top of page

How the struggling carbon market affects African projects?


Recent months have been a flurry of interest in Africa’s potential role in the voluntary carbon market, accompanied by a series of major announcements about land deals for carbon removals projects.

The voluntary carbon market (VCM) is a decentralized marketplace where private entities voluntarily buy and sell carbon credits, which represent verified emissions reductions or carbon removals. These credits are generated by projects that aim to mitigate climate change by reducing greenhouse gas (GHG) emissions or removing GHGs from the atmosphere.

The VCM operates independently of government-regulated carbon markets, such as the European Union Emissions Trading Scheme (EU ETS). Instead, it is driven by the demand of companies, organizations, and individuals who want to offset their own emissions or support climate-friendly projects.

Companies and organizations can purchase carbon credits to offset their own emissions. This means that they can reduce their overall carbon footprint by purchasing credits from projects that are removing or reducing GHGs elsewhere. For example, a company that operates a coal-fired power plant could purchase carbon credits from a reforestation project in order to compensate for the emissions generated by its operations.

The voluntary carbon market has seen a surge in interest in recent years, with Africa being touted as a key player in the future of carbon offsetting. However, the struggling carbon market is now forcing African projects to rethink their strategies.

There are a number of reasons why the carbon market is struggling. One reason is that the supply of carbon credits has increased significantly in recent years, outpacing demand. This has led to a fall in the price of carbon credits, making it less profitable for companies to invest in carbon offset projects.

Another reason for the struggling carbon market is the price volatility. The price of carbon credits can fluctuate significantly, making it difficult for companies to plan their carbon offset strategies.

The struggling carbon market is having a significant impact on African projects. Many projects are now struggling to find buyers for their carbon credits, and some have even been forced to close down. This is a major setback for Africa, which was hoping to use the VCM to raise finance for climate change mitigation projects.

In order to survive in the struggling carbon market, African projects are being forced to rethink their strategies. Some projects are focusing on developing new types of carbon credits, such as credits for avoided deforestation. Others are looking to partner with companies that have a strong demand for carbon credits, such as airlines and oil and gas companies.

The future of African projects in the VCM is uncertain. The carbon market is likely to remain volatile in the coming years, and it is difficult to say whether the demand for carbon credits will recover in the short-term. However, African projects that are able to develop innovative strategies and find new partners are likely to be more successful in the long run.

Despite these challenges, the VCM has the potential to play a valuable role in addressing climate change. As the market matures and competitions are strengthened are strengthened, it can become a more credible and effective tool for mitigating greenhouse gas emissions.

Comments

Rated 0 out of 5 stars.
No ratings yet

Add a rating

Subscribe to The Lake Street Review!

Join our email list and get access to specials deals exclusive to our subscribers.

Thanks for submitting!

bottom of page