Mozambique plans to introduce regulations to govern carbon-credit projects in the country in 2024, following similar announcements by Zimbabwe, Malawi, and Kenya.
The government will prepare draft rules by the end of this year, for presentation to the Council of Ministers for approval in the first quarter of 2024, according to a presentation made this week by an inter-ministerial task team.
It will ensure that the African nation “captures the full value potential of this nascent market,” while also offering a compelling incentive structure for investors, said Pedro Simão, country director at the Tony Blair Institute, who’s also an adviser to Mozambican Finance Minister Max Tonela. It’s too early to say what the revenue split would be between investors and the state, as the regulations will address this, he said.
African politicians including Kenyan President William Ruto have said that the continent needs to benefit more from the offsets. Kenya is formulating new rules for the industry, Malawi set up a government body to oversee the trade, and Zimbabwe on Friday announced a law that will see project developers hand over 30% of income to the state, softening an earlier plan to take 50%.
A single carbon credit represents a ton of climate-warming carbon dioxide or its equivalent removed from the atmosphere or prevented from entering it in the first place. They are bought by emitters of greenhouse gases to offset their activities. The market is currently worth $2 billion a year and Bloomberg BNEF has forecast it may reach $1 trillion within 15 years.
Mozambique has the technical potential to generate an estimated 80 million to 90 million carbon credits annually, according to the finance ministry. Producing just 25 million could earn as much as $500 million, it said in a statement this week, without saying how it got to that figure. Carbon-credit prices vary. Mozambican projects have already issued about 2 million credits.
The ministry is in the process of setting up a Climate Finance Unit. Acting as a secretariat for the task team drafting the new regulations, it will also assess the broader impact of climate change on the economy, Simão said in reply to emailed questions.
Mozambique is also in talks with nations including Belgium over a debt-for-nature swap, he said. Negotiations with Brussels should be concluded by the 2023 United Nations Climate Change Conference, or COP28, which starts Nov. 30. Other governments have approached Mozambique too, Simão said, declining to provide more information as the talks are ongoing.