Nature-based solutions seen yielding $82bn annual revenue for Africa

• ECA advocates comprehensive carbon tax
• To cover fossil fuels, marine, aviation transport
• At $120 per metric tonnes

Onome Amuge

The United Nations Economic Commission for Africa (ECA) has unveiled a game-changing proposal, advocating for a comprehensive carbon taxation regime that would span the continent, reaching far beyond traditional fossil fuels to encompass shipping and aviation. 

In addition, ECA research has shown that investing in nature-based solutions in African countries could yield up to $82 billion in annual revenue, assuming a carbon price of $120 per metric tonne of carbon dioxide equivalent.

Speaking at a high-level dialogue on carbon markets and development on the sidelines of the tenth Africa Regional Forum on Sustainable Development (ARFSD-10) in Addis Ababa, Ethiopia, Claver Gatete, executive secretary of ECA, stressed that such a taxation regime would not only help mitigate the negative impacts of climate change but also generate much-needed funds for Africa’s energy transition.

“If combined with other policy measures, carbon tax could help to mitigate those residual emissions that cannot be addressed by carbon credit markets or subsidies and technologies. Such a tax could allow countries to improve responses to their commitments to contribute to reducing climate instability,”  Gatete said.

Gatete argued that renewable energy sources and carbon sinks hidden within Africa’s rich forests and diverse ecosystems could serve as a powerful catalyst for the continent’s economic and environmental progress, if only these treasures were harnessed to their full potential. He pointed out that by leveraging these natural resources, African countries could not only bolster their revenues, but also strengthen their green and blue economies against the devastating impacts of climate-related disasters, enabling them to make strides towards their sustainability goals.

Albert Muchanga, commissioner for economic development, trade, industry and mining at the African Union Commission, also lent his authoritative voice to the call for urgent action on climate change, highlighting the importance of rapid decarbonisation as a key component of this effort. 

For Muchanga, carbon taxation offers a clear path forward in the fight against the looming climate crisis, though the successful implementation of such a system will require a concerted effort from stakeholders at both the national and global level.

“African economies are small and fragmented, integrating them together is necessary for a unified approach to promote a green transition across the continent,” Muchanga noted.

At the centre of the dialogue session, four pivotal aspects of carbon markets — voluntary markets, compliance markets, Article 6 of the Paris Agreement, and carbon tax markets, were dissected and deliberated upon by a panel of industry experts. While the promise of carbon credit trading as a key tool for addressing the global climate crisis was recognised, the experts warned that this strategy could not be effective if deployed in isolation, and must instead be paired with a broader framework that ensures fair negotiations and resource distribution, especially for developing countries that have been disproportionately impacted by the damaging effects of climate change.

Ahunna Eziakonwa, the regional director of the United Nations Development Programme (UNDP) for Africa, offered her incisive perspective on the matter, highlighting the profound potential of climate carbon credits as a mechanism to confront the substantial economic challenges currently confronting the continent. However, she cautioned, realising this potential will require climate action in Africa to be developed in tandem with agreements that ensure that African nations are offered favourable deals in carbon markets and that the revenues generated from carbon credits are directed towards sustainable development projects.

“Beyond just understanding the carbon market space and carbon credits, there is need for experts to advise governments on the different options available to Africa and help them understand the opportunities presented by carbon markets as a source of development financing and how they function,” said Eziakonwa, adding that this will require strong engagement with producers, consumers, investors, and many other stakeholders.

The findings of a major study on carbon emissions in the shipping industry, as shared by Jan Hoffmann, head of the trade logistics branch of the division on technology and logistics at the United Nations Conference on Trade and Development (UNCTAD), dwelled on the disproportionate impact of the extent to which climate change has ravaged the world’s small islands and coastal regions, exacerbating the existing vulnerabilities of these nations and placing them on the frontline of the global climate crisis

“Carbon dioxide emissions have increased by 21% in the last decade in the shipping industry which is a major concern in African countries. There is a need for alternative fuels for Africa to become competitive,” he said.

“For African countries to become providers of alternative fuels, there is a need to invest in infrastructure and trade to compensate for higher costs resulting from climate change mitigation,” Hoffman stated.

As the dialogue session drew to a close, experts in attendance reached a consensus, noting that the engagement and active participation of investors and civil society organisations would be vital to the successful implementation of a pan-continental carbon taxation regime. To pave the way for this pivotal collaboration, the experts proposed country-tailored engagement strategies, recognising that a one-size-fits-all approach would not be adequate given the diverse political, economic, and socio-cultural contexts across the continent.