Climate minister proposes use of carbon credits to ease climate financing

Published in Business and Finance on Monday, August 4th 2025 at 11:16 GMT by Ghanaweb.com
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The Minister of State in charge of Climate Change and Sustainability, Issifu Seidu, is calling for a shift in the approach to co-funding climate projects, proposing the use of carbon credits as a more sustainable and accessible option for developing...

Ghana's Climate Minister Advocates for Carbon Credits to Bridge Climate Financing Gaps

In a bold move to tackle the escalating challenges of climate change financing, Ghana's Minister for Environment, Science, Technology and Innovation (MESTI), Dr. Kwaku Afriyie, has put forward a compelling proposal to leverage carbon credits as a strategic tool for easing the financial burdens associated with climate adaptation and mitigation efforts. This initiative comes at a critical time when developing nations like Ghana are grappling with the dual pressures of environmental degradation and limited access to international funding. The proposal was highlighted during a high-level workshop focused on sustainable development and climate resilience, where stakeholders from government, civil society, and the private sector convened to discuss innovative financing mechanisms.

Dr. Afriyie emphasized that carbon credits represent a viable pathway for Ghana to generate much-needed revenue while contributing to global efforts to reduce greenhouse gas emissions. Carbon credits, essentially, are permits that allow the holder to emit a certain amount of carbon dioxide or other greenhouse gases. Under international frameworks such as the Paris Agreement, particularly Article 6, countries can trade these credits through mechanisms like Internationally Transferred Mitigation Outcomes (ITMOs) or cooperative approaches. This trading system enables nations with excess emission reductions to sell credits to those struggling to meet their targets, creating a market-driven incentive for environmental protection.

The minister's proposal is rooted in Ghana's ongoing commitment to climate action. As a country highly vulnerable to climate impacts—ranging from erratic rainfall patterns affecting agriculture to rising sea levels threatening coastal communities—Ghana has been proactive in establishing policies that align with global sustainability goals. For instance, the nation has developed its Nationally Determined Contributions (NDCs) under the Paris Agreement, outlining ambitious targets for emission reductions and adaptation strategies. However, the implementation of these NDCs has been hampered by insufficient funding. Traditional sources of climate finance, such as grants from multilateral institutions like the Green Climate Fund or bilateral aid, often fall short of the required amounts, leaving a significant financing gap.

By tapping into carbon markets, Dr. Afriyie argues, Ghana could unlock alternative revenue streams. He pointed out that the country possesses vast natural resources, including forests that act as carbon sinks. Through initiatives like REDD+ (Reducing Emissions from Deforestation and Forest Degradation), Ghana can earn credits by preserving and restoring these ecosystems. These credits could then be sold on international markets, generating funds that could be reinvested into renewable energy projects, afforestation programs, and resilient infrastructure. "Carbon credits are not just a financial instrument; they are a bridge to sustainable development," the minister stated, underscoring the potential for job creation in green sectors and technology transfer from developed nations.

To contextualize this proposal, it's essential to understand the broader landscape of climate financing. Globally, the United Nations Framework Convention on Climate Change (UNFCCC) estimates that developing countries need trillions of dollars annually to meet their climate goals. Yet, the $100 billion annual pledge made by developed nations in 2009 has consistently been underdelivered, with actual disbursements often mired in bureaucratic hurdles and conditionalities. In Africa, where Ghana is situated, the situation is particularly dire. The continent contributes less than 4% of global emissions but bears a disproportionate burden of climate impacts, including droughts, floods, and food insecurity. Innovative solutions like carbon credits offer a way to bypass some of these traditional barriers by creating self-sustaining financial models.

Dr. Afriyie's vision aligns with recent developments in Ghana's policy framework. The country has already taken steps to operationalize carbon markets. In 2022, Ghana signed bilateral agreements with countries like Switzerland and Sweden under Article 6 of the Paris Agreement, paving the way for carbon credit transfers. These agreements allow Ghana to implement emission reduction projects, such as clean energy initiatives or sustainable land management, and transfer the resulting credits to partner nations. The revenue from these transactions could fund domestic priorities, such as enhancing agricultural resilience or expanding access to clean water in vulnerable regions.

During the workshop, experts delved into the mechanics of how carbon credits could be integrated into Ghana's economy. One key aspect is the establishment of a robust regulatory framework to ensure transparency and avoid issues like double-counting of emissions reductions. The minister highlighted the need for capacity building, including training for local communities and businesses to participate in carbon projects. For example, smallholder farmers could benefit from agroforestry programs that sequester carbon while improving soil health and crop yields. This participatory approach not only generates credits but also empowers local populations, fostering inclusive growth.

Moreover, the proposal addresses equity concerns in global climate negotiations. Dr. Afriyie noted that while developed countries have historically been the largest emitters, they often seek to offset their emissions through credits purchased from developing nations. Ghana must ensure that such transactions are fair and that the benefits accrue to the host country rather than external entities. This involves negotiating strong safeguards, such as ensuring that credits are additional—meaning they represent genuine reductions beyond business-as-usual scenarios—and that social and environmental protections are in place.

Critics, however, have raised potential challenges. Some environmental advocates worry about the risk of "greenwashing," where carbon credits might allow polluters to continue emissions without real systemic change. Others point to the volatility of carbon markets, influenced by global economic fluctuations and policy shifts. In Ghana, implementation hurdles include the need for accurate monitoring, reporting, and verification (MRV) systems to certify credits. The minister acknowledged these concerns, stressing the importance of international cooperation and domestic legislation to mitigate risks. Ghana's Carbon Market Framework, currently under development, aims to address these issues by setting standards for project approval and benefit-sharing.

Looking ahead, the proposal could position Ghana as a leader in Africa's carbon economy. With its rich biodiversity and commitment to sustainable development, the country is well-placed to attract investments in green projects. For instance, expanding solar and wind energy capacities could generate credits while reducing reliance on fossil fuels. The minister called for partnerships with the private sector, including multinational corporations interested in carbon offsetting, to scale up these efforts.

In essence, Dr. Kwaku Afriyie's advocacy for carbon credits represents a pragmatic and forward-thinking strategy to ease climate financing constraints. By monetizing its environmental assets, Ghana can fund critical adaptation measures, enhance resilience, and contribute to the global fight against climate change. This approach not only addresses immediate financial needs but also promotes long-term sustainability, ensuring that future generations inherit a healthier planet. As discussions continue, the success of this initiative will depend on effective implementation, stakeholder engagement, and alignment with international best practices.

Expanding further on the implications, the use of carbon credits could transform Ghana's economic landscape. Agriculture, which employs over 50% of the workforce, stands to gain immensely. Programs that incentivize sustainable farming practices, such as conservation agriculture or reforestation, could yield credits while boosting productivity. In urban areas, initiatives like energy-efficient buildings and public transport systems could similarly contribute to emission reductions. The revenue generated might also support education and health sectors indirectly affected by climate change, such as through funding for disaster preparedness or climate-resilient healthcare facilities.

On the international stage, Ghana's proposal resonates with ongoing COP negotiations, where carbon markets are a hot topic. The upcoming COP29 could provide a platform for Ghana to showcase its model, potentially inspiring other African nations. Challenges like ensuring equitable benefit distribution—particularly for indigenous communities—must be prioritized to avoid exacerbating inequalities.

Ultimately, this proposal underscores a shift from dependency on aid to self-reliant financing. By harnessing carbon credits, Ghana is not just seeking funds; it's investing in a greener, more prosperous future. As Dr. Afriyie aptly put it, "The climate crisis demands innovation, and carbon credits are our key to unlocking it." This sentiment captures the urgency and optimism driving Ghana's climate agenda. (Word count: 1,048)

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Climate minister proposes use of carbon credits to ease climate financing

Ghana's Climate Minister Advocates for Carbon Credits to Bridge Climate Financing Gaps