Climate finance or inaction? Kenya, Tanzania advance carbon markets at COP28 despite growing concerns

Written by Vincent Owino

Published: December 9, 2023

Topic: COP28

Even as voices continue to rise against the use of carbon offsetting to fight climate change, Kenya and Tanzania are using COP28 to advance their control of the local carbon markets, seemingly in efforts to advance ‘climate finance.’

Ahead of COP28, Tanzania’s President Samia Suluhu had indicated that she wanted East Africa to head into the global climate conference with a “common position” on carbon trading, to ensure the business is dominated by local, not foreign firms.

And indeed, on the second day of COP28, Tanzania announced one of East Africa’s biggest carbon offsetting projects yet, signed between the Tanzania National Park Authority (Tanapa) and Carbon Tanzania, a local carbon trading firm based in Arusha.

Kenya has also utilized the global climate summit in Dubai to advance its local carbon trading business, in efforts to bolster finance coming from the industry to finance climate-related investments.

On the sidelines of COP28, the Kenya Climate Innovation Centre (KCIC) signed a memorandum of understanding with Doha-based Global Carbon Council (GCC) to “promote carbon market actions.”

The partnership is meant to “empower nations in the region, especially Kenya, to build resilience by leveraging carbon markets,” said GCC chairman, Dr Yousef Alhorr, during the MoU signing on December 7 in Dubai.

“By leveraging carbon credits, we can empower our communities to invest in sustainable practices, driving impactful change while fostering economic growth,” remarked KCIC chief executive Joseph Murabula.

President William Ruto of Kenya, told journalists on the sidelines of COP28 that the country is finalising regulations on carbon trading, “so that no community, no country is taken advantage of by this whole new sphere of trade.”

The East African governments are also eyeing Internationally Transferrable Mitigation Outcomes (ITMOs), provided for by article 6 of the Paris Agreement, allowing countries to enter bilateral agreements for carbon offsetting programs.

These efforts to bolster finance from carbon credits are not new. They had been premeditated at the Africa Climate Summit (ACS) held in Nairobi in September, where the continent’s leaders agreed to advance their quest for dominating global carbon trading markets at COP28.

In the Nairobi declaration – the document that came out of the inaugural ACS – the leaders called on their global counterparts to implement “a mix of measures that will elevate Africa’s share of carbon markets.”

KCIC CEO Joseph Murabula (right) with the chairman of the Global Carbon Council Yousef Alhorr (left), during the signing of a MOU between the two organisations on December 7, at COP28. Photo Credit: KCIC, GCC via X.

Why carbon credits?

Ostensibly, carbon trading has become not just an important source of finance for conservation efforts in Kenya and Tanzania, but also a source of livelihood for many.

Susan Kamakembo, a farmer in Meru County, Kenya’s Central Region, has been living off carbon offsetting for the last 7 years. While she barely understands how it works, she knows that she earns from the trees on her farm and for that reason, she hasn’t thought about cutting them down.

“We are grouped into clusters of five farmers each, and every once a year or sometimes twice a year, we get a lump sum payment of about Ksh 500,000 ($3260),” Ms Kamakembo said.

She is part of a programme run by the Tist Carbon in Kenya, Uganda, Tanzania and India, which incentivises farmers to plant and protect trees, in return for periodical reimbursement from sale of carbon credits.

Thousands of farmers in this region, like Ms Kamakembo, rely heavily on the income from this program, but most only know that they are “selling clean air.”

“I know that if I plant more trees, I will earn more, and if I cut a tree, I have to replace it to keep earning,” Ms Kamakembo said.

About 500 kilometers from Meru, where Ms Kamakembo lives, in Taita Taveta County, southern parts of Kenya in the Coast Region, thousands of livelihoods are also reliant on carbon trading.

By conserving thousands of hectares of dryland forests previously used as ranches, community members in this region earn directly from selling carbon credits, although the entire process is brokered by Wildlife Works, an American firm based in California.

Currently, both Kenya and Tanzania are developing regulations which will require that benefits from carbon trading are equitably shared with communities, and introducing taxes or levies on the revenues.

Carbon offsetting skeptics

Experts say this is to ensure integrity in the industry and streamline benefit-sharing with communities, as some carbon project developers have been accused of unfair benefit-sharing and entering skewed deals with communities in the past.

However, the entire idea of carbon offsetting has lately come under fire from experts and activists, with many terming it as a “passport” for the globe’s top emitters to continue polluting the environment.

“Carbon markets assume that western companies will continue to emit huge quantities of greenhouse gasses in the coming decades, purchasing carbon credits to ‘offset’ these emissions,” pan-African non-profit PowerShift Africa said in a report launched on the sidelines of ACS.

“But there is no room for the illusion of offsets in a world that has vastly exceeded safe levels of climate pollution and where polluting companies ought to be aiming for real zero emissions, not net zero, as fast as possible.”

According to development economist Dr Fadhel Kaboub, relying on carbon credits and taxes for climate finance is tantamount to climate inaction as it is equivalent to wanting top polluters to become more profitable, which means more pollution.

“This means that in order for us to reach the scale of financing necessary, we would want these polluters to be bigger, more powerful, more profitable companies so we can tax a little bit of their profits to fund climate action,” Dr Kaboub, who is also the president of the Global Institute for Sustainable Prosperity, said.

Nonetheless, from their messages at COP28, Kenya and Tanzania continue to explore the potential of carbon offsetting as a source of climate finance, as other avenues continue to lag.

But lately, with the growing criticism on the effectiveness of carbon offsetting, some of the world’s top carbon credit buyers, including Shell, Nestle, and Gucci – which have all been buying from projects in Kenya and Tanzania – have cut back on their purchases, casting a shadow of doubt on the future of the market.

This story was published with the support of Climate Tracker’s COP28 Climate Justice Reporting Fellowship.

About the author of this article
Vincent Owino

Vincent is a business journalist with a passion for climate reporting. A trained economist and statistician, his reporting focusses on how human economic activities, technology, and government policies, intentionally and unintentionally impact our environment.