Zimbabwe's carbon credit takeover raises concerns among locals, investors

In the early morning light, Peter Mudenda scans the dirt road encircled by mopane trees, searching for signs of elephants.

Formerly a farmer, the 49-year-old abandoned the plow years ago when a massive forest preservation project commenced in Binga, a remote semi-arid region in northern Zimbabwe.

Mudenda now earns his livelihood by constructing fireguards, nurturing trees, and monitoring wildlife.

“I used to have good crop yields… but I soon realized that as a community, we could benefit more from a conservancy,” Mudenda shared with AFP.

The conservancy is part of a broader initiative that generates revenue through the sale of carbon credits—a financial instrument designed to combat climate change. However, this model in Zimbabwe has been disrupted by an unexpected announcement that the government plans to claim 50% of all proceeds.

This move has sparked uncertainty in the global market, valued at $2 billion, and has raised concerns that other governments might adopt similar measures, according to analysts.

“The approach they’ve taken is quite drastic and lacks finesse,” commented Gilles Dufrasne of Carbon Market Watch, an advocacy group.

The project in Binga is a component of Kariba REDD+, the largest carbon credit initiative of its kind. Carbon credits serve as a critical funding source for conservation efforts. Companies and individuals purchase credits from entities engaged in activities that mitigate or remove greenhouse gas emissions, such as investing in renewable energy, tree planting, or preserving old-growth forests.

Each credit represents one metric ton of carbon dioxide, serving as a valuable testament to one’s commitment to environmental sustainability. Launched in 2011, Kariba REDD+ is a collaboration between Zimbabwean company Carbon Green Investments and South Pole, a Swiss-based carbon offsets developer.

It spans 785,000 hectares (1.9 million acres) of forest and supports a range of community-led initiatives, including beekeeping and ecotourism.

According to South Pole, the initiative has generated over 100 million euros ($110 million) from carbon credit sales since its inception, a figure expected to grow substantially.

Carbon Credit Boom

By 2030, the global market for carbon credits is projected to expand at least fivefold to $10 billion, as estimated by oil giant Shell and the Boston Consulting Group (BCG) in 2023. Much of this trade occurs within the voluntary market, where companies engage in transactions voluntarily. However, countries are also negotiating an international carbon offset trading system as part of their climate targets under United Nations-led climate talks.

South Pole indicates that most of Kariba’s income has been generated in the past two years, with companies like Gucci and Nestle investing in the initiative. Last month, cash-strapped Zimbabwe expressed its desire to claim a portion of the revenue. Francis Vorhies, a conservation economist at South Africa’s Stellenbosch University, acknowledged the logic behind Zimbabwe’s decision, given that the national market heavily relies on government-controlled resources.

Nonetheless, the new policy has rattled investors and local communities alike. Elmon Mudenda, a local councilor in Binga (unrelated to Peter Mudenda), stressed that this is a business endeavor, not charity work, and emphasized the importance of government enacting friendly policies to ensure that forest conservation is valued by communities.

Under the new policy, 50% of all earnings from carbon offset projects will go to the national treasury. An additional 20% is allocated to local investors, while foreign partners can retain no more than 30%. All carbon credit agreements must be approved centrally, and previously established agreements will be considered null and void, as declared by Harare last month.

“This is business, not charity work. There are investors putting in their money,” said Elmon Mudenda, a local councillor in Binga, who shares the same surname as the former farmer but is not related to him.

“Government must be careful to come up with friendly policies, so that we don’t have communities going back to a mindset where they don’t value the conservation of forests.”

Under the new policy, 50 percent of all revenue from carbon offset projects should go to the national treasury.