Carbon offset projects are rising across Africa. Governments and corporations tout them as a win-win solution for climate action and economic development. But who truly benefits? The evidence suggests a more complicated picture.
Carbon markets have been framed as a way to channel finance to developing nations. Projects like REDD+ (Reducing Emissions from Deforestation and Forest Degradation) aim to protect forests while generating income for local communities. Africa, home to vast forests and biodiversity, has become a hotspot for such projects.
However, the voluntary carbon market, which includes schemes like soil carbon credits, has come under scrutiny for its lack of transparency and questionable effectiveness. While these projects promise to support sustainable development, their credibility and impact remain contentious, raising concerns about their true value in addressing climate change and benefiting local communities.
In 2017, a report revealed that 300,000 million metric tonnes of carbon are stored in lands managed by indigenous and local communities globally. Carbon markets promised to reward these communities for their stewardship. For countries like Gabon, which relies heavily on its forests, carbon credits were seen as a lifeline for conservation funding. But the reality has been far from ideal.
Recent downturn in voluntary carbon markets has exposed significant risks, impacting major contracts aimed at funding forest conservation. This indicates a broader issue: carbon markets, whether compliance-based or voluntary, are inherently unstable because they depend on fluctuating demand. As a result, the flow of finance is inconsistent, undermining their reliability as a sustainable funding mechanism for conservation efforts and the communities that depend on them.
Understanding Carbon Credits and Offsets
At the core of the debate is the difference between a carbon credit and its use as an offset. A carbon credit represents a measurable reduction in greenhouse gas emissions, often through projects like reforestation, soil restoration, or renewable energy development. These initiatives can have many positive impacts, such as restoring ecosystems, creating jobs, and providing sustainable livelihoods.
The problem begins when these credits are used as offsets—when corporations or countries purchase them to justify continued pollution elsewhere. Instead of reducing their own emissions, companies can buy credits and claim they are “carbon neutral” while still burning fossil fuels. This practice has led to growing concerns that carbon offsetting, rather than being a tool for genuine climate action, is becoming a way for polluters to delay or avoid real reductions.
The carbon market is not a single entity but a fragmented and complex system. Different types of carbon markets operate with distinct rules and impacts. Some allow companies to buy credits to offset their emissions, while others let countries trade large-scale emissions reductions for financial compensation. There are also cap-and-trade systems where companies buy pollution permits, forcing them to gradually cut emissions over time.
The Cracks in the System
Investigations reveal significant flaws in carbon offset projects. A 2023 report by SourceMaterial found that many carbon credits traded on voluntary markets do little to reduce greenhouse gas emissions. Billions have been wiped off the value of offset credits as corporations and investors lose confidence.
The report revealed that carbon markets allow polluters to buy their way out of reducing emissions. Instead of cutting emissions at the source, companies purchase cheap credits, often of questionable quality. This has led to a reputational crisis, with demand for nature-based credits plummeting. Prices for these credits are now at an all-time low.
In Africa, the impact of carbon offset projects on local communities is mixed. While some projects claim to benefit communities, evidence suggests that profits often bypass those on the ground.
Unearthed and SourceMaterial investigation found that brokers frequently purchase credits from landowners at low rates and sell them at triple the price. Middlemen profit, while communities see little financial return. In some cases, projects have even displaced local populations or restricted access to land and resources.
For example, in Kenya, a major REDD+ project faced backlash after allegations of land grabs and insufficient community consultation. Similar issues have been reported in Uganda and Tanzania, where carbon offset projects have disrupted livelihoods without delivering promised benefits.
The Science Behind the Scandal
The science of carbon offsets is also under scrutiny. Only 5% of offset projects focus on carbon removal, according to industry data. Most projects, like renewable energy initiatives, merely prevent additional emissions rather than removing existing carbon from the atmosphere.
Forest-based offsets, which make up 28% of the market, have been particularly controversial. Monoculture plantations, often used in reforestation projects, capture far less carbon than natural forests and can harm biodiversity. Research shows that even high-quality nature restoration, while critically important for reducing the likelihood of wildfires, maintaining rainfall cycles, and supporting biodiversity, is problematic as an offset for continued emissions.
Research shows it can only reduce global warming by 0.18°C by 2100—far short of what’s needed to meet climate targets. While forest restoration offers immense ecological benefits, its emissions savings are not sufficient to justify swapping it with ongoing fossil fuel use.
The economic viability of carbon markets is also in question. In 2022, the average price of a carbon offset was just $2 per tonne, compared to $85 per tonne in regulated markets like the EU’s Emissions Trading System. This low price reflects the poor quality of many projects and a glut of unused credits.
Even if prices rise, the potential of carbon markets to address climate change is limited. Reports estimate that high-quality offsets could only cover 4% of current emissions by 2030. This makes them a minor piece of the climate solution, not the silver bullet some claim.
Land Rights and Local Communities
Land rights are a major concern in Africa, where many offset projects are located. Only three countries in the UN’s REDD+ program legally recognize community land rights. This lack of legal protection leaves communities vulnerable to exploitation.
In Zimbabwe, the government attempted to cancel all existing offset deals, demanding 50% of profits. While this move aimed to ensure national benefits, there’s no guarantee the funds will be used for conservation or community development.
Indigenous communities, who manage much of the world’s forests, receive less than 0.1% of climate finance. Without fair compensation and involvement, which Joab Okanda Climate and Energy Policy Expert said offset projects risk perpetuating inequality rather than alleviating it.
A Shift in the Market?
Some developers, like South Pole, are exploring new frameworks for corporate contributions. These aim to cut out greenwashing by separating offset purchases from net-zero claims. However Okanda notes that while this could improve transparency, it doesn’t address underlying issues like land rights and benefit-sharing.
For example, Gold Standard is working on projects that focus on corporate contributions without classifying them as offsets. This approach could channel private finance to developing countries but still leaves questions about equity and accountability.
Meanwhile, the instability in carbon markets has spurred alternative corporate solutions outside traditional offset mechanisms. One such initiative is the newly launched fund by the UN Convention for Biological Diversity, which aims to collect contributions from companies profiting from nature’s genetic resources. Half of these funds are allocated directly to Indigenous Peoples, while the other half goes to governments in the Global South. However, for such models to succeed, stronger regulation is needed to mandate corporate contributions, rather than relying on voluntary goodwill.
Okanda notes that Carbon markets are not inherently bad. “Done right, they could provide much-needed finance for conservation and climate action. But the current system is flawed. To ensure fairness, standards must be strengthened.” Okanda explained.
He explained that offset projects must meet rigorous environmental and social criteria, with independent verification to ensure quality and transparency. Local communities must have a say in project design and implementation, with fair compensation and land rights guaranteed.
While Fred Njehu, Pan-African Political Strategist for Greenpeace Africa said governments and corporations must also diversify their climate finance strategies, investing in direct emissions reductions and alternative financing mechanisms. Adding that governments should play a stronger role in overseeing carbon markets to prevent exploitation and ensure benefits are shared equitably.
Njehu explained that carbon offset projects in Africa are at a crossroads. While they hold potential, the current system often fails to deliver on its promises. Without significant reforms, these projects risk exacerbating inequality and undermining climate goals.
“The question remains: will Africa’s communities benefit, or will they continue to bear the cost of a broken system? The answer will shape not only the future of carbon markets but also the lives of millions who depend on the land for their survival,” Njehu said.
To enhance the effectiveness and credibility of carbon markets, recent developments have focused on establishing high-integrity standards. For example, the Integrity Council for the Voluntary Carbon Market (ICVCM) has approved new methods aimed at reducing emissions through the use of cleaner fuels in domestic cookstoves. These methods are intended to boost buyer confidence in the carbon credits generated from such projects.
