Is carbon trading mere hot air?

The villagers call it 'hewa kaa', which translated from Kiswahili means 'black air'.

The community at Gazi Bay in Kwale county is expected to benefit from Sh18 million in annual revenue from a globally acclaimed carbon credit project.

In essence, the money comes mostly from overseas organisations joining the lucrative trade in carbon dioxide emissions, hence the local interpretation as 'hewa kaa' or black air.

Why, exactly, are the villagers in Gazi excited about trading hot gases from exhaust emissions generated elsewhere? It all goes back to basic biology.

Plants grow by absorbing carbon dioxide from the air and converting it into roots, stems, leaves, branches and seeds. The bigger the plant, the more carbon is stored within it.

Trees grow by absorbing carbon dioxide from the air throughout their lives. A single tree can store several tonnes of carbon, a phenomenon scientists call "carbon sequestration".

Gazi happens to have lots of mangrove trees. By conserving the mangrove forest, the community is performing a service of cleaning up excess carbon dioxide. Organisations that emit carbon emissions pay for that service through carbon credits. That's why it appears as though air is on sale.

TRADING HOTE GASES

The entire concept of carbon credits, carbon trading and carbon markets is an attempt to address the real problem of climate change.

Carbon dioxide gas is emitted from industrial production, electricity generation, mining, transport, domestic cooking and agriculture, among other sources. The concept of carbon credits is meant to encourage organisations that have lots of emissions to invest in mechanisms that remove that gas from the air.

Over the past decade, several carbon offset projects have been implemented across Kenya. The Kasigau carbon project in Taita Taveta county is one of the pioneers of carbon trading in Kenya.

Similar projects exist in western Kenya, Kajiado, the Aberdares and northern Kenya. One of the largest carbon trading projects to date has been approved for Lamu county, potentially generating as much as Sh13 million in annual revenues from at least 1,000 acres of mangrove forests.

The idea of helping poor communities make money from carbon credits is noble enough, but problems abound. For starters, most if not all of the carbon projects are managed by foreign entities. This is not surprising, considering almost all carbon funds come from outside Kenya, but there are worries of communities affected by carbon projects not getting their fair share of the money.

Environment CS Soipan Tuya has acknowledged that there is very little transparency in the conduct of carbon trading between foreign organisations and communities.

“We want to have clear benefit-sharing modalities for communities. We want to improve the carbon market space to be of high integrity and high quality," she said in February.

Misgivings aside, the government sees the growth of carbon markets as a motivating factor in encouraging communities to plant more trees.

The lack of transparency led Kajiado Governor Joseph Ole Lenku to revoke all carbon credit contracts signed between private entities and local communities.

In a public notice in June, the Kajiado government cited opaque arrangements of buying carbon credits from group ranches and conservancies. The county government justified the draconian step, saying carbon trading was disadvantageous to the community.

In March, controversy arose over the methodology used to calculate carbon credits at a conservation project in northern Kenya. Furthermore, there were questions over the rights of pastoralist communities to graze their livestock on land that falls under the carbon trading project.

Conservation publication MongaBay reports that the northern Kenya carbon project is intended to absorb 50 million tons of carbon dioxide from the atmosphere over the next 30 years. That quantity of carbon easily translates into millions of dollars in revenue.

The price of carbon credits fluctuates across the world. The European Union has recorded prices as high as 90 US dollars (Sh12,000) per tonne of carbon, but there are regions of the world recording only $6 (Sh840) per tonne.

Despite the wide range of prices, carbon trading is emerging as a very attractive prospect in conservation circles. According to Reuters, the value of traded global markets for carbon dioxide permits reached a record $909 billion (Sh128 trillion) in 2022.

Kenya leads African countries in carbon trading. Anzetse Were, an economist with FSD Kenya, says Kenya is responsible for 23 per cent of carbon credit issuances in Africa. Just to give one example, Saudi companies bought more than 2.2 million tonnes worth of carbon credits in June during a sale in Nairobi.

COMMUNITY GRIEVANCES

Carbon trading is a billion-dollar business, but the methods for calculating carbon absorption remain complicated. Hunter-gatherer tribes living in forests and nomadic pastoralists grazing their livestock on grasslands may lose out to carbon credit projects. Restrictions may be placed on land use so that trees and other types of vegetation can grow and capture carbon dioxide.

Money generated from carbon credits may be too low to compensate communities for losses in earnings arising from land use restrictions. For example, are carbon credits enough to convince a charcoal producer to get out of the business?

Prof Ashish Aggarwal, an expert in forest carbon projects, argues that carbon projects can affect property relations on the ground. In an article in the Journal of Forest Policy and Economics, Aggarwal points out that forestry policies and institutions are not coordinated, sometimes working at cross-purposes. If the land where carbon projects are to be implemented has not been surveyed, this can turn problematic for local people.

“In such a context, forest carbon projects might exacerbate existing conflicts and deteriorate rather than improve the resource governance," Aggarwal says.

The constantly fluctuating prices of carbon credits may make the venture unsustainable in the long term. Revenues may not be enough to cover the cost of managing the carbon project. The benefits promised to the community may not materialise, something which will strain relations with project managers.