– we desire to see you regularize. I hope you will utilize the one month to two month window, so that we give those contracts a priority, Minister Ndlovu said.
HARARE, Zimbabwe – Zimbabwe’s Environment Minister, Mangaliso Ndlovu, has warned all carbon trading operators to comply with the new Carbon Credit Framework.
Ndlovu made the announcement Monday evening, at a stakeholder meeting held over dinner at the Zimbabwe Parks and Wildlife Management (ZimParks) Head Office, in Harare.
This was six days after a cabinet announcement that left the industry contemplating packing bags.
“When we say these contracts have been voided, we know what we are talking about and give you an opportunity to regularize.
This was misunderstood by some to mean pack and go but we desire to see you regularize. I hope you will utilize the one month to two months window, so that we give those contracts a priority,” Minister Ndlovu said, while deflating fears by the investors, that the industry was shutting down.
On Tuesday 16 May, the Zimbabwean cabinet declared that all carbon credit agreements entered into prior to that date, were null and void.
Every operator was now supposed to comply with the new framework that is calling for government approval, after a nine-step application process, to operate in the sector.
The Framework also has a new strict model of profit sharing.
“The gross income from carbon credit trading shall be allocated to the listed beneficiaries as follows: Proponent Investment Recovery, 50% and Treasury, 50%.
The proponent Investment recovery comprising external and domestic investors shall be as follows: External Investor, not more than 30% and local investor, not less than 20%, to allow for local participation in the carbon trade business,” the Cabinet statement revealed.
However, the cabinet announcement lacked clarity and brewed shockers and uncertainty in the carbon trading industry.
– concerns raised
A number of concerns were raised regarding the proposed profit-sharing model under the new framework.
“Firstly, the framework treats all carbon projects as the same, I will tell you that feasibility studies and the economics are different with different kinds of projects.”
“My colleagues here have already said that the investment has to be repaid at a reasonable rate before we even get to the benefit sharing,” a concerned operator bemoaned.
He appealed for the Zimbabwean government to emulate what other governments are doing.
“We need to have a lot of institutional frameworks, to build that capacity in the Ministry and be able to come up with that kind of analysis for different projects,” he said.
Other operators were concerned there was general belief that environmental degradation was being viewed as a resource.
“Minister you talked of the need to unlock the US$ 100 billion financing, but that finance in my view is the finance that is coming through the investors. If you bring in US$ 100 million to do a reforestation project, that is part of the investment.
The off-take of the carbon downstream in the commercial voluntary carbon space, is the reward that the investor has for taking that risk of putting his money into the country,” another operator said.
Several consultants also expressed concern at what they referred to as failure by the framework to acknowledge the fact that reforestation itself was an investment.
Some took time to explain the long and scientific process of how carbon credits are created and how investors return their money arguing that if the government is involved in the buying and selling of the credits, the process will erode confidence.
– clarification offered.
Meanwhile Minister Ndlovu said the planting of trees by carbon credit investors cannot be termed ‘investment’ but partnership.
He said many organisations and individuals are in the process of planting trees, yet are not claiming to be investors.
“I don’t want someone who claims that they invested millions of dollars in Zimbabwe yet the government doesn’t know. What is critical first is technology and knowledge transfer.
We want to make sure that these communities begin to realise real benefits from carbon credit markets, we were told during plenary in the last COP that Africa’s main source will be carbon credits,” he indicated.
“We are giving you this opportunity to interact and exchange notes and we are not at this point welcoming those who will come and tell us how to engage in the exploitation of these resources, at their terms,” Ndlovu said.
Ndlovu said the government is not aware how many cook stoves have been given to the people even though they are grateful, the people should know that it is their resources that are unlocking those stoves, being given to them.
“The cook stove is meant to make sure they rely less on forests; these are the resources that should be properly accounted for.
We will not allow that through Zimbabwe there is climate washing, there are people who will publish internationally that they have invested millions, yet we know the majority of those resources are being exchanged elsewhere,” he explained.
However, fears are real in Zimbabwe.
“If the split in terms of the gross credits coming in has got a 50% split it means then that we have got to renegotiate the financing. The financiers will then sit on the table and look at alternative countries.
They may say, look you have got a good model but the return period is longer than this project in another country, and you here in Zimbabwe will be last on the list,” a young consultant told the Environment Minister Ndlovu.