Months-old companies based in the United Arab Emirates (UAE) are aiming to bolster their own type of carbon crediting projects on the African continent, hoping to gain momentum for their initiatives as all eyes turn to their country’s role as the hosts of this year’s COP28 UN climate talks.
UAE-based carbon credit project developers Green Economy Partnership (GEP) and Blue Carbon have signed memorandums of understanding (MoUs) with several African countries to explore the option of developing initiatives consistent with Article 6.2 of the Paris Agreement.
The companies said they aim to replicate the model established by Switzerland, which became the first country to engage in country-to-country cooperation aligned to Article 6.2, having signed a series of six bilateral agreements and authorising the first credit transfers together with Ghana last November. They are therefore working to establish a partnership with the UAE ruling authorities, hoping that the federation may choose to champion carbon markets through its role as president and host of this year’s COP.
Blue Carbon in particular has related ties to the government as its chairman, Sheikh Ahmed Dalmook Almaktoum, is a prominent member of Dubai’s royal family.
“What we’re doing, is trying to leverage the actual location of COP28 to make sure that people know that Africa is a goldmine for this, but it needs to be done properly,” said GEP CEO Arthur Chirkinian, explaining the regional link as neighbouring jurisdictions. Chirkinian added that this means looking beyond the UAE as a source of demand, noting that while he has already secured buying interest from companies located in the UAE, he hopes to expand to private and public buyers globally.
The companies are only months old, with Blue Carbon launching in October and GEP earlier this year. Both companies have only recently completed their websites and have not yet clarified the methodologies to measure results.
Though no carbon credits have been issued under the initiatives to date, the desire of these developers to directly link mitigation opportunities with credit transfers under the Paris Agreement’s Article 6.2 brings to light the nascent nature of the rules around such trades.
GEP is predominantly focused on developing forest-related carbon projects in Africa, while Blue Carbon looks to build mangrove restoration as well as forest projects.
The companies aim to build investments in carbon projects that will leverage finance to needed areas while securing a future stream of credits.
“A lot of the entities we’re dealing with have been expressing a desire to identify credible credits with high integrity,” said Chirkinian.
“We have been suggesting that rather than investing in offsets already on the market, try to derive value from a social developmental approach,” he added.
The company plans to help map nature-based assets, and council host governments on how related projects can create value through marketable credits under Article 6 of the Paris Agreement.
GEP signed an MOU with the government of Uganda on Jan. 19, through the country’s Ministry of Water and Environment – granting permission to conduct a feasibility study on carbon credit opportunities in the region – and is actively pursuing MoUs with other African countries. “I mean, it would be easy for me to just buy and sell credits,” Chirkinian said. “I do have the buyers … but there is a lot more value in creating long-term relationships vis-a-vis just making a transaction.”
Blue Carbon, meanwhile, has signed MoUs with Tanzania and Zambia, and said that agreements with other countries will soon be revealed.
“The [MoUs] mark an important milestone in [our] company’s efforts to expand blue and green carbon projects and promote sustainable climate change initiatives,” said Aigul Magazova, sustainability manager at Blue Carbon, having worked for the company since December. “Under the terms of the MoUs, Blue Carbon will work closely with the governments of Tanzania and Zambia to develop and implement a range of initiatives to conserve and restore coastal/marine as well as terrestrial ecosystems, to enhance their capacity to sequester carbon.”
“These initiatives will also focus on creating new economic opportunities for local communities, while promoting sustainable management practices and addressing climate change challenges,” she added.
Blue Carbon has already been under the spotlight after its previous carbon credit MoU signed with Papua New Guinea was questioned by the country’s climate delegates to COP27, who had not heard of the deal or how it could have been agreed in the absence of the country’s Climate Change Development Authority (CCDA).
Chirkinian said that his company is trying to mimic the approach taken by Switzerland, which has secured bilateral agreements with host country governments in order to ensure carbon credit purchases are recorded in national accounts, and align to overall development objectives.
Switzerland’s fuel importer foundation Klik then works with project developers to secure carbon credits in regions with MoUs in place.
GEP, on the other hand, looks to establish both the project pipeline and the MoU with host countries, facilitating transactions for country-level as well as private buyers.
As it has not yet secured any agreement with the UAE government to purchase credits, it aims to keep the market opportunity open to any interested buyers. “I’m not able to tell you we already have a green light from the COP28 Presidency,” Chirkinian said.
“But we would like … to seek the permission of the COP28 Presidency to host on the sidelines of the COP, our first idealised option for the credits,” he said. “And we’ll then be able to auction off forward-looking credits for entities and countries that are really committed to action.”
MEASUREMENT, REPORTING, VERIFICATION
GEP said that it does not intend to have its credits issued by one of the major standard bodies, such as Verra or the Gold Standard, but instead aims to develop its own approach to measurement, reporting, and verification (MRV). It is not clear how this will jive with emerging market-level governance and transparency initiatives, such as the Integrity Council on the Voluntary Carbon Market (IC-VCM). The IC-VCM aims to publish its core carbon principles in March, which would allow crediting programmes to apply for accreditation, essentially providing an additional stamp of assurance that the programme is robust. This does not mean that only the major crediting programmes will be approved, nor that major programmes are guaranteed a pass.
If GEP and Blue Carbon were interested in IC-VCM accreditation, they would therefore likely need to apply as crediting programmes, after which their individual carbon credits could be further considered.
Yet Article 6.2 trades do not require accreditation of this IC-VCM type nor MRV assurance from a recognised VCM carbon standard, with the negotiations on what will be required yet to conclude.
Switzerland’s first 6.2 authorised mitigation outcome transfer, for example, saw an agreement on credits stemming from a Ghana rice farming project implemented by the UN’s Development Programme (UNDP).
The UNDP did not obtain any further accreditation for the credits under a major VCM standard body, but instead based the rice farming project on a Kyoto-era Clean Development Mechanism (CDM) methodology.
The methodology has since come under fire over additionality concerns, but the UNDP defended its use in the specific context, noting that the project requires a considerable scale of resources to train and incentivise farmers.
While GEP said that it has over 10 years of experience in the carbon market space, it has only very recently become a legal entity for the purpose of carbon credit transactions, and has also recently launched a company website. Beyond carbon markets, the January agreement with Uganda will see GEP provide advisory and project management services towards the development of low carbon strategies for forests, wetlands, natural lakes, and rivers.
“The UAE leads with its efforts in green strategies, and the fact that the world chose them to host COP28 is a vote of confidence to their green economy initiatives and emission reduction policies,” Alfred Okot Okidi, permanent secretary of Uganda’s Ministry of Water and Environment, said in a statement last month. “We are confident that our partnership with the UAE-based Green Economy will further accelerate our commitment to transition to net zero goals seamlessly and leverage Uganda’s role within the African continent to serve as a benchmark for other counties to follow,” he added.
Chirkinian noted that while trades under the Paris Agreement’s Article 6.2 are already taking place, the mechanism will not become fully operational until full reporting rules are in place.
“This is largely expected to be an outcome of COP28,” he said.
But it remains unclear the extent that the UAE Presidency will prioritise progress on carbon markets, or the speed at which agreements can be met – particularly given these many thorny details related to MRV. Speaking at last month’s WEF summit in Davos, Majid Al Suwaidi, the UAE’s COP28 special representative, highlighted the need to focus on mitigation, climate finance, and activating the Loss and Damage fund.