“Carbon markets are not a silver bullet, but a key component, in Africa’s measures to address our climate crisis”
Exclusive interview with Olivia Tuchten, Principal Climate Change Advisor, Promethium Carbon, South Africa. At the third edition of Africa’s Green Economy Summit in February, Tuchten was the co-moderator of a packed masterclass on carbon markets.
Q: Thank you for joining us today. You have a strong background in the carbon and climate change sector. Tell us a bit about your background and your current role at Promethium Carbon.
I’m Olivia Tuchten. I’m from a company called Promethium Carbon. We are a climate change advisory company. We’ve been operating in this space for over two decades now. We are primarily carbon climate change specialists and consultants. That’s all we do. That being said, our work spans across mitigation and adaptation, climate change vulnerability risk assessments and reporting for governments. I’ve been with the company for about 10 years and tend to specialise in the mitigation side of the work that we do, especially the work around carbon markets and carbon credit project development and issuance of carbon credits.
Q: Would you take us through some carbon market fundamentals please, their evolution, the challenges that followed regarding transparency and fairness. And where are we today?
Carbon markets are essentially a system that has been designed to reduce global greenhouse gas emissions by assigning a monetary value to the carbon credit that is created as a result of the measure that is implemented. When I say measures, it varies, for example, you can have renewable energy measures, those types of projects which displace grid electricity that is very emissions-intensive. You can have other types of project activities like forestry projects, conservation projects that perhaps sequester or remove greenhouse gas emissions from the environment.
Typically, these types of systems and markets have operated through two mechanisms. They are generally referred to as the compliance markets and the voluntary markets. Compliance markets, we’re more and more using the term regulated markets, for example, like the South African domestic market based on our carbon tax system, which allows for the use of carbon credits to offset a corporate greenhouse gas inventory where that corporate has to pay carbon tax, and the use of carbon offsets in the system is regulated. One doesn’t have to use a carbon offset, but the rules by which you do use them is well defined in pieces of legislation.
Voluntary markets have arisen through the likes of big corporates who have recognised that there is an urgent need to decarbonise and that carbon offsets can play a vital role in this process. These types of corporates purchase carbon credits in the market to voluntarily offset their corporate greenhouse gas inventories, hence the term voluntary markets.
Q: You are working in a system that is constantly evolving and changing. What are the main challenges in your view?
The system that we are working in is evolving rapidly. One can say that the carbon markets were born out of the Kyoto Protocol, which was a UN mechanism that was implemented in the late 1990s and we’ve come a long way since then. As you will be aware we now have the Paris Agreement, which is the new UN mechanism, a new global mechanism whereby countries that have ratified and joined the Paris Agreement recognise that there is an urgent need to decarbonise because climate change is a man-made phenomenon and we have a responsibility to correct the imbalance that we as a human society have created.
The Paris Agreement has really spurred new rules to enhance market integrity. And it is really said to be the precedent in terms of carbon markets. That being said, it has taken a very long time to get to where it is now, which is almost ready to be implemented. We’re on the verge of the Paris Agreement carbon markets or international markets.
In the interim, private sector has realised that there is this urgent need to decarbonise, as I said previously, and they’ve taken matters into their own hands, if you like. And they have spurred the development of these voluntary carbon markets where carbon credits are used to offset greenhouse gas inventories of these corporates on a very voluntary basis.
Because there’s been such a rapid evolution, in terms of the carbon markets, there are certain challenges that have come up and certain criticisms and issues. For example, there are concerns raised about the integrity of carbon markets and there are various measures underway to address these types of challenges. You see that there are market players like the ICVCM, the Integrity Council for Voluntary Carbon Markets, that has come out as a champion sector or entity to establish core principles to ensure the integrity of carbon credits. There are amazing technological developments, AI, blockchain, other technology innovations in the likes of decarbonising whole systems. Those are very exciting, and really there is a growth in this market that we can see happening as a result of the drivers from the Paris Agreement, drivers at country levels, drivers from corporate citizens and ordinary citizens like you and me really spurring the development of these markets.
Q: What are some of your favourite success stories of carbon credit swaps on the continent?
Some of the success stories across the continent for me are the types of initiatives that address development needs as well as mitigating greenhouse gas emissions or removing greenhouse gas emissions from the atmosphere.
There is really amazing work being done in the renewable energy space. For example, these types of projects not only mitigate greenhouse gas emissions, but they tick a development agenda, which is to provide increased access to electricity that’s clean, that’s affordable. These are huge development agendas. In addition, there are projects that are addressing waste and sanitation needs in very innovative ways, whether it’s the use of alternative waste treatment techniques like black soldier fly larvae. These are incredible success stories. In addition, I think I must mention the huge potential for increased carbon sequestration on the continent. And that’s in the form of large forestry types of projects, large conservation types of projects as well. So they’re super exciting projects that are worth following.
Q: In your view, how is Africa positioned to take advantage of this burgeoning opportunity?
Africa is largely well prepared to take advantage of the opportunities from a number of positions. First, we have abundant natural resources that can be the basis of these carbon credit projects. For example, we have vast forests and an abundance of sunshine and wind, and these make really good drivers for the development of carbon projects and carbon markets on the continent. I think you will know that the ACMI, the Africa Carbon Markets Initiative, which was launched recently, recognises the potential on the African continent and the aim of ACMI is to scale voluntary carbon markets significantly.
There are obviously some challenges in this regarding transparency issues around the development of these types of projects around the monitoring, the reporting, the methodologies that are used. And there are instances of market failures, whether they are through negligence or through forward greenwashing, double counting. Those are types of examples that that really is an issue that needs to be addressed in the market.
Some other issues relate to typically low carbon credit prices for these types of project initiatives. And that certainly needs to be addressed because these projects need to be sustainable in the long term and we need fair carbon prices to make that happen.
Q: Which countries on the continent are doing the right things to prepare for carbon markets? What more needs to be done?
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. 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 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. East African countries, West African countries, they have alliances, which are proving incredibly beneficial in sharing information and knowledge. 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. As you may be aware, we have a carbon tax system which provides for the use of a limited amount of carbon credits to offset taxpaying entities carbon tax liabilities. And that’s been a huge success and is expected to grow well into the future.
There are obviously the areas for improvement. We need better policy and regulatory frameworks that enable these types of project activities. We need transparency on governance regarding how these projects are managed from a private sector level and a public sector. And obviously there does need to be capacity building on the continent, which is very important.
Q: At the third AGES in February, you co-moderated a masterclass on carbon markets with another expert. The room was packed, and it was a great success. What were your main take-aways in terms of audience questions and views?
There was a very positive outcome from the carbon markets masterclass that was held at AGES. Really what we got was there was a strong enthusiasm for carbon markets. There were a large number of attendees and I think that just demonstrates the interest in this potential tool that can be used to address our global climate change crisis.
Other insights from the masterclass were that there’s a real need to focus on practical applications. How do you make a carbon credit project? How do you get the finance for it? Those are the types of needs that need to be addressed. I think there was also overwhelming optimism about Africa’s potential to participate in these markets, whereas Africa did not successfully participate in the Kyoto markets, namely the clean development mechanism, it didn’t participate very well. I think that there’s a recognition of where there were failures, and there is an understanding of the lessons learned, and I hope that we can apply that going forward.
Obviously, one of the key takeaways, again, is the need to unlock finances for projects in these sectors. And that may also require capacity building, whether it is technology transfer, whether it’s human capital, those kind of things. Those were the main key insights arising from that workshop.
Q: What is your vision for what carbon markets can mean for the continent?
We are absolutely committed to developing carbon markets across the continent, particularly because carbon markets have the potential to contribute to the continent’s development agendas. And the way in which carbon markets can do that is that they can provide access to funds for measures that were previously considered economically unfeasible, or perhaps they faced other barriers like a lack of access to technology. Perhaps there were regulatory, legislative, political kind of barriers that have prevented these incredibly important projects from taking place. I do want to caution that carbon markets are not a silver bullet to our climate crisis. What they do represent is a key component in our suite of measures to address the climate crisis.
Carbon markets can be an incredibly substantive and long-term component of these suite of measures to address climate change.
Q: Anything you would like to add?
Other than to say I’m very keen and excited about the next phase of these workshops and looking forward to engaging further with interested parties, even critics, at the upcoming workshops and sessions.