Abstract
Policymakers across Africa increasingly recognize that voluntary carbon markets present a significant opportunity for climate financing with the potential to accelerate sustainable economic development while curbing greenhouse gas emissions. Adopting a qualitative approach, primarily through consultations with key stakeholders, this study explored the opportunities and challenges in developing the carbon sector in Tanzania, with a focus on identifying policy options and practices to unlock its full potential.
The study clearly shows that Tanzania has vast opportunities to develop both land-based and non-land-based sources of carbon credits based upon the country’s extensive forests that are rich in biodiversity, coastal and marine ecosystems, renewable energy potential, agriculture and transport sectors, and waste management systems. The country can leverage its current carbon credit projects, supportive land tenure system, stable political landscape and strong international diplomacy for climate change to invest in new carbon initiatives.
However, despite having regulatory and institutional frameworks that align with the Paris Agreement (PA) of 2015 and with local livelihood improvement, the present ambiguity in institutional roles and mandates, along with other internal and external barriers, creates a challenging environment for the carbon sector in Tanzania. Other barriers to growth of the sector include the low level of awareness and understanding of carbon trading among stakeholders, including government officials, project developers and the general public, inadequate financial and technical capacity to prepare carbon projects, lack of transparency, particularly on the market side, the absence of a comprehensive digitalised registration process for carbon projects, and limited enforcement of local content requirements in carbon trade investments. To address these challenges, the country can learn from the experiences of countries that have already made significant strides in carbon trading, such as South Korea, China, South Africa, Ghana and Nigeria. The European Union ETS, one of the world’s most advanced emission trading markets, can be leveraged as both a learning platform and as the market for Tanzania’s carbon credits.
To unlock the country’s carbon trade potential, the study underscores the critical need to strengthen the National Carbon Monitoring Centre, currently administered under the Sokoine University of Agriculture, to become the independent Designated National Authority (DNA) for carbon trade in Tanzania. The DNA is responsible for approving a country’s participation in Clean Development Mechanism (CDM) projects. It evaluates whether proposed initiatives align with the host country’s sustainable development goals and comply with national priorities before granting approval. Regulatory frameworks also need to be enhanced to address the complex political and economic landscape driving the global carbon trade market and to establish an enabling environment for domestic carbon projects. Capacity building and continuous learning in crucial aspects of the carbon trade ecosystem and value chain, increased transparency (particularly with respect to markets and monitoring, reporting and verification (MRV) systems), equitable distribution of benefits, enforcement of local content provisions, and corporate social responsibility (CSR) schemes were identified as other key actions needed to strengthen the capacity of the carbon sector and contribute to Tanzania’s long-term sustainable development.
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