Ghana’s Framework on International Carbon Markets and Non-Market Approaches, finalized in December 2022, is a groundbreaking document that operationalizes the country’s participation in global carbon markets under the Paris Agreement. By integrating cooperative mechanisms under Article 6, the framework aims to mobilize resources, foster sustainable development, and enhance climate action.
Context and Objectives
The framework builds on Ghana’s commitment to the Paris Agreement and its updated Nationally Determined Contributions (NDCs). With a target of reducing 64 MtCO2eq by 2030, the framework provides the necessary policy, regulatory, and operational tools to achieve this goal.
Key objectives include:
Raising carbon finance to support NDC implementation.
Driving foreign direct investments in green initiatives.
Establishing robust governance for international carbon transactions.
Article 6 Cooperative Approach
The framework leverages Article 6 of the Paris Agreement, which enables countries to collaborate through cooperative approaches to achieve their climate goals while maintaining environmental integrity.
Under Article 6.2, Ghana has positioned itself as a pioneer in engaging in bilateral and multilateral agreements to transfer Internationally Transferred Mitigation Outcomes (ITMOs). Key components of this approach include:
Bilateral Agreements
Ghana has signed agreements with countries like Switzerland, Sweden, and Singapore, focusing on sectors such as renewable energy, agriculture, and waste management. These agreements provide:
Access to financial resources for implementing mitigation projects.
Opportunities for technology transfer to enhance Ghana’s technical capacity.
Pathways to attract foreign direct investment in climate-resilient projects.
Mitigation Activities
The framework identifies priority areas for mitigation, including:
Clean Energy: Developing solar, wind, and biomass energy projects.
Sustainable Agriculture: Introducing climate-smart farming techniques to reduce emissions.
Waste Management: Implementing waste-to-energy projects to address urban waste challenges.
Capacity Building
Through partnerships with organizations like the Swiss State Secretariat for Economic Affairs (SECO) and UNDP, Ghana has enhanced its technical and institutional capacity to engage in carbon markets. This includes training stakeholders, developing robust monitoring systems, and ensuring compliance with international standards.
Governance and Reporting
Ghana’s governance structure ensures that all ITMO transactions are tracked transparently, with a focus on avoiding double counting. This is supported by a national carbon registry that records all mitigation activities and transfers, ensuring accountability.
Principles and Guidelines
The framework is guided by three core principles that ensure the integrity and sustainability of Ghana’s participation in carbon markets:
1. Environmental Integrity
Ghana commits to rigorous greenhouse gas accounting standards to ensure that all mitigation outcomes represent genuine and measurable emission reductions. Key actions include:
Implementing strict validation and verification processes for mitigation activities.
Ensuring that ITMO transfers align with the global carbon budget under the Paris Agreement.
Avoiding double counting by maintaining a transparent national registry.
2. Transparency
The framework prioritizes transparency in all aspects of carbon market participation. This includes:
Establishing a Carbon Market Office (CMO) to oversee ITMO transactions.
Regularly publishing reports on mitigation activities and their contributions to Ghana’s NDCs.
Engaging stakeholders, including civil society organizations, in decision-making processes.
3. Sustainable Development
Mitigation activities must align with Ghana’s broader social and economic goals. Projects are evaluated based on their contributions to:
Job creation and poverty alleviation.
Gender equity and inclusivity.
Protection of ecosystems and biodiversity.
By adhering to these principles, Ghana ensures that its carbon market participation delivers tangible benefits for its people and environment.
Institutional Arrangements
The framework establishes a multi-layered governance structure:
Carbon Market Office (CMO): Operated by the Environmental Protection Agency (EPA), it oversees ITMO transactions and registry management.
Carbon Market Committee (CMC): Provides oversight and ensures compliance with international standards.
Technical Advisory Committees: Offer expert guidance on project validation and implementation.
Key Features of the Framework
Registry and Tracking: Ghana’s Carbon Registry ensures secure and transparent tracking of ITMOs, reducing the risk of misreporting.
Authorisation Process: Mitigation activities undergo a rigorous process before being authorized for ITMO transfers.
Sustainable Development Criteria: Projects must contribute to Ghana’s social, economic, and environmental goals, ensuring equitable benefits.
Voluntary Carbon Market Integration
The framework recognizes the importance of voluntary carbon markets (VCMs) in complementing Ghana’s NDCs and providing additional opportunities for private sector engagement.
Formal Recognition of VERs
Projects generating Verified Emission Reductions (VERs) can now receive formal recognition under Ghana’s framework. This includes initiatives in renewable energy, reforestation, and energy efficiency that contribute to emission reductions beyond Ghana’s NDC targets.
Private Sector Engagement
The framework encourages private sector participation by:
Offering incentives for businesses to invest in carbon offset projects.
Providing technical support for project development and certification.
Creating a transparent registry to enhance investor confidence.
Global Market Access
By aligning its voluntary market activities with international standards, Ghana positions itself to access global demand for high-quality carbon credits. This creates opportunities for:
Exporting VERs to international buyers.
Leveraging revenue from carbon credits to fund local development projects.
Co-Benefits for Communities
Projects in voluntary markets are required to demonstrate social and environmental co-benefits, such as:
Improved livelihoods for rural communities through agroforestry projects.
Enhanced access to clean energy for underserved populations.
Restoration of degraded ecosystems.
Challenges and Opportunities
Challenges:
Navigating complex international carbon market rules.
Ensuring equitable distribution of benefits from carbon finance.
Building capacity for effective implementation.
Opportunities:
Attracting green investments to boost local economies.
Enhancing Ghana’s leadership in climate action on the global stage.
Driving innovation in sustainable technologies and practices.
The Way Forward
Ghana’s Framework on International Carbon Markets and Non-Market Approaches sets a bold precedent for integrating climate finance into national development. Moving forward, several critical steps will ensure its success:
1. Strengthening Institutional Capacity
The government must continue to build the capacity of key institutions like the Environmental Protection Agency (EPA) and the Carbon Market Office (CMO). This includes:
Training personnel in advanced greenhouse gas accounting and reporting.
Enhancing the functionality of the national carbon registry.
Establishing mechanisms for stakeholder engagement at all levels.
2. Expanding Bilateral Partnerships
Ghana should pursue additional bilateral agreements with countries and organizations that share its commitment to climate action. These partnerships can unlock new funding opportunities, technology transfers, and technical expertise.
3. Promoting Private Sector Participation
The framework must actively engage the private sector by:
Offering tax incentives for investments in carbon offset projects.
Providing clear guidelines and support for project certification.
Creating public-private partnerships to scale up mitigation activities.
4. Ensuring Equity and Inclusivity
Efforts must focus on ensuring that carbon market benefits reach marginalized and vulnerable communities. This includes prioritizing projects that:
Create jobs and improve livelihoods.
Empower women and youth in climate-related activities.
Protect ecosystems that are vital to local communities.
5. Leveraging International Support
Ghana should continue to engage with international organizations like the UNFCCC, SECO, and UNDP to secure technical and financial assistance. Active participation in global climate forums will also enhance Ghana’s visibility and leadership in carbon markets.
Conclusion
Ghana’s framework represents a transformative step in aligning climate action with sustainable development. By integrating carbon markets and non-market approaches, the country is setting a model for others to follow.
As the framework is implemented, it will require a collaborative effort from government, private sector, and civil society organizations like Frontline for Climate Action (FCA) to ensure its success. Together, these stakeholders can turn Ghana’s climate challenges into opportunities for innovation, resilience, and growth, paving the way for a sustainable future.
Cedric Dzelu
Executive Director
Frontline for Climate Action
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