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Action Programmes

On 16 January 2023, during its Steering Committee meeting at the Abu Dhabi Sustainability week, ACMI launched 13 action programmes to achieve its objectives. These action programmes seek to deepen the continent’s participation in the carbon market through:

  • The launch of country activation plans for a number of countries
  • Advancing market commitments with an ambition of up to $1 billion for the purchase of high-integrity African credits
  • Developing projects based on new methodologies and the realities of Africa such as diesel replacement credits and biodiversity credits
  • Increasing a significant volume of credits on the continent
Action programme 1: Development of country voluntary carbon market activation plans

The first action plan is dedicated towards seeking to build a carbon ecosystem by drawing up a plan to develop the market. It defines the ambition of trying to get governments to define concrete targets to increase their carbon credit volume at national and sectoral levels, the integration into the continent's climate plans,the governance structure needed to make that happen and the regulation to foster the growth of voluntary carbon markets.

To foster carbon project development on the continent, ACMI proposes to support several actions.

  • 1. Set up an accelerator / incubator to support high potential new or nascent project types
  • 2. Reinforce targeted on-the-ground technical assistance to support project developers throughout the project life cycle.
  • 3. Establish a technical facilitation programme focused on reducing barriers to entry for carbon credit certification for project developers in Africa.
  • 4. Actively mobilise new project developers, by reaching out to potential candidates (e.g., organisations that have developed eligible solutions at scale without deriving any carbon credits from these) and conducting awareness-raising activities (e.g., conferences, workshops).

Although smallholder farmers contribute up to 70 percent of Africa’s food supply, it is difficult for them to access and benefit from carbon markets, as high upfront certification costs to create carbon credits and project monitoring costs require scale and access to financing/ buyers. Micro-carbon credit supply models can enable smallholders to individually earn income from carbon credit projects by leveraging:

  • • Aggregation of farmers into larger carbon credit programs to spread costs of certification and project development
  • • Technology such as satellite imagery and remote sensing tools (e.g., to monitor biomass growth by smallholder farmers and issue carbon credits accordingly) to further bring monitoring costs down)
  • • Local field force to train and onboard farmers and track impact (e.g., Acorn uses partner field force organizations to enroll farmers as well as to collect real data on sample plots to train AI models and conduct sample checks)
  • • Digital platforms / marketplaces to connect credits originated by smallholder farmers with international buyers.

Carbon emission reductions or carbon removals only become carbon credits when certified by a standard upon successful verification by a third-party validation/ verification body (VVB). Due diligence is necessary to validate carbon credits and determine their quality. Standard setters often require that the impact from a carbon emissions reduction or carbon removal is real, measurable, permanent, additional, independently verified (by a VVB), unique and traceable. Two main types of bodies play a role within the certification process: standard setters and validation/ verification bodies (VVBs). Standard setters include organisations such as Verra (Verified Carbon Standard) or the Gold Standard. These organisations support and accept methodologies for different project types to develop carbon credits. The VVBs are independent third parties which are approved to perform verification and validation. Currently, Verra alone has approved close to 30 validation/verification bodies across 5 continents 46. Once a project has been registered under a standard and validated by an independent VVB, project developers must continue to report data on a frequent basis for ongoing monitoring, reporting and verification (MRV).

ACMI could collaborate with existing initiatives on the continent that are attempting to establish a carbon credit exchange or marketplace to harmonize trading principles on African carbon credit quality, integrity, and pricing and to better help retain revenue that might otherwise end up going outside the continent.

“Multiple financing instruments could be mobilised to unlock Africa’s carbon credit supply potential”. High cost of capital and lack of access to adapted financial mechanisms to provide early-stage capital and to de-risk investments are critical challenges for African carbon project developers. High cost of capital is mainly due to relatively high risks associated with Africa carbon projects development. The four common types of risk are counterparty risk, project risk, country risk and market risk.

To grow the supply of carbon credits on the continent, the demand for credits must grow in tandem. In 2021 there were 22 MtCO2e retired from Africa out of total supply of 39 MtCO2e53. An advance market commitment (AMC), where multiple corporations commit to purchase large quantities of carbon credits from Africa, can send a strong demand signal and incentivice suppliers to develop projects.

Carbon neutral commodities are products whose scope 1 and 2, and potentially scope 3 CO2e emissions have been fully eliminated or compensated for (in case of residual emissions, by bundling sales with carbon credits). Identification of the most relevant commodities to develop carbon neutral projects would require more in-depth analysis, especially in terms of feasibility to reduce direct CO2e emissions. To ensure high integrity, commodities producers should indeed create carbon neutral commodities that lean first on the reduction of direct emissions before leveraging carbon credits to offset residual emissions.

ACMI aims to build demand for African credits by ensuring that buyers and high integrity standards organizations understand and account for the unique value of African credits and by advocating for African credits to be more widely integrated into international compliance markets. “Higher credit quality will help to build public and corporate confidence in carbon markets”.

To better capture specific decarbonization opportunities on the continent, new types of projects could be developed across multiple sectors (e.g., renewable energy, waste management, engineered carbon dioxide removals, transport, agriculture and soil sequestration, livestock, blue carbon), as well as methodologies that are better adapted to the local context

Action programme 11: Establishment of a biodiversity / nature credit model A biodiversity/nature credit could be developed as a finance mechanism to bridge the gap between conservation projects, carbon credits and corporates. High-quality projects could monetize their contributions towards global nature targets by selling “credits” for their work, whether bundled with carbon credits or sold as a standalone product. Corporates could then purchase these “credits” as a tool to invest in meeting nature and biodiversity targets. By verifying credits with a third party, credits are guaranteed to be the result of effective and equitable conservation work. This ensures corporates have a reliable mechanism for their funding.

In conjunction with carbon credits, Africa may need to leverage a larger set of innovative financing solutions or products to secure long-term financing for critical geographic areas (e.g., Congo basin, coral reef, mangroves). Conservation areas do not always qualify for carbon credits as they may not contain significant carbon absorption or stocks or fail to meet additionality requirements. Given this, there is a need for alternative financing mechanisms to complement carbon credits. These financing mechanisms can be bundled with carbon credits for certain geographies to monetize not only the reduction in carbon emissions, but also general conservation benefits.

This action plan proposes to raise integrity levels in supply through evaluation of carbon projects by developers, integrity in intermediation among exchanges and brokers, an integrity in demand. Some of the proposed actions of this action program are to coordinate with, and support established, recognized global standards and integrity organizations—such as the ICVCM, VCMI SBTi—and to implement these standards in its programmes.

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