Emission Reduction and Carbon Trading in Africa: Fundamentals, Prospects and Challenges

Purpose: In response to the threat of climate change, there has been progressive development of emission trading in different parts of the world. However, Africa is largely absent from the carbon trading map. International institutions such as the International Carbon Action Partnership (ICAP) and United Nations Development Programme (UNDP) have emphasised that Africa needs an emission market. This study explores the fundamentals, prospects, and challenges of carbon trading in Africa. Methods: This study uses content and thematic analytical procedures. It conducts documentary reviews and technical analyses on carbon emissions and trading and explores the prospects and challenges in Africa. Findings: The analyses revealed that Africa presents fertile grounds for a flourishing carbon market and there is reasonable progress to achieve carbon emission reduction and advance carbon trading. Nevertheless, it was also found that much capacity is still needed to advance, establish and mature these carbon markets including trading framework and regulatory capacity for a sound operation of the market. The fundamental challenges found include inadequate resources to engage in carbon emission mitigation activities, difficulty to create and maintain a market with no intrinsic value such as carbon, weak regulatory capacity and the difficulty in assigning carbon credits to nature-based projects which are predominant in Africa. Research Limitation/Implications: This research is limited to technical analyses and limited implications for higher-order quantitative estimation of carbon trading-emission reduction nexus. Practical Implication: The findings present policymakers and stakeholders in Africa with the stage of development relevant to carbon markets including the fundamentals, prospects, and challenges. The evidence further shows the feasibility, capacity, and adequacy of Africa’s readiness toward the development of carbon emission trading systems. Social Implication: This study presents carbon trading as a market-based instrument to reduce carbon emissions and improve the livelihood of Africans through financial incentives for nature-based projects and other technical support in Africa. Originality/Value: This study is one of the foundational studies that present evidence about the fundamentals, prospects, and challenges of emission reduction and carbon trading in the wake of the launch of the African Carbon Markets Initiative (ACMI). The evidence in this study demonstrates African-based initiatives which define the stage of readiness for carbon trading.