Feature: Govt to conduct audit on natural assets to be used for carbon credits

Mthuli Ncube

GOVERNMENT will conduct an audit on all its natural assets to see which ones can be used to form tradable carbon credits, it has been revealed.

A carbon credit is essentially a certificate that can be traded, basically, a legal instrument allowing the owner to emit carbon dioxide or other greenhouse gases over a period of time.

How carbon credits work is that if a country emits less than its targeted amount of greenhouse gases, as an example, it has a surplus that can be converted into carbon credits. These carbon credits can then be sold to either another country, company or institution interested in lowering its own carbon footprint.

Thus, the government has revealed that it’s looking into wildlife and agriculture, among the nation’s many natural assets, to see whether these two can be used to issue carbon credits.

“Are carbon credits being considered? The answer is yes. We have begun a process in government to really look into this issue seriously. First of all, looking at its governance, its potential, the opportunity at hand in terms of funding development including agriculture through carbon credit,” Finance minister Mthuli Ncube said, in response to questions from the paper last week at the launch of a US$20 million smallholder irrigation scheme.

“Zimbabwe is endowed with trees which actually act as carbon sink or carbon scrubbers, including our wildlife. So, we are currently seized with this matter and we are taking it very very seriously. We are going to the conference (COP27) in Egypt, his Excellency (Zimbabwean President Emmerson Mnangagwa) is headed there and again these are issues that will be high on the agenda in terms of how Africa can catch up with the rest of the world in tapping into the carbon credit market.”

He said the government was aware that global companies are trying to achieve net zero and as a result are ready buyers for carbon credits.

“So, we must get our act together and try to do an audit of our natural assets to see which assets act as a carbon sink upon which they can be applied for and borrowed or securitised, that carbon sink potential, to fund development so we are seized with this one,” Ncube said.

According to the American financial services firm MSCI Inc, carbon markets have a value of US$270 billion, and as such are now attracting institutional investors as an investable asset class.

Hence, carbon credits provide a new asset class for Zimbabwe that can attract forex.

In June, the World Bank reported that there are two types of credits, an emissions trading system (ETS) and carbon taxes.

“An ETS — sometimes referred to as a cap-and-trade system — caps the total level of greenhouse gas emissions and allows those industries with low emission to sell their extra allowances to larger emitters. By creating supply and demand for emissions allowances, an ETS establishes a market price for greenhouse gas emissions,” the World Bank said, in a carbon credits research paper.

“The cap helps ensure that the required emission reductions will take place to keep the emitters (in aggregate) within their pre-allocated carbon budget…A carbon tax directly sets a price on carbon by defining a tax rate on greenhouse gas emissions or — more commonly — on the carbon content of fossil fuels. It is different from an ETS in that the emission reduction outcome of a carbon tax is not pre-defined but the carbon price is.”

Lands, Agriculture, Fisheries, Water and Rural Resettlement minister Anxious Masuka said agriculture contributed a lot to greenhouse gas emissions.

“At a national level, we sequester more than we emit. So, I believe as we go to COP27 we have an opportunity to say we are already sequestering more than we are emitting so the trading of carbon credits could start,” Masuka told the paper at the launch of the US$20 million facility.

“We are also saying we need additional resources to accelerate the climate proof financing that we are doing. As we know, we have climate proofing at two levels at the small-holder level and through this accelerated irrigation rehabilitation and development so I think that the twin approach at COP27 will perhaps garner the support that we want.”

He confirmed that the Cabinet approved national position on carbon credits or securitising natural resources was ongoing.

In July, our sister paper, Zimbabwe Independent, first reported that Environment, Climate, Tourism, and Hospitality Industry minister Nqobizitha Mangaliso Ndhlovu was in discussions on how the country could utilise its 130-tonne ivory stockpile as a tradable commodity.

The discussions also included how ivory could be used for carbon credits.

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