Zimbabwe has made changes to its carbon law regarding carbon credit projects, abandoning its initial plan to allocate 25% of the revenue to local communities. Instead, developers will now be able to retain a larger share of the profits. Under the new amendment, project developers are no longer required to give up a quarter of their 70% share of profit. However, the country will still maintain its 30% share and allocate it to state stakeholders.
The environment and climate minister, Mangaliso Ndlovu, explained that the amendment was aimed at attracting the right investors. He stated, “We are doing this to be competitive in attracting the right investors, as every project is an investment in communities. They will still benefit from the 30% that goes to the government.”
In May, Zimbabwe announced that it would claim 50% of total revenue from carbon credit projects operating within the country. This left foreign investors with a limited share of 30%, while the remaining 20% would be allocated to host communities. The close regulation of voluntary carbon credit trading aims to prevent greenwashing and ensure benefits for local communities.
Zimbabwe is the 12th largest carbon offsets producer globally, having delivered over 4 million carbon credits from various projects in 2022. The country’s largest project, managed by the South Pole, covers hundreds of thousands of hectares of forest in Kariba. In terms of carbon credit production on the African continent, Zimbabwe ranks in the top three, representing approximately one-eighth of the total production.
In a recent announcement, the South African government declared that developers would be allowed to retain all of their profit share, reversing the previous requirement for 25% to be given to local authorities. The 30% Environmental Levy encompasses various aspects, including climate change adaptation and low carbon initiatives, loss and damage relief, local authority levies, administrative costs, and the Treasury.
This amendment has been welcomed by project developers who desire a larger share of the $2 billion global voluntary carbon credit market. The Zimbabwe Carbon Association, in particular, commended the change, stating that it relieves developers of burdens and allows them to focus on project activities.
However, some consultants view the amendment as a failure on the part of the government to exercise control over its own resources. One consultant noted that “the world is moving towards market-based climate action,” and Zimbabwe is now a part of that scenario.
Zimbabwe has enhanced its climate ambition by setting a target of reducing emissions by 40% by 2030, up from the initial target of 33%. Instead of opting for a compliance market, the country has adopted a voluntary carbon market scheme. The global carbon market, encompassing both voluntary and compliance markets, is projected to reach $22 trillion by 2050. Each credit represents the avoidance or removal of one tonne of CO2 from the atmosphere and is purchased and used by companies and entities seeking to offset their carbon emissions.
While the government does not have full control over the carbon market under the voluntary mechanism, it is gaining momentum in Africa. Zambia, the fifth-largest producer of carbon credits on the continent, also plans to implement a similar scheme to Zimbabwe. In July of this year, Tanzania announced that it would receive over $20 billion in carbon credit investments. Additionally, Kenya, the region’s largest supplier of carbon credits, is currently establishing regulations for its own carbon market.
African governments are taking strategic actions to position themselves in the growing carbon market. They are developing schemes and making changes to ensure that their carbon projects attract investors interested in developing climate solutions. Zimbabwe’s decision to amend its carbon law reflects the evolving landscape of carbon markets and emphasizes the importance of balancing economic interests with environmental and community benefits.