Africa contributes just 3% to global carbon emissions yet endures a wildly disproportionate share of the climate fallout – from deadly heatwaves to floods, cyclones and relentless droughts. Now, as the world scrambles for solutions, overseas companies that are unable to cut their own emissions are turning to the continent’s carbon markets to offset them.

Carbon offsets occur when polluting entities buy carbon credits from projects that reduce emissions – such as renewable-energy projects or reforestation efforts – to compensate for emissions they cannot avoid through operational modifications.

Africa, endowed with natural carbon- sequestration environments, such as dense rainforests, expansive grasslands and renewable- energy potential, holds significant leverage in this emerging market. Although still in their nascent stages, African carbon markets are forecast by the Africa Carbon Markets Initiative to generate between 1.5-billion and two-billion carbon credits yearly, potentially unlocking revenues of more than $50-billion a year by 2050.

Two African countries – Gabon and Kenya – have made impressive strides in this space. While employing different strategies, their goal is the same: turning environmental stewardship into economic value.

Gabon, which boasts 88% forest cover and is often called ‘The Lungs of the Planet’, has chosen the forest conservation route, inking a landmark agreement with the Central African Forest Initiative in 2021 that saw it receive $17-million as the first of multiple tranches to be disbursed over a ten-year period, contingent on the Central African country maintaining low deforestation rates.

Kenya, on the other hand, has decided to advance a regulatory and legislative framework aimed at integrating carbon credits into its economic planning. To this end, it crafted a Bill in 2023 paving the way for a Carbon Credit Trading and Benefit Sharing Authority, which aims to register, monitor and regulate carbon credit transitions in the country, particularly those involving foreign entities. Importantly, the proposed law includes a benefit-sharing formula that ensures communities hosting carbon projects receive a fair share of the proceeds.

Kenya has already made significant headway, with initiatives under way including the Kasigau Corridor REDD+ project, which protects hundreds of thousands of hectares of dry-land forest in the south-west of the country and has issued millions of carbon credits on the voluntary market. Proceeds from the sale of the carbon credits have been used to build schools and healthcare facilities, while a significant number of jobs have been created.

The Gabonese and Kenyan experiences prompted one commentator to suggest that “green is the new gold” for Africa.

However, not everyone shares this optimism, with concerns around power dynamics and price inequality, for example, having been raised. And those voicing these concerns include none other than African Development Bank (AfDB) president Akinwumi Adesina, who told the UK’s Financial Times newspaper last month: “We used to have land grabs. Now we are having carbon grabs. The cost of getting permits in Europe probably can be as high as €200 a ton. Or you can get it in Africa for €3. Countries are losing vast areas of forest, vast areas of land, to what I call a carbon grab.”

Adesina, who steps down in September after a decade at the helm of the AfDB, did not go so far as to name and shame the companies buying African carbon credits at rock-bottom prices while paying a premium to European sellers.

His concerns echoed those voiced by several prominent figures in the environment- protection space at a panel discussion hosted by the UN University Institute for Natural Resources in Africa in December.

One of the most powerful criticisms came from Gertrude Kenyangi, executive director of the organisation Support for Women in Agriculture and Environment in Uganda. In her remarks, she argued that “the current narrative around carbon markets masks a deeper concern: neocolonialism in disguise, with power asymmetries skewed in favour of the North”.

Despite these criticisms, several panellists agreed that carbon markets, if properly designed and equitably managed, could be a force for good. Equally important is a united African voice that can negotiate from a position of strength. If these conditions are met, then green may indeed be the new gold for Africa – and this time the continent could own the mine.