Climate action as team work
Saving emissions and earning money with them – carbon certificates make that possible.
In 2015, 195 states signed the Paris Agreement, committing to curbing climate change. The most important yardstick in this context are the national climate action plans that each country has drawn up. Carbon markets are an innovative and effective tool for achieving these goals. This is how the instrument works: a country implements climate action measures, which might include an increase in renewable energies, better efficiency standards or new environmentally friendly technologies. In doing so, it cuts emissions in a measurable way. These savings are converted into units that can be traded. A unit stands for one tonne of CO₂ that has actually been avoided.
Attractive market for buyers and sellers
A country can put saved units towards its own climate goals or sell them to other countries. That makes sense if a country saves more emissions than it planned to do in its own targets. In other countries, it is relatively expensive to save CO₂, for example because wages are high there or a number of simpler measures have already been implemented. For these countries, buying CO₂ certificates is an attractive option that helps improve their carbon footprint and contributes to achieving climate goals.
This makes the market attractive for countries selling carbon credits because they receive money for their climate action measures, enabling them to make investments that they would not be able to finance alone. For countries buying carbon credits, the market is a tool for achieving their climate goals. A global system is thus created in which climate action occurs where it is most efficient – and both sides benefit.
Climate action: a profitable investment
GIZ’s work in the Southern African Development Community (SADC) shows how this model works in practice. There are 5.6 million air-conditioning units in the SADC countries alone – and this figure is forecast to rise to more than 16 million in five years’ time. Air-conditioning units are problematic for the climate primarily due to the polluting refrigerants they use and the improper disposal of old appliances. That is where GIZ comes in: our work helps to disseminate modern, economical air-conditioning units that use environmentally friendly refrigerants through government-run schemes. The countries can trade the emissions thus saved on the carbon market and the profits can be used to finance additional climate programmes.
To make optimal use of the carbon market, GIZ provided support in setting up the Eastern Africa Alliance on Carbon Markets and Climate Finance : only if they are familiar with markets, financial instruments and economic correlations can countries harness them for climate action. Learning courses, a negotiation manual and global corresponding workshops teach participants how the mechanisms work and how they can be used at national level. This gives the countries greater confidence in international negotiations and strengthens their position on the global carbon markets.
In Kenya, we are supporting the creation of a national carbon register to boost transparency and trust in the market. The register provides reliable public access to key project information (methods, data, ownership structures and the status of the carbon credits). It tracks emissions reductions and the contributions that the projects make to sustainable development, thus demonstrating the important added value that functioning carbon markets generate for the region. Local specialists have deliberately been chosen to develop the necessary IT as a way of promoting national skills. The register improves the quality of national climate reporting and lays the foundation for reliable international trade based on standardised and verifiable data.
