Operationalization of Carbon Markets instruments in Africa – Namibia a frontrunner
July 12, 2022
Namibia has committed in its Nationally Determined Contribution (NDC) to combat climate change and accelerate the transition to a climate-resilient and low-carbon sustainable development. In line with this commitment, Namibia’s updated NDC seeks to achieve 91% mitigation targets from the Business as Usual (BAU) scenario.
Carbon Markets are fast becoming one of the policy tools used globally to accelerate low carbon development. Carbon Markets are usually referred to as the sale and purchase of carbon credits by participating parties such as a host country and a recipient country or entity in exchange for carbon revenue. One tradable carbon credit equals one tonne of carbon dioxide or the equivalent amount of a different greenhouse gas reduced, sequestered, or avoided. According to the 2022 report by the International Carbon Action Partnership (ICAP), domestic carbon markets have generated more than USD 161 billion in auction revenues worldwide. These carbon revenues are needed to address existential threats of climate change and will also play a significant role in the achievement of the SDGs, especially for developing countries.
What are the opportunities or benefits of Carbon Markets for Namibia?
Over USD 5 billion is required for the implementation of Namibia’s bold climate commitments under the Paris Agreement. Of this estimated amount, about 90% of the financing is expected to come from international public and private sector financing sources. Carbon markets thus have the potential to crowd in large-scale investment to meet the conditional commitment of Namibia’s NDC. Carbon markets can bring not only additional public and private climate finance but can bring down GHG emissions in Namibia as the host country of the carbon projects. Apart from the GHG emission reductions and the additional financing, these carbon projects have also sustainable development benefits derived from the implementation of the mitigation activities. It is for this reason, that, I would like to commend the government of Namibia, especially the Ministry of Environment, Forestry, and Tourism for this bold initiative to participate in carbon markets.
What are the building blocks for effective carbon markets?
The Paris Agreement recognizes that countries would like to pursue voluntary cooperation through cooperative approaches under Article 6.2 and other sustainable development mechanisms under article 6.4 in the implementation of their climate commitments to allow for higher ambition in their mitigation actions. With funding support from the Government of Japan, UNDP has initiated targeted technical assistance and capacity-building support for carbon finance readiness to access and fully benefit from the carbon markets in Namibia.
The implementation of the carbon market will require Namibia to put in place key building blocks such as a robust carbon market policy framework; carbon market process flows including the authorization processes; issuance of the emission credits, establishment of transparent national emission registries as well as capacity building initiatives for both, public and private actors. These building blocks will help the government to operationalize Article 6 by successfully authorizing carbon market projects and issuing carbon credits for international transfer and receiving carbon revenues from buyers, including administrative share of proceeds and adaptation fees. For communities and investors, it means to benefit from all SDG impacts projects generated beyond mitigation outcomes, including more jobs, healthier air, cleaner water, greener transportation etc.
A key component of UNDP’s support will involve the training of a coalition of national experts involving the government stakeholders, the private sector and the academia. With this pool of experts, Namibia will be able to demonstrate leadership in the region and become a frontrunner in the operationalization of carbon markets.
The operationalization of carbon markets will require the early involvement of key stakeholders. I, therefore, call for strong partnerships to enable Namibia to successfully achieve verifiable mitigation outcomes within this NDC cycle.