By Duncan Miriri
NAIROBI (Reuters) -The African Development Bank will launch a carbon markets support facility for the continent, senior bank officials said on Thursday, to unlock finance for a region increasingly impacted by climate change-linked droughts and storms.
The Africa Carbon Support Facility, which is still at the design stage, will have two components, said Africa’s top multilateral development lender, which also on Thursday said it had elected Former Mauritanian Finance Minister Sidi Ould Tah as president.
The first component will help governments develop policies and regulations governing carbon trading, while the second will focus on boosting the supply and demand for credits as well as the key market infrastructure needed to increase their use.
“Through this, we envision a future where carbon credits can become a tradable commodity on Africa’s stock exchanges,” Anthony Nyong, AfDB’s director for climate change and green growth, told a session of the bank’s annual meeting in Abidjan.
Carbon credits are created through projects such as planting trees or putting up wind farms in poorer countries that receive one credit for every metric ton in emissions that they reduce or suck out of the atmosphere. Countries and companies can buy those credits to help reach their climate goals.
Most of Africa’s carbon credits, which are mainly generated from forestry, land use and farming, are currently sold on the voluntary markets, he said, but embedding them in stock exchanges would boost their prices.
Africa’s 54 countries have been among those hardest hit by climate change despite releasing a tiny share of polluting emissions, compared with the industrialised world.
It has suffered from a series of climate catastrophes in recent years, including tropical storms that hit Indian Ocean island states such as Madagascar and the Southern Africa coastline, and severe droughts in the Horn of Africa.
The continent receives just 1% of annual global climate finance according to government officials on the continent.
“Carbon market development is an imperative for the continent,” added Kevin Kariuki, the AfDB’s vice president for power, energy, climate change and green growth.
The initiative will also help to boost earnings for carbon credits generated from the continent, by ensuring they are sold on compliance offset markets where prices could be 10 times higher than on voluntary offset markets, Nyong said.
(Reporting by Duncan Miriri; Editing by Marc Jones and David Holmes)
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