Carbon market in Africa grows bigger with cookstove and forest-based projects
In May 2024, the International Energy Agency (IEA) convened a high-level summit in Paris, championing clean cooking in Africa. At the heart of the discussions was financing clean cooking, with carbon finance framed as key to scaling these initiatives across the continent.
Carbon markets are now being positioned as a critical vehicle to drive this transition, promising the funding needed for the widespread adoption of clean cooking.
Unlike the Clean Development Mechanism — a UN-hosted carbon market now nearing retirement — where African projects accounted for just 3 per cent of all listings, today Africa is home to a fifth of all projects in the leading voluntary carbon market registries, according to a new report by Delhi-based think tank Centre for Science and Environment (CSE) titled Carbon Markets in Africa: An Overview.
Voluntary carbon markets source carbon credits from projects that are certified by private international registries such as Verra and Gold Standard. These projects currently in Africa, focus primarily on forestry and land use, as well as community-based efforts, such as improved cookstoves. Nearly 2,000 such projects have either been certified or are under development in Africa today.
Carbon credits issued to voluntary carbon credit projects in Africa until March 2024
The Cookstove Story
Cookstove projects claim to reduce carbon emissions by introducing energy-efficient stoves, thereby decreasing reliance on traditional biomass fuels like firewood. These energy-efficient stoves are distributed to communities either at subsidised rates or free of charge. The distributor or project developer claims emission reductions from the use of the cookstoves by families, generating carbon credits that can then be sold to companies seeking to offset their emissions.
A typical clean cookstove can cost between $2 and $20, with each stove capable of offsetting 2-4 tonnes of carbon dioxide per year. Carbon credits are typically awarded over a five- to seven-year period, which is the expected lifespan of the stove. Over its lifetime, a single cookstove may generate between 10 and 28 carbon credits, depending on its usage.
With carbon credit prices ranging from $7-10 per credit, the financial returns from each stove can vary between $70 and $280. These figures suggest that cookstove distribution is a lucrative venture within the carbon market, with the potential to generate significant revenue for project developers.
Until March 2024, 86 million carbon credits, more than three times the annual CO2 emissions of Kenya, had been issued to 380 cookstove-based carbon credit projects across Africa. These projects have been implemented in over 36 countries, with Uganda, Rwanda and Kenya leading in terms of the number of projects and carbon credits issued.
Capital raised by clean cooking companies categorised by their involvement in the carbon market
Stirring the pot or just blowing smoke?
With the growing investments and promising returns in carbon money, it’s worth taking a closer look at whether these projects are delivering the necessary changes. A 2023 study by Down To Earth and CSE on clean cooking carbon projects in India identified several issues in the design and implementation of these initiatives.
The study revealed flaws in the assumptions behind greenhouse gas reduction estimates.
Many projects mistakenly assumed that target populations relied solely on non-renewable biomass, ignoring those already using cleaner cooking methods. They also expected beneficiaries to use only the provided cookstoves, while most households relied on multiple fuel sources for convenience — this miscalculation inflated carbon savings estimates.
Transparency issues are rampant; villagers often signed away their rights to carbon credits without realising it, and some paid for cookstoves that generated profits for developers without their consent. Inadequate monitoring meant many households received minimal follow-up, and third-party validators appeared to overlook faults.
Were the projects benefiting communities? Some found the new cookstoves to be inconvenient and underused, with less-than-expected environmental gains, while financial benefits favoured developers over locals.
Similar findings emerged from a UC Berkeley study that noted a tenfold overestimation of carbon savings in cookstove projects, largely due to unrealistic assumptions about stove usage and fuel types, along with unfulfilled health benefits from reduced indoor air pollution.
Inflated benefits of forestry projects
The other major sector within Africa’s voluntary carbon market is forestry and land-use projects. These initiatives aim to sequester carbon dioxide by changing land management practices, including afforestation, reforestation, avoided deforestation and sustainable forest management.
Africa has been home to several prominent forestry projects, including Reducing Emissions from Deforestation and Forest Degradation (REDD+) initiatives. By August 2024, 144 million carbon credits had been issued to 55 forestry and land-use projects across Africa.
One standout project is the Kariba REDD+ initiative in Zimbabwe, launched in 2011. Covering a massive 747,000 hectares, it has sold 28.8 million credits to major brands like Gucci, Nestlé and Delta Air Lines.
A 2023 investigation found that the project overestimated its carbon savings, resulting in an excess of credits. This highlights a major hurdle for forestry projects: Accurately measuring their impact and ensuring the integrity of issued credits.
With the spotlight on African forestry, big investments are pouring in. United Arab Emirates-based Blue Carbon has struck multiple agreements with African nations for large-scale reforestation and forest conservation across millions of hectares.
Governments getting involved
Several African governments are implementing new regulations to better manage the carbon market. For example, Kenya’s Climate Change (Carbon Markets) Regulations, 2024 now subject all carbon credit projects in Kenya to this framework. Meanwhile, Ghana has created a framework for trading carbon credits based on Article 6 of the Paris Agreement.
In Zimbabwe, a proposed regulation requires project proponents to allocate 25 per cent of their 70 per cent share of carbon proceeds to the local community where the project is based, with the remaining 30 per cent going to the government.
Article 6-based carbon projects in Africa
The UN has been working on a new system for the carbon market for some time, and it has already attracted early interest from countries in Africa. Article 6 of the Paris Agreement establishes this market, enabling countries to cooperate on climate targets through carbon trading.
Under Article 6.2, countries can transfer emission reductions to other countries, referred to as Internationally Transferred Mitigation Outcomes (ITMO), to help meet their Nationally Determined Contributions (NDC). Article 6.4 establishes a UN-run system to certify projects that generate tradable emission reduction units, similar to the Clean Development Mechanism (CDM).
By May 2024, at least nine African nations had signed 22 agreements to host Article 6.2 projects aimed at issuing ITMOs for partner countries. Ghana, for instance, has partnered with Switzerland on initiatives like alternate wetting and drying in rice farming and the ‘Transformative Cookstove Activity’, which aims to distribute 180,000 fuel-efficient cookstoves.
In Malawi, the Dairy Biogas Programme in collaboration with Switzerland plans to instal 10,000 systems to generate 500,000 carbon credits by 2030, which will be transferred to Switzerland. The Klik Foundation, a Swiss organisation, supports these partnerships by providing financial backing in exchange for ITMOs.
As carbon markets grow and money flows into the continent, so does the need to assess their real impact on the ground. Ongoing concerns about the effectiveness of voluntary carbon markets raise important questions: Can these mechanisms really deliver on their promises? More importantly, will they bring about the change we need? The insights we need are found on the ground, where these projects are — and that’s where we should seek the answer.