In 2022, Tanzania’s Government took a significant stride towards embracing and advancing carbon trading within the country by introducing the Environmental Management (Control and Management of Carbon Trading Mechanisms) Regulations, Government Notice Number (G.N No.) 636 of 2022 (hereafter referred to as “the Regulations”). This move was aligned with the global initiative to mitigate greenhouse gas emissions and bolster environmental preservation.
While the Regulations were in force for only a year, certain shortcomings became apparent, impacting their practical implementation. To address these gaps and ensure comprehensive regulatory coverage, the Minister of State at the Vice President’s Office, Union and Environment introduced the Environmental Management (Control and Management of Carbon Trading) (Amendment) Regulations G.N No. 721 of 2023 (the Amended Regulations). These amended regulations significantly broaden the scope outlined in the original Regulations, now emphasizing the mobilization of climate financing from both local and international sources. The aim is to support the reduction of greenhouse gas emissions, foster green investment, and facilitate capacity building for climate change mitigation and adaptation.
This article provides a summary of the Amended Regulations, effective as of October 6, 2023, highlighting key changes affecting carbon trading projects in Tanzania.
Key Definitions and Terms
- Carbon Credit: The unit representing one tonne of carbon dioxide or an equivalent of another greenhouse gas, verified in compliance with an International Carbon Trading Standard.
- Carbon Trading: The buying, selling, or transfer of verified or certified carbon emissions, reductions, and removals in accordance with recognized international carbon standards.
- Committee: The National Carbon Project Assessment Technical Committee established under regulation 11(1) of the Regulations.
- Gross Revenue: Revenue generated from the sales of carbon credits without deducting any expenses or losses.
- Mechanisms: Market or non-market approaches to implementing climate actions that allow higher ambition in mitigation and adaptation.
- Property: An object owned by a person used in carbon trading projects to generate carbon credit.
- REDD+ Project: A project aimed at reducing emissions from deforestation and forest degradation, including conservation, sustainable management of forests, and enhancement of forest carbon stocks in developing countries.
- National Carbon Registry: A repository containing data conforming to national and international standards related to the acquisition or transfer of carbon trading mechanisms.
- Registrar: A person responsible for maintaining the National Carbon Registry.
- Sale: The exchange or transfer of carbon credits or units for monetary terms.
Administration and Institutional Framework
The Authorities (Designated National Authority, National Focal Point, or National Authority) are responsible for coordinating matters related to the environment and carbon trading projects in Tanzania. The Amended Regulations grant them additional mandates, including the establishment of a National Carbon Registry and the coordination of public awareness on carbon trading mechanisms.
The Minister now holds the responsibility of establishing the National Carbon Project Assessment Technical Committee (National Carbon Committee), which serves as an advisory body to the Authorities. Sector ministries play a crucial role in providing technical, administrative, and legal advice on carbon trading projects, with expanded duties to identify potential areas and monitor and evaluate carbon trading mechanisms.
Managing authorities, defined as property owners in carbon trading projects, gain authority to enter into agreements for project preparation and implementation. Proponents must submit periodic progress reports, as the Authorities will now conduct monitoring and evaluation of carbon trading projects.
Requirements for Carbon Trading Projects
Regulation 24(1) prohibits operating carbon trading projects without registration by the Registrar. Violations result in fines and imprisonment.
Regulation 24(2) outlines requirements for project registration, emphasizing alignment with national policies, contribution to Nationally Determined Contributions, adherence to priority sectors, involvement of local communities, transparency, and disclosure of relevant project information.
Regulation 24(3) introduces the need for authorization from the Authorities if a project intends to use carbon credits in another country, aligning with the framework of the Paris Agreement 2015.
After project approval, a Project Concept Note with expanded elements is required. The Authorities issue a Letter of Endorsement upon satisfaction with the Project Document, removing the previous need for the Minister’s endorsement.
Costs and Benefits Sharing
The Amended Regulations revise profit-sharing provisions to further support environmental conservation. Managing Authorities under Local Government Authorities allocate 8% of gross revenue to conservation activities. Proponents retain an additional 1% of gross revenue, with changes in payments to the Authorities and National Environmental Trust Fund. Profit sharing for non-REDD+ projects can be negotiated between Managing Authorities and Proponents, with 8% always paid to Authorities.
General Provisions
The Amended Regulations require monitoring and evaluation modalities to align with the Nationally Determined Contribution MRV system. Projects under the clean development mechanism must transition to mechanisms under Article 6.4 of the Paris Agreement 2015.
In summary, the Amended Regulations reflect a comprehensive approach to carbon trading projects in Tanzania, addressing gaps and providing a framework for effective implementation and environmental impact.
GN 721 (AMENDMENT) CARBON TRADING MECHANISMS REGULATIONS 2023
