Today, the Africa Carbon Markets Initiative (ACMI) announced 13 action programmes. Steering committee members, made up of African leaders, CEOs, and carbon credit experts, met at Abu Dhabi Sustainability Week to build on early momentum and set out further ambitions.

In the lead-up to COP28 ACMI’s action programmes aim to accelerate Africa’s participation in the global carbon market by:

• Launching country activation plans for multiple countries.
• Advancing market commitments with an ambition up to USD 1 billion for the purchase of high-integrity African credits.
• Developing projects based on new methodologies and the realities of Africa such as diesel replacement credits and biodiversity credits.
• Increasing a significant volume of credits on the continent.

ACMI was inaugurated in November 2022 at COP27 with a bold, long term-ambition for the continent - to reach 300 million credits retired annually by 2030. This level of ambition would unlock USD 6 billion in income and support 30 million jobs. By 2050, ACMI is targeting over 1.5 billion credits annually in Africa, leveraging over USD 120 billion and supporting over 110 million jobs.

At COP 27, USD 200 million was secured in advanced market commitments from global corporates. In addition, seven African nations signed up to develop country carbon activation plans including Burundi, Gabon, Kenya, Malawi, Mozambique, Nigeria and Togo. A further 7 corporate buyers and 7 countries approaching commitment to the programme demonstrate the progress made in the past two months.

During the launch of ACMI at COP27, H.E. William Samoei Ruto, President of the Republic of Kenya, said “Our people have the potential to play a unique, indispensable, and globally significant role in the prevention and mitigation of emissions, protection of crucial ecosystems and the restoration of precious carbon sinks. The urgent actualisation of these critical interventions offers humanity its best chance of prevailing in the existential contest with climate change-induced catastrophe. The good news is that the world has a golden opportunity to rapidly achieve these objectives. By developing a robust, transparent and sustainable mechanism through which a carbon credits market can yield attractive income and development opportunities for communities at the frontlines in the fight against climate change.”

Damilola Ogunbiyi, CEO and Special Representative of the UN Secretary-General for Sustainable Energy for All and Co-Chair of UN-Energy, states, “The Africa Carbon Markets Initiative will be a transformational opportunity for Africa, with the potential to unlock billions in climate finance to support economies while expanding energy access, creating jobs, safeguarding biodiversity, and driving climate action towards our joint Paris goals.”

Joseph Nganga, Vice President, Africa, for the Global Energy Alliance for People and Planet, noted, “Current levels of climate finance fall short of Africa’s needs. The continent requires US$3 trillion to implement its aspect of the Paris Agreement, yet less than US$20 billion was provided in total to Africa between 2016 and 2019. Voluntary carbon markets can play a crucial role in filling this finance gap, but its potential is far from being realised. The Africa Carbon Markets Initiative can help us achieve a more rapid and equitable energy transition for Africa, a transition that supports lives and livelihoods with clean, reliable energy while countering the existential threat of our time, climate change.”

Antonio Pedro, Executive Secretary of the United Nations Economic Commission for Africa, has emphasised, “Africa is at the centre of the opportunity to develop the voluntary carbon credit market in a way that accelerates climate action, fosters shared value creation and creates sustainable livelihoods for communities at this time of global economic uncertainty.  To recover from the global pandemic and to address the food and energy crisis which impacts Africa the most severely, we need to rethink Africa’s economic model- shifting to invest in sustainable value chains that deliver jobs and resilience. The Africa Carbon Markets Initiative aims to provide realistic, transparent and reliable pathways for investment.” 

Bogolo Kenewendo, Special Adviser Africa Director, The Climate Champions Team, said, “Africa is undoubtedly the nature-positive economic superpower of the world. With access to the global voluntary carbon market, valuing and commercialising nature assets could unlock new financing opportunities for development for Africa. This market, operating with integrity, equity and transparency, could help Africa deliver on three fronts: nature, climate and development”.

Dr. Mahmoud Mohieldin, UN Climate Change High Level Champion COP 27 Presidency, stated, “The world has no shortage of financial resources, scientific ingenuity, and technological wherewithal to deal with the climate crisis. What has been lacking is leadership that  will marshal the resources and solutions for the parts of the world that desperately need them for the sake of the protection of nature assets and actioning a just transition that will help us all attain our 1.5 degrees ambition. ACMI is designed to create space for the public & private sectors to marshal assets to financial flows”

ACMI was launched in collaboration with The Global Energy Alliance for People and Planet (GEAPP), Sustainable Energy for All (SEforALL), and the UN Economic Commission for Africa, with the support of the UN Climate Change High Level Champions.

Electricity access remains a significant global challenge, with only incremental progress made to date towards achieving Sustainable Development Goal 7 (SDG7) – access to affordable, reliable, sustainable and modern energy for all by 2030.

The affordability of electricity plays an important role in determining whether households gain and maintain access to electricity. Closing electricity access gaps therefore requires special attention to supporting affordability.

New research published by Sustainable Energy for All in partnership with Climate Policy Initiative examines this issue in-depth, particularly how subsidies can support affordability. The Role of End-User Subsidies in Closing the Affordability Gap assesses three end-user subsidy programmes – in Ghana, Uganda and Togo – and builds on existing literature regarding the development and implementation of end-user subsidies for solar home systems.

Based on analysis of the three subsidy programmes, the brief outlines a set of attributes key to end-user subsidy design – financing structure; delivery modality and implementers; technology targeted; market targeting mechanism; verification system; and target market – and identifies the various methods available to build each component.

Ghana

The Ghana Energy Development Access Project launched the Improving Rural Energy Access through Solar Home Systems programme in 2010. The programme is widely seen as a success – likely the result of accurately calculating the subsidy thresholds for different regions in the country and targeting those populations that needed the subsidy the most. The programme also demonstrates the benefits of working with reliable third parties; the inclusion of both the Association of Ghana Solar Industries and rural banks were programme strengths.

Uganda

The Energy for Rural Transformation (ERT) Subsidy programme has been implemented jointly by the Ugandan Government and the World Bank since 2002. The programme has suffered from structural challenges, although the lack of transparency around it has made specific identification of these challenges difficult. Given the information publicly available on the programme, it appears likely the programme’s challenges may have been due to a more complicated subsidy value than the Ghana programme and more stringent verification requirements that led to delayed payments. Furthermore, high prices and private companies’ capacity limitations to deliver high-quality products of high quality led to consumer distrust.

Togo

The Togo government launched the CIZO project to enact enabling environment supply-side and demand-side interventions. Various multilateral institutions such as the European Union and African Development Bank have provided financing for the initiative (EUR 10 million and EUR 12 million, respectively). Implementation of the programme has been slow despite the use of digital technology to verify installations and beneficiaries and provide the monthly subsidy payments. The programme is relatively new so drawing conclusions at this stage is challenging, but early indications are that accurately calculating the affordability gap for SHS products could be a key factor in determining the correct subsidy threshold for increased uptake.

Key takeaways from existing subsidy programmes

The assessment of these programmes suggests effectively employing the menu of design attributes available to policymakers is critical to effectively target and verify beneficiaries while also determining the right threshold of the subsidy being provided.

The brief highlights crucial ongoing data and information issues that must be addressed at the national level to effectively design targeted, efficient subsidy programmes. Most notably, the difference between a successful and unsuccessful end-user subsidy programme is heavily influenced by consumer affordability estimates. This is how entities would determine which markets to enter, what would be the required concessionality to crowd in investment for an initiative from the private sector, and which subsidy thresholds for a technology would lead to increased uptake.

Therefore, the brief recommends that researchers advance a modified energy burden threshold for measuring the affordability gap in developing and emerging economies. An energy burden threshold is the percentage of household income spent on energy costs. Spending on energy beyond the defined percentage is called an energy burden. This threshold is used to determine affordability gap calculations at the moment.

This brief argues that the energy burden, which is defined by certain researchers as 6 percent or higher, is probably not accurate in a developing country context and needs revision based on market conditions and the type of technology.  

Policymakers should also invest resources to improve data on several fronts: demographic data to more accurately target subsidies, technology, and access tier data to assess the potential for phases interventions of subsidies, and household consumption data to minimize potential for market distortion.

By Harriet Lamb, Ashden CEO

Among the many pathways to a low carbon world, one track is too little trodden: training up a generation of young people with the skills for clean energy.  Every time someone learns how to fix a solar panel or assemble a cookstove, we are one step closer to the future we want. What’s more, we are one step closer to tackling a scandalous global failure – that almost one billion go without access to electricity, and three times as many go without safe cooking fuels.

The opportunities ahead are enormous. By 2023 the decentralised renewable energy sector could provide 210,000 direct, informal jobs in India, 30,000 in Kenya, and 24,000 in Nigeria, Power for All reports. But only if countries develop the workforce to fuel this energy revolution.

The benefits of widening green skills go far beyond lowering emissions. Initiatives can also support a just transition, by retraining workers in polluting fossil fuel industries or creating employment in countries with fast-growing youth populations.

So as well as tackling climate change, investment and smart policymaking can deliver huge social and economic benefits – including progress towards gender equality, if efforts are made to reach out to women.

Ambition and impact: trailblazing work in Togo, Kenya and India

In Africa, pioneering governments are taking on the energy access challenge with bold national plans – including action on skills training.

Among the frontrunners is the Togolese Rural Electrification Agency, which aims to achieve universal energy access in the country by 2030 – an ambitious target, given that in 2017 access was just 8 percent in rural areas. The agency’s systemic approach takes in subsidies, clever integration with mobile banking, public-private partnerships – and a clear focus on building skills. 

In recent years, 3,000 local technicians have been trained and certified to install, maintain and fix solar systems. Meanwhile, 3,000 people have been trained and certified as mobile banking agents – essential to the successful roll-out of solar solutions.