Regulating the African carbon market

The global carbon credits market is on the rise and it is expected to grow to 2.68 trillion by 2028. Many African nations are now looking to capitalize on the increasing demand for carbon credits. As they move towards a more equitable profit-sharing model, they are also faced with the challenge of balancing regulation with investor interests. CNBC Africa recently hosted a discussion with key figures in the industry to shed light on the dynamics at play. Mr. Joseph Lekuton, a Member of Parliament in Kenya, and Greg Murray, the CEO and co-founder of Koko Networks, joined the conversation to provide valuable insights. Mr. Lekuton shared details about a new carbon credit bill that focuses on credit trading and benefit sharing formula. The bill aims to introduce a mechanism to govern carbon credit trading and ensure fair distribution of benefits derived from green energy initiatives. The benefit sharing formula outlined in the bill allocates percentages to different stakeholders, including project developers, communities, national and county governments, and managing authorities. By establishing clear guidelines on benefit distribution, the bill aims to create a conducive environment for private investors while safeguarding the interests of local communities. Mr. Murray offered his perspective as a private investor in the carbon market, highlighting the importance of clarity and transparency in regulatory frameworks. He emphasized the need for a robust regulatory environment that supports investment while ensuring equitable benefit sharing. Mr. Murray also underscored the significance of raising capital for green industries and conservation efforts, suggesting that governments should focus on attracting private sector investment to drive sustainable development. The discussion touched upon the challenges related to quality assessment in the carbon market, particularly in evaluating the value of carbon credits offered. Mr. Lekuton outlined Kenya's approach to regulating the voluntary carbon market and emphasized the importance of providing clear policy frameworks and legal protections for investors. He also highlighted the role of financial infrastructure in creating a favorable investment climate. Mr. Murray echoed the need for transparency in benefit sharing and proposed the idea of a benefits sharing registry to enhance accountability and public access to information. Both speakers emphasized the need for striking a balance between regulation and investor interests to foster a thriving carbon market in Africa. They agreed that transparency, clarity, and incentivizing behavior change are key elements in ensuring sustainable growth and equitable distribution of benefits. As the African carbon market continues to evolve, stakeholders are expected to collaborate closely to address regulatory challenges and promote responsible investment practices.