Investments in Africa to boost carbon credit production draw millions

NAIROBI, Sept 4 - An initiative to boost Africa's carbon credit production 19-fold by 2030 has drew hundreds of millions of dollars in pledges, as Kenyan President William Ruto opened the continent's first climate summit. Investors from the United Arab Emirates committed to buying $450 million of carbon credits from the Africa Carbon Markets Initiative, which was launched last year at Egypt's COP27 summit. He said that we must see in green growth, not just a climate imperative but also a fountain of multi-billion dollar economic opportunities that Africa and the world is primed to capitalise. African leaders are pushing for market-based financing instruments, such as carbon credits or offsets, which can be generated by projects that curb emissions, usually in developing nations, such as planting trees or switching to cleaner fuels. Companies can then buy carbon credits to offset emissions that they can't cut from their own operations to meet climate goals. One credit is equivalent to saving or avoiding one ton of carbon dioxide. The summit in Nairobi aims to showcase Africa as a climate investment destination rather than an victim of floods, drought and famine. African governments view carbon credits and other market-based financing instruments as crucial to mobilizing funding that has been slow to arrive from rich-world donors. The offset market was worth around $2 billion in 2021, and Shell and Boston Consulting Group forecast in January that it could reach between $10 billion and $40 billion by 2030. Several speakers at the summit said they had seen little progress toward accelerating climate finance because investors still saw the continent as too risky. The non-profit Climate Policy Initiative has received only about 12% of the money it needs to cope with climate change impacts, according to a report last year published by the non-profit Climate Policy Initiative. There hasn't been any success for an African country in attracting climate finance, said Bogolo Kenewendo, a UN climate adviser and former trade minister in Botswana. Kevin Kariuki, a vice president of the African Development Bank, said the deals announced on Monday were very welcome but not enough. African states will push ahead of the COP28 U.N. climate summit in Dubai at the end of November for the expansion of special drawing rights on the International Monetary Fund that could unlock $500 billion worth of climate finance, which could be leveraged up to five times. The private sector is truly an untapped opportunity that now must be seized, Scotland said. If you look at what we've got on thermal energy, solar energy, wind, hydropower, this is a powerhouse just waiting to be unleashed, she said. More than 20 presidents and heads of state are expected to attend the summit from Tuesday. They plan to issued a declaration outlining Africa's position ahead of a U.N. climate conference later this month and the COP28. The UAE, a oil-producing nation, has been aiming to become a climate finance leader in Africa. The UAE Carbon Alliance, a coalition of private sector players, announced its $450 million commitment, announced by Hassaan Ghazali, an investment manager at the UAE Independent Climate Change Accelerators. Climate Asset Management, a joint venture of HSBC Asset Management and Pollination, a specialist climate change investment and advisory firm, announced today that it has announced a $200 million investment in projects that will produce ACMI credits. Britain said UK-backed projects worth 49 million pounds would be announced during the summit, while Germany announced a 60 million euro debt swap with Kenya to free up money for green projects. As many African campaigners have criticized the summit's approach to climate finance, about 500 people protested in downtown Nairobi on Monday. The OECD said carbon credits are a pretext for continued pollution by wealthier nations and corporations, who should instead pay their climate debt through direct compensation and debt relief. The COP28 chief, Sultan Al Jaber, stressed that carbon markets were an important tool, but a lack of widely-agreed standards was undermining their integrity and weakening their value. The Debt Relief for Green and Inclusive Recovery Project released a working paper that revealed that sub-Saharan African countries face annual debt servicing costs that are nearly the same as their climate finance needs.