quality and integrity of African carbon credits and provide
governments to build an enabling environment for carbon
equitable and transparent distribution of revenues with a
credit production. There is also a need to mobilise
significant portion going to local communities. ACMI aims
key stakeholders such as funding partners, technical
to inspire a broad mobilization of stakeholders across
assistance providers, financial institutions, standard
the continent and overseas, to achieve collaboration and
providers, VVBs and carbon credit exchanges and
synergies towards an ambitious and impactful common
marketplaces to promote the development of VCMs in
goal.
Africa.
Over the next 24+ months, ACMI will focus on refining

these action programs and establishing a more detailed
plan to progress towards its ambition to grow African
credit retirements to ~300 MtCO2e by 2030 while
ensuring equitable and transparent distribution of
revenue, supporting jobs, and raising the quality and
integrity of African credits.
60
Exhibit: Proposed next steps for ACMI post COP 27
Directly related action programme Indirectly supported action programme
Refine Conduct a public consultation to collect comments and refine the proposed roadmap All
roadmap accordingly
Conduct additional deep-dive analysis on selected topics (e.g., guidelines for All
smallholder farmers agroforestry, market-potential analysis for selected carbon neutral
commodities, biodiversity credit pricing and marketing)
Pursue Support interested governments in the development of VCM activation plans: 1

support to • Provide supporting material to help countries understand potential benefits of VCM
governments • Provide a blueprint for the development of national VCM plans and help countries
define their ambitions for VCM over the next years
• Connect countries with technical assistance providers and funding partners to support
implementation of national VCM activation plans
Build African Conduct active reach out and sensitization activities to mobilize developers to scale 2 3 8
carbon credit up existing or develop new projects, especially focusing on differentiated project types and
relevant aggregation mechanisms 10 11
projects
supply Support the development of flagship projects / pilots , especially on new/nascent 3 8
methodologies that are especially relevant for Africa (e.g., agroforestry projects involving
smallholder agriculture and community forestry, fossil fuel displacement via DRE, 10 11
savannah fire management, biodiversity / nature credit)
Collaborate with VVBs and other stakeholders (national/ domestic members of the 4
International Accreditation Forum, universities) to scale-up validation/verification
capacity on the continent
Advocate for governments to support project development through reinforced 2 3

technical assistance to project developers, data-sharing to build Africa data baseline,
creation of incentives for local financial institutions to fund carbon projects development, 6 8
and detail best practices to support specific project types (e.g., agroforestry, carbon-neutral 10 11
commodities, coal decommissioning – especially by expanding renewable energy capacity)
Mobilize Encourage financial institutions to develop and scale adequate instruments to fund 6
financing and and de-risk carbon credit projects development in Africa, and enable communities’
participation (e.g., smallholder farmer finance) 12
demand
Progress an advance market commitment for African carbon credits with African and 7
international corporations
Advocate for African carbon credits quality and value for buyers and for access to 9
international compliance markets
Spread understanding of the different long -term innovative financing options for 12
critical geographic areas, to help governments and communities identify what
instruments are most relevant to their situation and to the asset they are trying to protect
Collaborate Encourage funding partners and technical assistance providers including DFIs, 1 2 3
with other key philanthropies, NGOs to reinforce key supporting activities including funding early-
stage projects, scale up of blended-finance programs, reinforcing technical assistance to 6 10 11
stakeholders governments and project developers, sharing data to build an Africa data baseline
to facilitate
and support Coordinate / support established, recognised global standards and integrity 13
VCM organisations (e.g., ICVCM, VCMI SBTi) to establish transparency and benefits-sharing
development standards for both sellers and buyers for ACMI-endorsed credits
Encourage standards to adapt methodology requirements and provide more 2 3 8 10 11

standardized methods for Africa (i.e., performance benchmarks, positive lists)
Collaborate with new / existing carbon credit exchanges and marketplaces to 5

establish commitments on common standards supporting suppliers & communities
Mobilize other Call for organizations to lead and participate in proposed actions / working groups, All
action leaders and support implementation by framing roles, responsibilities and focus areas for the
coming year. These actions include:
• Set up of an accelerator/incubator to support high-potential new/nascent project types
• Set up of a technical facilitation programme focused on reducing barriers to entry for
carbon credit certification for project developers in Africa
• Coalitions to support the development of the first biodiversity/nature credit and to
support agroforestry for food security and carbon credits
22
61
Glossary
Carbon credit terminology

Additional: Requirement in the design of carbon credit methodologies. Describes projects whose impacts,
including emissions reductions, would not otherwise occur without carbon credit revenue.
Avoidance: Along with removal, one of the two major types of carbon credits. Avoidance projects prevent the
release of greenhouse gases that would otherwise be emitted, such as by preventing deforestation in an area
with a high rate of logging.
Leakage: Risk to manage in the design of carbon credit methodologies. Describes situations when the direct
impact of a carbon reduction activity is offset by its indirect impacts. For example, protecting a forest from
logging could lead to an increase in logging in surrounding forests, negating the intended effect.
Nature based solutions (NBS): Projects that use natural landscapes to mitigate climate change, often while
providing biodiversity co-benefits. Includes forestry, agriculture, and blue carbon projects.
Permanence: Requirement in the design of carbon credit methodologies. Describes whether greenhouse gas
abatement will be undone over the medium- to long-term. Carbon dioxide has a half-life of over 100 years, so
projects that secure emissions for only a few decades may not be appropriate as carbon offsets.
Reducing emissions from deforestation and forest degradation (REDD+): Framework for emissions-
limitation programs focused on preventing deforestation that was negotiated under the United Nations
Framework Convention of Climate Change (UNFCCC). REDD+ credits are not allowed in the Clean
Development Mechanism but are common in the voluntary carbon markets.
Removal: Along with avoidance, one of the two major types of carbon credits. Removal projects aim to adsorb
additional CO2 back from the atmosphere to reduce greenhouse effect potential. For example, photosynthesis,
as well as engineered methods such as direct air capture and accelerated mineral weathering can be used to
absorb carbon from the atmosphere.
tCO2e: tonne of CO2 equivalent. Standardised unit for greenhouse gases that expresses all emissions in terms
of the amount of CO2 with equivalent global warming potential.
Vintage: The year the emissions avoidance or removal that underlies a carbon credit took place. May be
different than the year of issuance.
Carbon regulation terminology

Carbon pricing (incl. carbon tax): A legal instrument that ties the external costs of greenhouse gas
emissions to the sources of pollution. Usually implemented as a carbon tax—a flat tax paid per tonne of carbon
emitted—or as an emissions trading system (ETS).
Emissions trading system (ETS): There are different types of ETS. In a ‘“cap-and-trade system” regulators
set a fixed upper limit on total emissions (‘cap’) and auction or distribute allowances (typically one allowance
grants the right to emit one tonne of CO2e). Under a “baseline-and-credit system” each individual entity is
required to reduce emissions at a certain rate. Companies that reduce emissions faster than they are obliged to
can earn ‘credits’ which they can sell to entities which do not meet their required obligations.
62
Climate diplomacy terminology
Clean Development Mechanism (CDM): Framework developed under the Kyoto protocol for countries with
emissions targets to finance emissions-reductions projects in developing countries in exchange for certified
emission reduction (CER) credits, which count towards meeting Kyoto targets. The CDM includes a wide variety
of project types, including fuel switching, afforestation, and methane reduction, but notably does not include
avoided deforestation.
Kyoto Protocol: International treaty adopted in 1997 that aimed to reduce the emission of GHGs and prevent
global warming. The treaty committed industrialized countries and “economies in transition” to GHG reductions,
established a GHG monitoring and review system, and created a set of “market-based mechanisms”, including
the CDM, that allow for emissions trading.
Nationally Determined Contribution (NDC): A national plan to reduce emissions and adapt to climate change.
Parties under the Paris Agreement are required to submit an NDC every five years.
Paris Agreement: Landmark 2015 international treaty on climate change. Article 6 of the Paris Agreement
covers voluntary international cooperation, including carbon trading. Additional details on the implementation of
Article 6 were agreed to at COP26 in Glasgow.
Other
Congo Basin: Basin of the Congo River in central Africa, an area spanning parts of ten countries. Includes the
world’s second largest rainforest, a major carbon sink.
Least developed country: UN classification for countries with per-capita income below $1,222 and low scores
on human development and vulnerability indicators.
High forest low deforestation (HFLD): Applies to countries or jurisdictions that have very extensive,
ecologically intact forests and low past rates of deforestation.
63
Africa Carbon Markets Initiative (ACMI): Roadmap Report
Harnessing carbon markets for Africa
November 2022
64

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Africa

Other Steering Committee and contributors

Steering Committee Members

Gillian Caldwell Bogolo Kenewendo David Antonioli Sitoyo Lopokoiyit

Ariel Perez Riham ElGizy M. Sanjayan

Damilola Ogunbiyi Joseph Nganga

Chapter 1: Why carbon markets matter for Africa 12

Chapter 2: Current state of voluntary carbon markets 16

Chapter 3: Obstacles to growth of African carbon markets 22

Chapter 4: ACMI’s ambition — build foundations for growth to 2030 26

Chapter 5: Proposed action programmes to support the 31

Action programme 1: Development of country 31

Action programme 2: Scale up of multiple new and existing 36

Action programme 3: Scale up of programmes for micro carbon 37

Action programme 4: Building of additional capacity and facilitation of monitoring, reporting, 40

Action programme 5: Promotion of quality, equity, and marketing of differentiated 41

Action programme 6: Deployment of financing mechanisms to de-risk 42

Action programme 8: Establishment of African carbon neutral commodities 46

Action programme 9: Advocacy to build demand for African carbon credits 48

Action programme 10: Piloting of new project types and methodologies 51

Action programme 11: Establishment of a biodiversity / nature credit model 54

Action programme 12: Identification of long-term, innovative 56

Action programme 13: Promotion of carbon markets integrity 58

Joseph Nganga, Vice President Africa, Global

Supply (generation) and standards Intermediation and financing Demand

Exhibit: The principles of ACMI

Transparent and fair

1. Validation/verification body – 2. Measurement, Reporting and Verification

Pursue Support interested governments in the development of VCM activation plans: 1

Advocate for governments to support project development through reinforced 2 3

Encourage standards to adapt methodology requirements and provide more 2 3 8 10 11

Collaborate with new / existing carbon credit exchanges and marketplaces to 5

Bogolo Special Advisor, Africa Director, UN Climate Change High -Level

Riham ElGizy Director, MENA Voluntary Carbon Exchange

M. Sanjayan CEO, Conservation International

Supply (generation) and standards Intermediation Demand

Volume growth: Demand for voluntary carbon markets

Avoidance offsets Removal offsets

Forestry and land Agriculture and soil Renewable energy

Afforestation / Cover crops Saltmarsh Biomass Clean cookstoves

Industry gases (incl. Engineered

Higher end of price range Lower end of price range

Average global price (2021)

Agriculture and soil sequestration 9 15

Forestry and land use 6 18

Blue Carbon No data available

Livestock No data available

Engineered carbon dioxide removal No data available

under-realised” Similarly, there have been essentially no active African-

Supply (Generation) and standards Intermediation & financing Demand

A Top 15 project developers B Standards C Intermediaries D Top buyers of African credits

African-origin offsets by developer African-origin credits African-origin offsets retired by

Wildlife Works Carbon LLC 45

E Funders, both public and private

Exhibit: Initiatives related to carbon markets and climate change (non-exhaustive)

Supply c. Besides capital intensity, new projects may

Supply (Generation) and standards Intermediation and financing Demand

Project development: l High reliance on relationships, r Concerns on the integrity of

k Insufficient local validation/verification capacity including

Frontier mobilized $925 million in advance

The LEAF Coalition mobilized a pledge of +$1