Carbon Markets Report

New report shows carbon pricing and trading is a win-win opportunity for Africa and Europe to accelerate climate action

4 December, Dubai – In the framework of COP28 (the UN Climate Change Conference), the Africa-Europe Foundation (AEF) and the Climate Action Platform for Africa (CAP-A) released a joint report, Realising the full potential of carbon pricing and markets: Opportunities for the Africa-Europe Partnership, outlining the reasons why carbon pricing and subsequent trading is a win-win opportunity to advance global climate action and achieve socio-economic growth.

Global report launch at COP28 with AUDA-NEPAD, the EU, Climate Action Platform for Africa and the Africa-Europe Foundation.

The report underlines Africa’s vast potential in the supply of carbon credits and low-emission products given its renewable energy capacity, growing workforce, and natural resources.

Yet currently, Africa falls short in meeting global and European demand for carbon credits.

Between 2012 and 2022, projects originating in Africa represented approximately 9% of credits retired globally on the Voluntary Carbon Market. Positive shifts in market access however are contingent on the high environmental integrity of the certified credits. As such, the joint report identifies seven key pillars for high integrity carbon markets to proliferate and outlines key areas of collaboration between Africa and Europe to ensure convergent -not divergent- paths in market building.

The seven pillars for high integrity markets are:

1. Good national governance
2. Conducive policy and regulation
3. Fit-for-context methodologies, measured rigorously
4. Affordable project finance for suppliers
5. Information and tools to assess project quality and integrity
6. Market-based mechanisms for connecting supply and demand
7. Fair and equitable market access

The three horizons for Africa-Europe cooperation centre on:

1. Strategic alignment of opportunities, including those that are time-sensitive for African contribution, such as in the development of metrics and processes for the operationalisation of the EU’s Carbon Border Adjustment Mechanism (CBAM).
2. Building the technical and tangible pillars to achieve globally fair, equitable, and efficient market access, including through investments in the right infrastructure and local value chains, and developing the right skills, policy and governance structures.
3. Leveraging strong market foundations to realise EU market access for African projects and low-emission products that meet a high bar on quality, integrity and social equity.

Speaking on the launch of the report, James Irungu Mwangi, CAP-A Founder, “CAP-A is proud to have co-authored this bold, important report. We firmly believe that, with true partnership and a shared agenda, Africa and Europe can catalyse Climate Positive Growth on the continent. We thank the AfricaEurope Foundation for its leadership and ambition, and look forward to further collaboration.”

Paul Walton, Executive Director of the Africa-Europe Foundation, “Working at the nexus of climate and development is central to the Foundation’s mission and critical to unlocking cooperation in areas which hold the most promise for an impactful Africa-Europe Partnership. Our joint report with CAP-A provides an operational blueprint for Africa and Europe to act together as pioneers in carbon pricing and markets, inspiring and accelerating global climate action.”