Tackling climate change by reducing deforestation is a necessary step, though not a ‘silver bullet’. The question is, rather, how should we tackle it?
One possible solution is the voluntary carbon market (VCM), a system that enables companies or individuals to pay to offset their greenhouse gas emissions by funding projects, like forest conservation or renewable energy, that reduce or remove carbon from the atmosphere, and it has been praised and criticised in equal measure.
Findings from a recent study I conducted on the ground suggest that the VCM will not unlock a sufficient flow of funds from those most responsible for climate change to those most affected by it – but it is a start.
We need to reject calls to ‘axe’ the VCM and instead work to improve this imperfect but promising tool.
The stakes at COP30
Kicking off on 10 November in Belém, Brazil, the 30th Conference of the Parties (COP30) aims to mobilise private and public finance for climate action, advocating for equity and inclusion, especially for marginalised peoples. The conference will highlight the crucial role of forests in climate mitigation/adaptation and establish technical guidelines for carbon markets.
If carbon markets are treated as mere financial instruments, though, they risk generating backlash, potentially harming vulnerable communities.
COP30 offers an opportunity to reorient carbon and forest finance along principles of justice rather than defaulting to technocratic market solutions. The IUCN’s Natural Resource Governance Framework will be calling for amendments to the Paris Climate Agreement at COP30 to strengthen governance, mandating the creation of climate justice mechanisms.
Now is the moment to consider the lessons that can be learned from existing experiments with the VCM, such as Zambia’s Luangwa Community Forests Project. At over 1.2 million hectares, it is touted as the largest REDD+ (Reducing Emissions from Deforestation and Forest Degradation) project in Africa by hectarage, and arguably the largest in the world by verified social impact.
Lessons from Zambia’s Luangwa Community Forests Project (LCFP)
My recent research focused on this community forests project, emanating from Zambia’s Luangwa Valley, and included discussions with the Community Forest Management Groups (CFMGs) that have been registered in the project area.
These CFMGs transfer their carbon rights to the project proponent, BioCarbon Partners (BCP), which sells them on their behalf. BCP has secured a 20-year Emissions Reduction Purchase Agreement with Italian energy company Eni.
This bilateral sale enabled the project proponent to negotiate a premium price that reflects its triple gold status, generating benefits to climate, communities and biodiversity. Nonetheless, criticisms of this bilateral system abound, given the lack of transparency surrounding the negotiations.
Critics argue that the carbon market should be a ‘real market’, not a ‘secret pact’ between buyers and sellers. In the absence of any clear indication of proceeds retained by the project proponent or paid to any financial/technical intermediaries, there is no way of knowing whether the amounts reaching beneficiaries on the ground reflect the value of the premium price paid.
In the Luangwa project, the benefit-sharing mechanism is based on a percentage of net proceeds, with communities unable to determine whether they are receiving their fair share.
A community representative interviewed in June 2023 said, “The challenge … is, we are not involved in the selling of carbon, so we don’t know how much BCP is getting from the carbon offsets, from the resources that we are conserving. We just receive the money, but we don’t know how much they make”.
Human Rights Watch notes that it is really only project developers who know how much money is coming in – and how much of that is reaching the ground.
A call for fair and transparent climate finance at COP30
As COP30 seeks to operationalise market and non-market approaches under Article 6 of the Paris Agreement, scale forest finance and deliver credible climate action, there is a risk that mechanisms built predominantly on market logic may exacerbate inequalities, marginalise vulnerable communities and erode legitimacy. Key points that should be considered include the following:
- Power asymmetries matter – carbon markets are not neutral; they embed and reproduce existing power relations (between project developers, financiers, states and local communities).
- Governance within the VCM is a weak point, with projects often suffering from weak oversight, low accountability and poor enforcement of rights.
- Local participation is desired, with chiefdoms neighbouring the Luangwa Community Forests Project telling BioCarbon Partners, “we are ready … we are waiting for you” (Interview, BCP Representative, 2023). Despite the lack of transparency around benefit sharing, outsiders are eager to participate, seeing that some benefits from REDD+ are better than none at all.
- Benefit-sharing mechanisms are opaque and may mask inequity. Benchmarks for benefit sharing are necessary to further an understanding of ‘fair’ or equitable contributions.
- Markets alone are insufficient for ecological justice. Governments are called upon to regulate the negative and incentivise the positive – creating an enabling environment for private action. Market and non-market mechanisms can be complementary, embedding justice as a design mechanism.
If findings from recent research are ignored, there is a risk that inequitable patterns of climate finance may be reinforced, with capital flows to more powerful actors outstripping those to rural communities.
This would undermine the legitimacy of COP30 outcomes, with notions of a just transition viewed as little more than ‘hot air’.
Kathleen Bergs recently completed a PhD in the University of Ottawa’s School of International Development & Global Studies and is a former research affiliate of the University of Zambia, having focused her research on the role of the market in financing for nature, building upon her professional experience in conservation finance in southern Africa.
The role of the Voluntary Carbon Market in addressing global social challenges: ecological (in)justice in Africa’s largest REDD+ project? by Kathleen Bergs from the Global Social Challenges Journal is available to read open access on Bristol University Press Digital here.
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