Carbon Markets

What are Carbon Markets ?

Carbon markets are systems that turn verified greenhouse gas reductions or removals into tradable units known as carbon credits. Each credit represents one certified tonne of carbon dioxide equivalent (CO₂e) that has been avoided or removed from the atmosphere. These credits enable countries, companies, or individuals that emit greenhouse gases to compensate for their emissions by purchasing verified reductions achieved elsewhere. This mechanism channels finance to actors that cut emissions or enhance removals, supporting both climate goals and sustainable development.

Well-functioning and high integrity carbon markets encourage cleaner production, protect ecosystems, and unlock investment in renewable energy, nature-based solutions, and other low-carbon technologies. They also promote accountability by requiring transparent measurement, reporting, and verification (MRV) of emission reductions.

Carbon Markets Pathways in Eastern Africa

Carbon markets are a critical and strategic opportunity for Eastern Africa to mobilize climate finance and accelerate its low-carbon transition. The Eastern Africa region has actively developed pathways (for action under the international carbon markets) including under; Article 6.2 cooperative approaches, Article 6.4 PACM, Article 6.8 Non- Market Approaches and the Voluntary Carbon Market (VCM), each serving distinct but complementary roles.  

The readiness structures put in place within the region largely align with the 10 steps below: 

  1. Develop a guiding document to guide the purpose for carbon markets e.g a strategy.  
  2. Establish National Policy Framework 
  3. Designate a National Authority (DNA) 
  4. Define Host country approval processes
  5. Staff, equip and capacitate the DNA 
  6. Set up an NDC Linked Article 6 MRV system 
  7. Develop system-supporting structures e.g audit, and project development.
  8. Promote private sector investment into implementation and carbon markets
  9. Establish Registry Infrastructure in line with growing and identified need.
  10. Engage in International Cooperation/ITMO Pilots.

More details can be found on each country’s progress by accessing their country profiles.