Creating an Effective Legal Framework for Carbon Collection and Trading in Africa [Climate Change]

Climate Change Carbon Collection, Carbon Trading, International Law, Africa.

The Role of International Agreements and Cooperation in Creating an Effective Legal Framework for Carbon Collection and Trading in Africa

By James Omaye

Entry submission for the 2023 Henry Barnabas Ehi Essay Competition

Oyemaja; Creating an Effective Legal Framework for Carbon Collection and Trading in Africa [Climate Change]

Abstract

This essay emphasizes the necessity of equitable participation and sustainable development in creating Africa's response to the effects of climate change. It highlights the global efforts to address the impact of climate change on the continent, taking into account its vulnerabilities and economic development. The essay further emphasizes the importance of international agreements and cooperation in developing a legal framework for carbon collection and trading in Africa. It also investigates the relationship between international agreements and domestic policies, as well as the potential benefits and challenges of carbon trading in Africa.

Introduction

Overall, carbon collecting and trading are aspects of worldwide efforts to mitigate climate change by lowering greenhouse gas emissions and supporting sustainable environmental practices. The system is intended at reducing the impact of carbon emissions on the environment. The process of capturing and storing carbon dioxide (CO2) from diverse sources, including as industrial operations, power plants, and even straight from the air, is referred to as carbon collection. This can be accomplished through techniques such as carbon capture and storage (CCS) or direct air capture(DAC). Carbon trading, on the other hand, is the establishment of a market for the purchase and sale of carbon credits (also known as emission allowances). Carbon credits are granted to companies or entities that emit carbon dioxide in order to represent their permissible emissions. If a corporation emits less pollutants. McKinsey& Co., reports that US$414.8 billion in carbon pricing have been traded on the carbon markets as of 2021[1], and global demand for voluntary carbon credits could increase by a factor of 15 by 2030 and a factor of 100 by 2050[2].

The idea of applying a cap-and-trade solution to carbon emissions originated with the Kyoto Protocol[3] that took effect in 2005. Two types of carbon markets exist under the protocol viz; regulatory compliance and voluntary markets. The compliance market is used by companies and governments that by law have to account for their GHG emissions. It is regulated by mandatory national, regional, or international carbon reduction regimes. On the voluntary market, the trade of carbon credits is voluntary. The size of the two markets differs considerably. Under the Kyoto Protocol developing countries (Non-Annex I countries) are not obliged to reduce their GHG emissions, whereas industrialized countries (Annex I countries) have to fulfill specified targets. They can achieve these by reducing GHG emissions in their own country; implementing projects to reduce emissions in other countries; or trading. This means that countries that have satisfied their Kyoto obligations can sell their excess carbon credits to countries that find it more expensive to meet their targets. For developing countries, the CDM is of most interest among the regulatory market mechanisms. An industrialized country implements an emission reduction project in a developing country, this can be an afforestation, an energy efficiency, or a renewable energy project created to help slow down global warming. Through these projects new technology is transferred to the host country, investments are made, and additional jobs are created thereby supporting sustainable development and reducing environmental impacts within the host country

Background and Impact of International Agreements

The international community began the long process towards building effective international and domestic measures to tackle GHG emissions (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulphur hexafluoride) in response to the increasing assertions that global warming is happening due to man- made emissions and the uncertainty over its likely consequences. These International agreements provide a platform for countries to collectively address climate change. In1997, the Kyoto Protocol was the first major agreement to reduce greenhouse gases[4]. 38 developed countries (Annex 1 countries) committed themselves to targets and timetables. The resulting inflexible limitations on GHG growth could entail substantial costs if countries have to solely rely on their domestic measures.

Apart from the Kyoto Protocol earlier mentioned, the Paris Agreement, a landmark accord adopted in 2015, also stands as a prime example. It sets the stage for nations to collaborate to reduce greenhouse gas emissions and promote sustainable development. That process began in Rio de Janeiro in 1992 when 160 countries agreed to the UN Framework Convention on Climate Change (UNFCCC). The necessary detail was left to be settled by the UN Conference of Parties (COP).[5] Climate change is a looming challenge in Africa, and there is an urgent need to combat this problem and lower greenhouse gases. The continuous march of carbon emissions threatens the complex web of ecosystems that have survived for millennia, leaving humankind vulnerable to an uncertain future. The importance of international agreements and collaboration appears as a ray of light in this storm of uncertainty, exposing a viable route to create an efficient legal framework for carbon collection and trading in Africa. It is imperative to know that carbon pricing has achieved a remarkable feat in recent years, with increasing governmental and industrial consensus on the primary role of transitioning into a low- carbon economy. The World Bank Group and other business investors had called for the “put a price on carbon,” even before COP21 of the United Framework Convention on Climate Change (UNFCC) held in November in Paris.

These fascinating adventures have influenced the impact of international agreements on the growth of carbon trading in African countries. Thanks to accords like the Paris Climate Accord and the Kyoto Protocol, nations now have access to a complex network of obligations, responsibilities, and opportunities to cooperate to accomplish their common climate goals. By signing and ratifying these agreements, African countries are committed to a shared vision of environmental protection and sustainable development. Numerous case studies demonstrate the successes and failures of African countries' attempts to establish a solid legal framework for carbon trading. Every one of these scenarios exhibits a unique set of challenges, from adjusting to distinct economic and cultural contexts to negotiating the intricate network of economic and political interdependencies that holds the continent together. African countries have blazed a trail in the carbon market by actively participating in and supporting sustainable development projects. During the 28th UN Climate Change program, nations including Nigeria, Congo (DRC), Niger, and Mozambique affirmed their commitment to climate action. These nations have launched several measures, from renewable energy projects to reforestation and afforestation programs, to reduce carbon emissions while fostering economic growth.

Nigeria has created the appropriate policies, strategies, and action plans through legal programs like the NCCP (2021), NAP Framework (2020), and NASPA-CCN(2011) to accomplish its adaptation goals[6] , and employs a sectoral strategy to solve adaptation- related difficulties that cover important industries like energy, agriculture, water resources, wildlife/forestry, health, security, education, and transportation.[7]

Established by law[8] in 2011[9] , the Nigerian Sovereign Investment Authority is the investment institution of the Nigerian Federation set up to manage Nigeria’s sovereign wealth fund. The NSIA currently manages $2.95 billion according to GlobalSWF.com, a sovereign wealth fund tracker. The Nigeria Sovereign Investment Authority (NSIA) and Vitol, an oil refining and trading group have recently completed a $50 million joint venture to invest in carbon avoidance and removal projects. The joint venture was first mooted in July last year and aims to aggregate voluntary market carbon credit from project partners and third parties, as reported by[10] Premium Times, a Nigerian online newspaper.

The Democratic Republic of Congo fights climate change by promoting green energy and REDD+ programs to stop deforestation. This nation seeks to promote wind, solar, and hydroelectric energy use while also increasing its renewable energy capacityfrom2.9 megawatts (MW) in 2022 to 42.7 MW by 2026[11] . This initiative also aims to raise the living standards of the DRC's population.[12] Mozambique is fighting a never-ending battle against deforestation and seeks to rely more on renewable energy sources. The country actively promotes conservation measures to lower GHGs, such as rainwater collecting and methane recovery, since it recognizes the importance of sustainable agriculture. In addition to installing 5,000 solar PV systems, it plans to use water pumps to irrigate homes and farms.[13]

Challenges and Barriers in Africa

While carbon trading holds economic promise as a mechanism for emissions reduction, it encounters formidable barriers ingrained in the complex realities of the African context. Economic disparities among countries in the region contribute to unequal burden-sharing when adopting and upholding carbon trading schemes. When more economically advanced countries are expected to bear a larger share of the mitigation cost, the fairness of carbon markets is usually questioned. In traditional markets, there have been major instances of misuse, including price manipulation, collusion, money laundering, cyberattacks, and predatory actions.[14] Again, understanding the complexities of African politics is a difficult task. Regional carbon trading programs must overcome challenges caused by various governance systems, entrenched interests, and levels of political stability. It takes ability and refinement to strike a balance between immediate political needs and long-term environmental goals. Furthermore, many African countries struggle with data shortages, which makes it challenging to precisely calculate and monitor carbon emissions. The lack of a solid data infrastructure compromises the accuracy of carbon accounting and calls into question the veracity of claims of emission reduction due to restricted technological capabilities and resource availability. Statistics are inherently ambiguous since they are based on insufficient data, which makes them vulnerable to manipulation.[15]

Numerous case studies demonstrate the successes and failures of African countries' attempts to establish a solid legal framework for carbon trading. Every one of these scenarios exhibits a unique set of challenges, from adjusting to distinct economic and cultural contexts to negotiating the intricate network of economic and political interdependencies that holds the continent together. African countries have blazed a trail in the carbon market by actively participating in and supporting sustainable development projects. During the 28th UN Climate Change program, nations including Nigeria, Congo (DRC), Niger, and Mozambique affirmed their commitment to climate action.

Need for a Legal Framework

It is no longer news that Africa has vast areas of wetlands, savannahs, and forests, which are quite useful in their capabilities to capture and trade carbon. And yes, the secret to opening up untapped possibilities for sustainable development and reducing greenhouse gas emissions lies in its biodiversity. While this continent currently has a paltry share of renewable energy, the sub-Saharan nations can thrive to boost this industry and create up to 2.5 million jobs in the nearest future. With adherence to the climate deal, these countries can restore degraded lands to boost their agricultural sector. According to the World Bank, an increase in crop yields of 10%resultsina7%decrease in poverty in Africa – thus, agricultural growth is at least twice as effective in decreasing poverty than development in other sectors that are equivalent in size.[16]

Carbon trading can bring several benefits to Africa. It creates economic opportunities by incentivizing emission reductions and fostering the growth of green industries. Revenue generated from carbon trading can be channeled into sustainable development projects, such as renewable energy infrastructure, afforestation, and climate adaptation initiatives. Moreover, carbon trading can contribute to job creation and technology transfer, enhancing the continent's resilience to climate change impacts. Ensuring social equity within the carbon trading framework is essential. Africa's vulnerable populations often bear the brunt of climate change impacts. Therefore, mechanisms should be in place to prevent environmental injustices and ensure that carbon trading benefits reach marginalized communities. Incorporating principles of environmental justice into legal frameworks can help create a fair and inclusive system. In conclusion, international agreements and cooperation play a pivotal role in creating a legal framework for carbon collection and trading in Africa. These mechanisms provide the foundation for collaborative efforts in mitigating climate change and promoting sustainable development.

The urgent need to create an efficient legal framework for carbon pricing or trading in Africa is an ambiguous yet crucial topic in this global conversation. While there are existing policies designed to mitigate climate change, it is crucial to maintain environmental integrity when delivering cost-effective emission reductions.[17] For African countries, introducing carbon trading systems elicits hope and caution. Despite contributing relatively low emissions to the global total, the region bears the brunt of climate change impacts, boasting remarkable biodiversity and abundant natural resources. Balancing sustainable growth with carbon reduction poses a significant challenge for African nations. The socio-economic landscape across the continent is diverse, ranging from emerging economies to struggling countries grappling with poverty and political instability. Consequently, harmonizing carbon trading schemes with local developmental aspirations becomes more work. Compounding the issue is the limited access to advanced technologies, weak institutional capacity, and inadequate legal frameworks, hindering the effective implementation and enforcement of carbon pricing methods. the Africa Carbon Market Initiative (ACMI) which is geared towards initiating and scaling a carbon credit market across the continent. In furtherance of Nigeria’s commitment to the ACMI, the Federal Republic of Nigeria passed the Climate Change Act of 2021 (the “Act”) into law and established the National Council on Climate Change (NCCC).

On June 24, 2023, the NCCC published a notice titled “Regulatory Guidance on Nigeria’s Carbon Market Approach” (“Publication”), wherein it emphasized its commitment to the global efforts to reduce emissions that contribute to climate change and made a proposal for appropriate governance framework and processes for the proper implementation of cooperation mechanisms under the Paris Agreement.

African nations may experience simultaneous socioeconomic and environmental growth if an adequate legal framework for carbon trading is established. This would be a significant step toward the continent's transformation into an eco-centric economy. Any successful venture has stakeholders that are consistently committed to it and work together. The combined efforts of governments, corporations, civil society, and international organizations play a crucial role in developing an effective legislative framework for the capturing and trading of carbon in Africa.

Conclusion and Recommendations

Climate change is a worldwide concern that requires concerted efforts to mitigate its effects. International treaties and collaboration are critical in developing legal frameworks that permit carbon collection and trade in Africa. In developing a legal framework for carbon collection and trade, Africa has particular obstacles. The continent's capacity to engage successfully in global carbon markets is hampered by limited access to technology, poor infrastructure, and economic inequality.

Furthermore, the absence of precise emission data and monitoring systems makes it difficult to validate carbon reduction initiatives. Overcoming these challenges will need international cooperation and specialized solutions that take into account the continent's different conditions. Collaboration between African countries and international partners is essential for developing a legislative framework for carbon collection and trade. Financial help can be provided by developed countries.

Alignment of governmental policies will provide investors with the legal certainty they need to invest confidently in carbon collection and trading projects.

Because they are key sources of economic development, private companies are critical to the success of carbon trading. Laws that promote private sector participation through tax breaks, incentives, and environmentally friendly procurement procedures would spur green investments and innovation.

By emphasizing the urgency of climate action and holding governments and companies accountable for their promises, civil society organizations may act as change agents. Their lobbying has the ability to gain public support and create an environment conducive to true international collaboration.

Referenced Works

• Aderonke Alex-Adedipe and Sharon Okpo “Regulatory Update: Nigeria’s Carbon Market Approach” June 30, 2023. Pavestones Newsletters

• Betz, R., Mikhailova, A., Castro, P., Kotsch, R., Mehling, M., Mikhailova, K., &Branzini, A. (2022).” The Carbon Market Challenge: Preventing Abuse through Effective Governance.” Cambridge University Press. Published online: 12September 2022.

• "The Greenhouse Gas Reduction Scheme". NSW: Greenhouse Gas Reduction Scheme Administrator. January 4, 2010. Archived from the original on January7, 2010. Retrieved July 31, 2023.

• International Carbon Action Partnership (ICAP). "Emissions Trading Worldwide: Status Report 2021". Berlin Convention: Retrieved August 3, 2023.

• Jerven, M. The Problems of Economic Data in Africa. Oxford Research Encyclopedia of Politics. (2019) Retrieved 5 Aug. 2023, from https://oxfordre.com/politics/view/10.1093/acrefore/9780190228637.001.0001/acrefore-9780190228637-e-748

• Munang, R. and Mendi, R (April, 2016). The Paris Climate Deal and Africa. Retrieved from https://www.un.org/africarenewal/magazine/april-2016/paris- climate-deal-and-africa

• Olivier, J.G.J.; Peters, J.A.H.W. (2020). "Trends in global CO2 and total greenhouse gas emissions (2020)" (PDF). The Hague: PBL Netherlands Environmental Assessment Agency.

• Passey, Rob; MacGill, Iain; Outhired, Hugh "The NSW Greenhouse Gas Reduction Scheme: An analysis of the NGAC Registry for the 2003, 2004 and 2005 Compliance Periods" (PDF). CEEM discussion paper DP_070822. Sydney: The UNSW Centre for Energy and Environmental Markets (CEEM). Archived from the original (PDF) on September 29, 2009. Retrieved August 3, 2023.

• Stewart R., “Economic Incentives for Environmental Protection: Opportunities and Obstacles” in Revesz R., Stan P., Stewart R., (eds), Environmental Law: The Economy and Sustainable Development, Cambridge University Press 2000

• Wertz-Kanounnikoff, Sheila & Sitoe, Almeida & Salomao. “HowisREDD+Unfolding in Southern Africa’s Dry Forests? A Snapshot fromMozambique” Ald. (2011)

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End Notes

1. McKinsey & Co., Reports. “Consultation: Nature and Net Zero” World Economic Forum2021

2. These amounts reflect demands established by climate commitments of more than 700 large companies. They also reflect an assumption that all carbon dioxide removal and sequestration results from carbon credits purchased on the voluntary markets (whereas some will result from carbon credits purchased in the compliance markets).

3. Adopted in Kyoto, Japan, in December 1997, the Kyoto Protocol is the UN framework Convention on climate change and “emissions trading.”

4. Ibid 3

5. Stewart R., “Economic Incentives for Environmental Protection: Opportunities and Obstacles” in Revesz R., Stan P., Stewart R., (eds), Environmental Law: The Economy and Sustainable Development, Cambridge University Press 2000

6. Federal Republic of Nigeria. (2021). Initial Adaptation Communication to the United Nations FrameworkConvention on Climate Change. Nigeria’s Federal Ministry of Environment, Department of Climate Change.

7. Kindly note that each sector is impacted by challenges that cut cross all sectors in the Federal Republicof Nigeria since 2021.

8. NSIA Act Cap A15 LFN 2004

9. Established as an independent investment institution by an Act of the National Assembly in May 2011

10. Ronald Adamolekun NSIA signs $50 million deal with oil trader Vitol towards carbon reduction https://www.premiumtimesng.com/business/business-news/540805-nigerias-nsia-signs-50-million-deal- with-oil-trader-vitol-towards-carbon-reduction.html Published online: July 4, 2022

11. See November 2021 National Adaptation Plan © Democratic Republic of the Congo, Deputy Prime Minister’s Office, Ministry of Environmental and Sustainable Development.

12. UNDP through the Global Support Programme on National Adaptation Plans. For more informationseehttps://www.undp.org and https://www.globalsupportprogramme.org

13. Wertz-Kanounnikoff, Sheila & Sitoe, Almeida & Salomao, Ald. (2011) How is REDD+ Unfolding in Southern Africa’s Dry Forests? A Snapshot from Mozambique

14. Betz, R., Michaelowa, A., Castro, P., Kotsch, R., Mehling, M., Michaelowa, K., & Baranzini, A. (2022). The Carbon Market Challenge: Preventing Abuse through Effective Governance. Cambridge University Press. Published online: 12 September 2022.

15. Jerven, M. The Problems of Economic Data in Africa. Oxford Research Encyclopedia of Politics. Retrieved 5 Aug. 2023, from https://oxfordre.com/politics/view/10.1093/acrefore/9780190228637.001.0001/acrefore- 9780190228637-e-748

16. Munang, R. and Mgendi, R. The Paris Climate Deal and Africa. (April, 2016) Retrieved fromhttps://www.un.org/africarenewal/magazine/april-2016/paris-climate-deal-and-africa

17. United Nations Climate Change (25th July, 2023). Four African Countries Ramp up Ambition for Transition to a Low-Carbon Future. https://unfccc.int/news/four-african-countries-ramp-up-ambition-for- transition-to-a-low-carbon-futuree

Originally published by James Omaye on Linkedin

Email: omayejames23@outlook.com

Oyemaja Law.