Tanzania eyes Sh2.4 trillion from carbon trading projects

Dar es Salaam. The government is now eyeing registering carbon trade projects worth $1 billion (about Sh2.4 trillion) once it completes the registration of the planned schemes in Tanzania.

The minister of State in the Vice President’s Office responsible for Union and Environment, Dr Selemani Jafo, told the parliament yesterday that 35 applications for carbon trade projects were received by the end of December 2023.

“Carbon trade is so thriving in Tanzania that it will significantly contribute to the economy soon,” said Dr Jafo, who was responding to a question from Buhigwe legislator Kavejuru Felix (CCM).

Mr Felix had sought to know how much the carbon trade, which involves reserving forests, has contributed to the economy since the government adopted it.

Mr Felix also wanted to know the government’s strategy towards marketing some 580 forests available in Tanzania to the companies involved in the carbon trade.

Dr Jafo said the government received Sh32 billion between 2018 and 2022 from carbon trade projects implemented in different local councils.

“By December 31, 2023, we had received a total of 35 applications for different carbon credit projects. When the implementation of these projects starts, we expect to generate $1 billion (Sh2.4 trillion), which will have a significant contribution to the national economy,” he said.

According to him, the government had already conducted some meetings with the regional and district commissioners and engaged the media as part of the wider intention of creating public awareness about the growing carbon trade.

“During COP28 in Dubai, we also marketed our country for carbon trading among the companies involved in the trade. The positive response we see today is the outcome of such global engagements,” added Dr Jafo, adding that carbon trading is an opportunity for Tanzania to increase revenue.

In the carbon trade, the payment is made after carbon credits accumulated from forestry protection have been sold to the voluntary carbon market.

High-quality certified carbon credits are generated by protecting the forest reserves with the expertise and support of an investor who normally enters into contracts with village governments.

The contract requires the village communities to engage with the company in protecting their forests. By stopping deforestation, the communities are contributing to the global fight against climate change.

When forests are cut down, carbon dioxide is released into the atmosphere, but on the contrary, prevention measures result in emission reductions measured as carbon credits. The company then sells the credits on the voluntary carbon market, therefore providing communities with access to the global financial system. Globally, carbon credits are issued and regulated by the United Nations Framework Convention on Climate Change, a UN body set up in 1992 to catalyse the global response to threats brought about by climate change.

Increasingly, however, more countries are looking to set up their frameworks through which carbon credits can be issued and traded.

In 2022, Tanzania introduced the National Carbon Trading Guidelines, which aimed to guide international, regional and national stakeholders engaging in carbon trading projects.

With extreme weather conditions and climate events manifested through increased seasonal variation in rainfall and temperature, drought and floods, the impact of climate change is affecting socio-economic and development sectors such as agriculture, tourism, energy, water, marine and coastal, public health and livestock-keeping.

Carbon trading is one of the mitigation measures related to the reduction and removal of emissions.

Last December, Tanzania signed a deal for one of East Africa’s biggest land-based carbon credit projects, which covers six national parks and spans 1.8 million hectares.

Tanzania, which has forest resources of nearly 48 million hectares, has emerged as one of the leading African players in the global carbon credit trade.

How it works

Carbon credits work like this: an organisation that pollutes can buy a credit that is worth one tonne of carbon dioxide.

The money paid by the organisation is meant to go towards carbon-lowering schemes, so for every tonne of carbon dioxide (CO2) emitted, the credit represents a tonne of CO2 that was captured.

In this way, the overall amount of carbon dioxide and other pollutants produced is supposed to stay the same or even be lowered.