Demand for carbon credits worldwide crashed last year. How did Africa perform?  

• The executive summary: The continent did less badly than others. 

• According to a data-heavy report from the nonprofit Ecosystem Marketplace.

By Volume: The number of transactions in Africa only fell by 7% last year. Competitors among developing regions, Asia and Latin America, went down 78% and 72%.

By value: Down 25% in Africa, while Asia and Latin America plummeted 83% and 72%. 

• Africa underperformed Europe on value change – and North America on volume change (the only region to grow volume last year). 

Zoom out: Carbon markets are more than 25 years old and widely – but far from universally – accepted as a key to global climate action. 

Annus horribilis: Last year, severe criticism marred the voluntary carbon markets, where companies and individuals purchase credits to mitigate the impact of emissions. 

• The resulting tumble led some insiders to question the markets’ future. 

• The total value of credits globally was down by more than half last year.

And now: The dust is settling, and it’s clear that third-party verified international carbon offsets remain a widely traded commodity, so says BCG, the global consultancy. 

• Demand in Africa is expected to increase. The compound annual growth rate is projected at 31% over the next five years. Demand is set to outstrip supply by 2030. 

• The voluntary markets, currently worth about $2 billion globally, are expected to grow fivefold by the end of the decade.

Continental share: Africa supplies 20% of all voluntary credits, making it the second largest supplier after Asia. 

• DR Congo produces about two-fifths of the African total, and Kenya one-fifth, while other African suppliers have less than a tenth each. 

• DRC credits are almost exclusively based on its vast forests, while Kenya also benefits from hosting low or no-carbon cookstove makers.

The customers: Buyers of African credits are a who’s who of global business: BP, Shell, Apple, Netflix, Nespresso, Air France KLM. 

• They are motivated by pressure from consumers, stakeholders and investors as well as their own commitments to offset emissions. 

Quality is king: Since buyers act out of brand concern, getting “the best” carbon credits matters more than ever. Buyers increasingly want to know:

• Is carbon removed permanently? 

• How solid is the measurement?

• What other green benefits exist? 

Key vulnerability: Buyers have become more sensitive to doubts about credit quality. And there have been lots, scaring buyers off in droves. Some carbon projects were accused of:

• Inflating climate benefits or being altogether bogus

• Undermining indigenous people and local communities

• Damaging ecosystems more than helping them

Going forward: Two topics are front of mind for insiders. 

• Everyone is watching prices. They are the clearest signal of market health. For now, prices are going up – but at lower than hoped for volumes, suggesting a flight to quality.

• Lots of attention is on new regulations & taxes both in Africa and at the EU but affecting Africa. New Kenyan rules may signal where government minds are trending.

Main conclusion: The carbon juggernaut keeps going regardless of bumps in the road. But it’s unclear if price signals alone can iron out market flaws, and if regulation will be a boost. 

• Pricing was volatile last year. Africa saw a 19% decrease — less bad than Asia and North America, but behind Latin America and Europe.

• Recent trading is setting a new trend. Quality above all. But how far has the threat of reputational damage from crooked credits receded?

The latest: One of the world’s biggest carbon-offset projects was withdrawn from a key standards body last month. 

• Carbon Green Investments removed the Kariba forestry project in Zimbabwe from Verra’s registry over quality concerns.

2. Cheat sheet: Eight kinds of carbon credits 

(i) Forestry & land use: Africa supplies a quarter of all credits here ($1.1 billion p.a. in total)