WHAT IS THE CARBON MARKET?
The carbon market is a global market in which carbon credits can be bought and sold in line with specific standards and guidelines. The goal of the carbon market is to reduce greenhouse gas emissions.
Under the rules of the carbon market, countries are allocated a number of permits to emit carbon dioxide up to a certain level. If a country does not use all of its permits, it can sell the unused permits to another nation that wants to emit more carbon dioxide than its permits allow.
The carbon market was introduced by the Kyoto Protocol to allow more flexibility in how countries reduce their greenhouse gas emissions. It offers developed countries the possibility to invest in cost-effective mitigation options, with the goal of increased global ambition in greenhouse gas emissions reduction.
The carbon market includes market mechanisms established under Kyoto Protocol, including the Clean Development Mechanism, International Emissions Trading, and Joint Implementation. These are regulated by the United Nations Framework Convention on Climate Change and the Voluntary Carbon Market. The Voluntary Carbon Market allows individuals and companies to offset or reduce emissions through various financing mechanisms.
WHAT DOES THE CARBON MARKET LOOK LIKE IN RWANDA?
Despite its low level of emissions, Rwanda has the potential for a range of carbon market projects due to its vision to become a developed, carbon-neutral, and climate-resilient economy by 2050. The carbon market will play an important role in reducing greenhouse gas emissions and contributing to the sustainable development of the country.
In Rwanda, the Clean Development Mechanism (CDM) and Voluntary Carbon Market (VCM) are the two operational mechanisms. Carbon credits in Rwanda are currently dominated by improved cookstove projects which account for 87% of total Certified Emission Reductions issued, while lighting and solar together represent 9% and 4% respectively.
By December 2020, more than 2,250,000 carbon credits had been issued to Rwanda from the Clean Development Mechanisms and the Voluntary Carbon Market. All CDM activities have issued 724,320 Certified Emission Reductions (CERs) while the VCM activities have issued 1,525,680 Voluntary Emission Reductions (VERs).
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National approval through REMA
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Verification and certification
Rwanda Carbon Market Framework for Article 6 of the Paris Agreement
The purpose of developing and establishing the Article 6 framework is to facilitate Rwanda’s participation in carbon markets, both within and outside Article 6 (6.2 and 6.4), and in non-market approaches under Article 6.8. The framework will help in bringing confidence to the market and reduce uncertainty for project participants, particularly for the private sector.
The framework establishes a governance and institutional structure that will make it possible for Rwanda to make further considerations regarding its participation in carbon markets. In addition, the framework provides an operationalization of operational/technical elements, such as determining specific procedures necessary to participate, including but not limited to, the project cycle, requirements to ensure environmental integrity, and processes for reporting.
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