Is regenerative farming key to successful carbon markets?
There is great optimism currently about the future of carbon markets and what these could mean for Africa. The role of regenerative farming in increasing the carbon supply, and therefore the carbon credits for the continent, is also receiving a lot of positive press. The latest: AgriCarbon, Anthesis’ pioneering carbon farming programme recently becoming the first carbon farming initiative in Africa to achieve registration and carbon credit issuance under Verra’s VM0042 Agricultural Land Management Methodology.
This renewed optimism is encouraging since the carbon market crash in 2022, linked to several factors (including the Russian invasion of Ukraine) but also issues related to the quality and integrity of some carbon credits, particularly those from nature-based solutions exposed weaknesses in the market and caused investor concerns. However, such “growing pains” may be par for the course for any nascent sector (think of cryptocurrencies), as an entirely new system of checks and balances have to be developed, tested and adapted, as the market evolves. And evolving it is.
According to the World Bank, carbon pricing revenues reached a record $104 billion in 2023, and there are now 75 carbon pricing instruments in operation worldwide. Over half of the collected revenue was used to fund climate and nature-related programmes.
“Carbon pricing can be one of the most powerful tools to help countries reduce emissions. That’s why it is good to see these instruments expand to new sectors, become more adaptable and complement other measures,” says Axel van Trotsenburg, World Bank Senior Managing Director.
Nature-based solutions in Sub-Saharan Africa
Also in Sub-Saharan Africa, nature-based solutions are gaining momentum. According to a new report from the World Resources Institute and the World Bank, developed in collaboration with the African Development Bank, between 2012 and 2023, the region saw nearly 300 new nature-based resilience projects that collectively secured over $21 billion in funding. And between 2012 and 2021, the number of new projects steadily grew by an average of 15% per year.
While the name may sound technical, nature-based solutions refer to a well-known and intuitive set of approaches that aim to protect, manage and restore natural systems—such as forests or wetlands—to benefit people, nature and the climate simultaneously.
Early carbon market rock stars
Which countries on the continent are doing the right things to prepare for carbon markets?
“We have a number of early movers, rock stars, superstars on the continent who are really paving the way for the development of international carbon markets,” says Olivia Tuchten, Principal Climate Change Advisor at Promethium Carbon in South Africa.
She explains: “For example, Ghana is one of the very first early movers. They have developed a very innovative approach to formalising mainstreaming carbon markets within their economy. Kenya is an enormously important regional hub. That’s where Africa Carbon Markets Initiative (ACMI) is located. The Kenyans historically have a large amount of carbon credit projects that have been registered with well-recognised carbon programmes. So they have a huge wealth of experience and capacity to develop these types of projects.”
She continues: “East African and West African countries have alliances, which are proving incredibly beneficial in sharing information and knowledge. I think regional cooperation in that regard is absolutely key to developing carbon markets on the continent. South Africa, obviously, is also a leader on the continent in terms of carbon markets.” [Read the full interview here.]
AgriCarbon programme
Verra is a carbon credit registry that manages the Verified Carbon Standard (VCS), which is the biggest standard in the carbon market based on market share. It drives finance toward activities that reduce and remove emissions, improve livelihoods, and protect nature.
Anthesis South Africa’s AgriCarbon programme commenced in 2021, and through sustainable agricultural practices adopted by 29 farmers across 17,582 hectares, has issued 39,207 tonnes of carbon credits.
The company’s MD Franz Rentel is rightfully proud of its milestone of become the first carbon farming initiative in Africa to achieve the Verra seal of approval: “Innovation is at the core of Anthesis and this milestone is a testament to our commitment to pioneering sustainable solutions. What was once uncharted territory is now a thriving sector, with projects worldwide building on what we started. This achievement underscores how bold ideas, backed by strategic expertise, can drive real impact and reshape industries for a more sustainable future.”
Future of carbon supply
Africa is poised to become the future of carbon supply, according to the Catalyst Fund’s Ash Berman and Malika Anand, and the continent’s supply of carbon credits cannot get to market fast enough. According to the analysts: “Both the voluntary carbon market (VCM) and compliance markets more than doubled in value between 2020 and 2022 as an increasing number of corporations and governments in the Global North seek to execute voluntary or mandatory Net Zero commitments. In 2022, $2 billion of carbon credits were traded on the VCM, more than doubling since 2020. The volume of credits required globally is expected to increase at least 20x by 2035, with 30 to 40x needed for scenarios consistent with the Paris Agreement on climate change. To harness this opportunity, we need to establish African markets as attractive destinations for private sector investment, and support African innovators to navigate the carbon value chain.”
Africa’s forests
The continent’s forests play an important role in its carbon supply and accreditation. Last month, the International Day of Forests was celebrated globally. A report published the NGO Farm Africa details how smallholder farmers in eastern Kenya are reaping financial and environmental benefits from an agroforestry project that integrates carbon finance with sustainable agriculture.
The report, “Growing green – How agroforestry and carbon markets are transforming farming in eastern Kenya,” details how 21,500+ farmers in Embu and Tharaka Nithi counties have planted trees and adopted climate-smart farming techniques. The farmers have reduced carbon emissions by a total of 24,945 tonnes of carbon dioxide and earned income through the sale of an equivalent number of Carbon Removal Units (CRUs), while contributing to climate change mitigation and soil restoration across 14,175 hectares of land.
This initiative, launched by Farm Africa in 2020 in partnership with Acorn, Rabobank and AGRA, enables farmers to generate revenue from carbon credits while improving biodiversity and agricultural productivity. Eighty per cent of the revenue from carbon credits goes directly to farmers, many of whom have used the earnings to pay school fees, expand farms, and invest in alternative income sources. “Beyond environmental benefits, the initiative has provided a financial lifeline for local communities,” says Mary Nyale, Country Director, Farm Africa, Kenya.
Morocco new force for regenerative agri
The Singapore Centre for African Studies that prepares reports for prospective Asian investors, regards Morocco as another emerging force for regenerative agriculture in Africa. The kingdom has established regenerative agriculture solutions on the basis of carbon reduction and the monetisation of carbon credits that are especially attuned to the needs of African agriculture with its estimated 350-million smallholder farmers. In Morocco, 71% of farmers work on less than 5 hectares.
According to the Singapore Centre for African Studies, Morocco’s African agricultural success story as a major fruit and vegetable exporter to Europe can be attributed to the kingdom’s ten-year initiative, the Green Morocco Plan (Plan Maroc Vert), that has managed to increase the value of agricultural exports by 117% to roughly $3.5 billion and created 342,000 new jobs.
Southern African regenerative farming
In one of our exclusive interviews in this edition of the Green Economy Express, Andrew Ardington, the founder of the Regenerative Agriculture Association of Southern Africa (RegenAg SA), says finance is the biggest hurdle in farmers changing to regenerative agriculture.
“Regenerative agriculture can never become compulsory. It is definitely a carrot solution, not a stick solution. Farmers have to engage with it. They have to believe in it. And they have to work with the natural ecosystem of their farm that cannot be legislated. What can be legislated is incentives. Farmers will do this themselves if they can find the financial partners to help them make the change.”
He explains: “We are in this rather strange situation of a world where everyone is expecting the farmers to invest in this transition. Agriculture constitutes less than 3% of global GDP, and it is a very indebted sector of the global economy. So it’s really in no position to pay for this transition that is required to maintain the planet as a welcoming and habitable place for human beings. So we need to have an in-depth look as a society how to set up the investments with farmers in primary agriculture by 97% of GDP that’s not involved in primary agriculture.” [Read full interview here.]
This article first appeared in the Green Economy Express newsletter, published by Africa’s Green Economy Summit.