Opportunities in Malawi’s Carbon Markets

 Opportunities in Malawi’s Carbon Markets

Opportunities in Malawi’s Carbon Markets.

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A study commissioned by the World Bank in 2012 identified potential opportunities that can enhance Malawi’s ability to attract investment in carbon markets through climate change mitigation and adaptation activities.

In response to the study findings, government has initiated a number of programs that seeks to expand the scope and impact of climate change mitigation finance within Malawi.

The Malawian Investment and Trade Centre (MITC) has already started marketing domestic carbon market opportunities. It has helped produce an investor guide which has been shared with market participants at Carbon Expo- the world’s largest offset-related trade event.

MITC’s campaign include enhancing Malawi-focused offset investment marketing materials; convening national carbon finance opportunity events for private sector entities; advocating on behalf of project developers within the government for policy support and financial incentives.

A report titled “Scoping of Opportunities and Institutional Assessment for Malawi’s Engagement in the Carbon Markets” by Winrock International says potential projects were selected according to their relevance to Malawi Growth and Development Strategy (“MGDS”), the number of precedent projects in Africa, development feasibility, and cost.

The carbon market opportunities are largely found in the energy, industrial, construction, agriculture and forestry sectors.

The study indicates that most promising abatement potential for Malawi lies with the dissemination of cooking stoves, landfill gas projects, avoided deforestation and degradation, and afforestation/reforestation of non-cropland.

According to Winrock International, carbon market opportunities include either voluntary or pre-compliance markets and regulated/compliance markets, such as those created by the United Nations Framework Convention on Climate Change (UNFCCC).

The UN Convention on Climate Change sets an overall framework for intergovernmental efforts to tackle the challenge posed by climate change. It recognizes that the climate system is a shared resource whose stability can be affected by industrial and other emissions of carbon dioxide and other greenhouse gases.

“Voluntary markets including standards such as the American Carbon Registry (ACR), Verified Carbon Standard (VCS) and the Gold Standard (GS) can be effective means of attracting outside capital to specific projects in Malawi,” the report says.

However, the study believes that most offset investment will be driven by compliance mechanisms, such as the EU ETS, through its recognition of Clean Development Mechanism (CDM) projects and potential development of REDD+ frameworks.

The Clean Development Mechanism (CDM), defined in Article 12 of the Protocol, allows a country with an emission-reduction or emission-limitation commitment under the Kyoto Protocol to implement an emission-reduction project in developing countries. Such projects can earn saleable certified emission reduction (CER) credits, each equivalent to one tonne of CO2, which can be counted towards meeting Kyoto targets.

“Least developed countries (such as Malawi) are likely to soon become the target destination of CDM project investment, as only CDM credits registered from projects in LDCs will be eligible for use offsetting compliance obligations under the EU Emissions Trading Scheme,” reports the study.

The report argues that this development will result in global project developers shifting their focus to Africa, in search of countries where they can quickly and efficiently develop projects.

Charles Mkula

Charles Mkula has over 15 years of working as a Malawian newsroom news reporter and editor as well as a freelance journalist for a number of international news outlets, Charles Mkula has worked as a Public Relations Officer for a Malawi/Germany urban development project. He co-founded Hyphen Media Institute, a platform for sharing information generated from policy debate and advocacy activities. Charles likes reading, writing, traveling, exercises, making friends, listening to music, watching TV, documentaries and cartoons.

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