Takeaways from the Voluntary Carbon Market Auction in Nairobi

By Peter Kinuthia Murimi

Since its introduction under the Kyoto Protocol, people doubted the feasibility and practicability of a carbon market where emitters can voluntarily purchase carbon offsets to cover up for the emissions they are generating from their operations. Moreso, people and stakeholders in the corporate sector would have doubted the feasibility of the same in the African continent considering its low emitting capacity. Most of the emitting countries are in the countries classified as developed, and they are the ones expected to purchase carbon credits as a way of offsetting their emissions, as they strive to find alternatives to cutting down on their emissions.

The promising thing with the larger carbon market is that emitting companies are allowed to continue emitting provided that they demonstrate commitment in addressing the issue. The purchase of carbon credits is not a ticket for these companies to continue with their emissions, but a part of their commitment in the journey in greening their operations and ensuring that they get reduce and continue cutting down on their emissions towards a zero-carbon emission target.

Previously, there were few events and progress in carbon credits and carbon markets in the larger African continent. However, it is worth noting that there is more hope for Africa and those with keen interest in venturing into the carbon market as a way of not only empowering their communities and societies, but also driving climate change action and agenda. This year however, an African country was the host of the voluntary carbon market auction. The auction was the second edition of its kind, and was held in Nairobi, Kenya on 14th June 2023. Specifically, Kenya hosted and facilitated The Regional Voluntary Carbon Market Company (RVCMC) in organizing a very rare form of auction for carbon offsets and credits. The CEO of the RVCMC, Riham ElGizy indicated that she chose Nairobi after being inspired by the unique speech of Kenya’s president, William Ruto at the Africa Carbon Markets Initiative (ACMI) launch at COP27.

ElGizy persuaded up to 15 Saudi based companies to travel to Nairobi, Kenya for the event. The first edition of the auction was held in Riyadh, the Saudi Arabian capital in October of 2022. The event was attended by a dozen of companies mainly from Saudi Arabia, noting that most of the companies in the Middle East and especially Saudi Arabia are involved in business of crude oil, which is one of the leading sources of Green House Gasses (GHGs). There was and continues to be a global call on businesses and organizations to cut down on the dependence of fossil fuels, as they are the main sources of carbon and other related GHGs. Therefore, it is highly commendable that some of the companies in Saudi Arabia and the larger Middle East are committed to offsetting their emissions by purchasing more carbon offsets in form of carbon credits.

One of the key highlights of this particular event is that up to 2.2 million tonnes worth of carbon credits were sold to various companies that were committed to offsetting their emissions in this year’s auction. This is a significant rise from 1.4 million tonnes of carbon credits that were sold in last year’s first auction in Riyadh. Consequently, this auction held in Nairobi has been deemed as the world largest auction of its kind, especially considering it happened in a developing country on the African continent. The event attracted some renowned companies in Saudi Arabia such as Aramco, the renowned Saudi Electricity Company, and the popular Saudi Airlines. These firms purchased the carbon credits at the rate of 6.27 $ per metric tonne of carbon credits. The next edition of the auctioning event will be held within the first six months of next year. The CEO of the Regional

Voluntary Carbon Market Company, Riham ElGizy reiterated that it is time for the companies to walk the talk in addressing their emissions.

The Carbon Market And Subsequent Impact On Africa

There is an increasing demand for carbon offsets in the world, especially considering how the interest on sustainability and sustainable businesses has gained momentum in the current 21st Century. The African continent stands to benefit from carbon market as it has been considered a strategic source of carbon credits. The Regional Voluntary Carbon Market Company affirmed that up to 70% of the carbon credits sold in the Nairobi’s auction event were from the African countries, mainly from Kenya, Egypt, and Rwanda. The African continent owing to its wealth of natural capital has an enormous capacity of generating carbon credits from a wide range of projects that are happening such as tree planting, using of cleaner cooking fuel, and adoption of sustainable farming practices.

There is a great need to sensitize the African society on how to roll out some of these projects and become generators of carbon credits. The most interesting thing is that the smallholder farmers have tremendous potential of benefitting and being part of the enterprise through the adoption of sustainable land management practices and adoptions of climate-smart farming techniques. Considering the high unemployment and poverty rate in some of the developing and the least-developed countries in Africa, there is a greater need to position youths and women into forming groups that adopt and start implementing carbon-credit generating projects and guide them on how they can participate in such auctions of selling carbon credits and be beneficiaries of the same. The revenue generated from the carbon auction can serve as a solution to the issue of poverty and unemployment in the larger African continent. In some of the groups that have benefitted from the carbon credits, they have used the revenue in building schools and fixing issues such as water scarcity by building the necessary infrastructure and supporting those from less privileged families have access to education.