Carbon Trading Opportunities and Challenges in Africa

Abstract

Global Carbon markets with international carbon offset have been designed to channel carbon finance for climate change management to poor and developing countries. In the voluntary carbon markets, companies, governments, and individuals voluntarily spent just under $4.5 billion on conservation and clean energy over the past decade by purchasing nearly 1 billion carbon offsets. This review paper has targets of assessing the level of carbon trading, opportunities and challenges in carbon trading in Africa and suggesting possible remedial ideas for problems related to raised issues. The level of carbon emission from African countries is very low as compared with western and some Asian countries. In carbon markets, buyers and sellers trade in ‘carbon offsets’ or ‘carbon credits’ which are units of carbon emissions reduced at source. Broadly, these markets consist of two types of transactions called project-based transactions and trade in emission allowance. In Africa, a local carbon emissions trading system could create a system that is more flexible, encourage local investment projects, craft transparency and generate trading volumes. There are challenges in carbon trading in Africa, among these, uncertainty in the flow of benefit potential and high transaction costs are cited as the two major limitations. The revenue collected from the sale of carbon should be shared among countries particularly which have a good courage as well as motives of conserving forest resources. Project implementation capacity of African must be boosted by creating different opportunities of skills development.