Promotion of Carbon Markets in Namibia for an enhanced implementation of the nationally determined contributions (NDC) towards net-zero emissions and climate-resilient development, in response to the climate emergency (Promotion of Carbon Markets in Namibia)

Today the United Nations Development Programme (UNDP) in collaboration with the Ministry of Environment, Forestry and Tourism (MEFT) held a seminar on the “Promotion of Carbon Markets in Namibia for an enhanced implementation of the nationally determined contributions (NDC) towards net-zero emissions and climate-resilient development, in response to the climate emergency” an initiative to prepare Namibia to enter into Carbon Markets. This will place Namibia in the lead among sub-Sahara countries to pilot and support the development of a region-wide applicable framework for Carbon Market mechanisms or Emissions Trading System (ETS) which is funded by the generous support of the Government of Japan.

The revision and submission of Namibia’s Nationally Determined Contribution (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC) in 2021 signalled the Government of Namibia’s commitment to contributing to the goal of the Paris Agreement and following the road to net-zero emissions by 2050. Namibia has expressed interest to participate in Carbon Market-based mechanisms as a financing option for meeting its mitigation targets in the NDC and raising its mitigation ambitions. The Promotion of Carbon Markets in Namibia project is designed to establish an enabling environment for Namibia to pursue Article 6 on Carbon Market-based opportunities under the Paris Agreement. Article 6, particularly Article 6.2 provides guidance for voluntary cooperation between Parties in the implementation of NDCs to allow for higher climate ambition and to achieve greenhouse gas (GHG) emission reductions through Carbon Markets.

Speaking at the event, the UNDP Resident Representative, Ms. Alka Bhatia outlined that by entering Carbon Markets, Namibia can advance its socio-economic development while transitioning to a low-Carbon economy in a cost-effective way that puts a price on carbon, allows for carbon trading, and stimulates new market opportunities for the private sector. At the same event, the Ambassador of the Government of Japan to Namibia, H.E. H.E. Hisao NISHIMAKI, indicated that Japan would like to continue providing technical assistance other countries including Namibia to further develop their Carbon Markets including achieving the net-zero targets. He also announced that the Government of Japan will provide 200 million dollars of donation for the Middle East and African countries inclusive of Namibia to address the food price hike as a result of the Russia-Ukraine War.

In his keynote statement, the Minister of MEFT, Hon. Pohamba Shifeta said that the government recognises that achieving the 2030 ambition of reducing 91% of the national emissions requires all actors to come on board. He informed the participants that the Ministry is ready to work with its partners, especially the private sector and development partners in contributing to Namibia’s ambitious NDC through Carbon Markets. He said that the Ministry will create and establish a conducive enabling environment for Namibia to pursue Carbon Market-based options to allow for more stakeholders to participate in addressing the negative impacts of climate change.

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Frequently Asked Questions


1. What are Carbon Markets?
Carbon Markets are usually referred to as the sale and purchase of Carbon credits by participating Parties such as a host country and a recipient country or entity in exchange for carbon revenue. Carbon Markets incentivize climate action by enabling countries to trade Carbon credits generated by the reduction of greenhouse gases (GHGs) such as by switching from fossil fuels to renewable energy or enhancing or conserving Carbon stocks in a forest. One tradable Carbon credit equals one tonne of Carbon dioxide or the equivalent amount of a different greenhouse gas reduced, sequestered or avoided.

2. The Paris Agreement and subsequent international conferences on Carbon Markets
Article 6 is the Paris Agreement’s rulebook governing Carbon Markets, a key outcome of the United Nations Framework Convention on Climate Change’s 26th session of the Conference of the Parties (UNFCCC COP 26) in Glasgow, Scotland. The Paris Agreement recognizes that countries would like to pursue voluntary cooperation through cooperative approaches under Article 6.2 and other sustainable development mechanisms under Article 6.4 in the implementation of their climate commitments to allow for higher ambition in their mitigation actions. The World Resources Institute provides an explainer for provisions under Article 6 as follows:
• Article 6.2 provides an accounting framework for international cooperation, such as linking the emissions-trading schemes of two or more countries (for example, linking the European Union cap-and-trade program with emissions-reduction transfers from Switzerland). It also allows for the international transfer of Carbon credits between countries.
• Article 6.4 establishes a central United Nations mechanism to trade credits from emissions reductions generated through specific projects. For example, country A could pay for country B to build a wind farm instead of a coal plant. Emissions are reduced, country B benefits from the clean energy and country A gets credit for the reductions.
• Article 6.8 establishes a work program for non-Market approaches, such as applying taxes to discourage emissions.

3. Where are the major Carbon Markets around the world?
There are a number of Carbon Markets around the world, with major one being the European Union emissions trading system (EU ETS) established in 2005, with other systems operating or under development in Brazil, Britain, Canada, China, Japan, New Zealand, South Korea, Switzerland and the United States. In Africa, a variety of instruments have taken off in Ghana, Kenya, Rwanda, South Africa and other countries at a smaller scale.

For Namibia, emission trading systems will require key building blocks such as a robust Carbon Market policy framework; Carbon Market process flows including the authorization processes; issuance of the emission credits, establishment of transparent national emission registries as well as capacity-building initiatives for both, public and private actors to be put in place. These building blocks will help the government to operationalize Article 6 by successfully authorizing Carbon Market projects and issuing Carbon credits for international transfer and receiving Carbon revenues from buyers, including administrative share of proceeds and adaptation fees. UNDP’s expertise in this area can ensure longevity, sustainability and relevance of Carbon Market actions.

4. Promotion of Carbon Markets in Namibia Project
Namibia has little historical or current responsibility for global climate change with the country’s GHG emissions representing less than 1% of total global emissions. While adaptation is the priority for Namibia, action is needed to reduce GHG emissions that are projected to increase. When we participate in these mechanisms, in the long-term, we will also contribute to the UN Sustainable Development Goals (SDGs). Carbon Market projects are generated beyond mitigation outcomes, including more jobs, healthier air, cleaner water, greener transportation and other co-benefits.

With the Promotion of Carbon Markets in Namibia project funded by Japanese government, UNDP is working with MEFT to establish a national GHG emission reporting system and registry which includes NDC progress tracking and emission reduction tracking at unit level, issuance and transfers. The project has three major components:

• Design of Key Building Blocks for a National Emissions Trading Scheme (ETS) which will be a registry that will host verifiable data on all projects and programmes undertaken in Namibia (NDC mitigation and adaptation projects; Carbon projects registered under different standards such as the Clean Development Mechanism (CDM) under the UNFCCC; and independent standards). Once the emission unit registry becomes operational, the Government of Namibia will be able to carry out an emission unit cancellation within the registry based on the transactional records governed by different standards.
• Technical capacity building to enhance the institutional capacity of the MEFT and relevant institutions, including the private sector.
• Enabling investment climate and operationalization planning for market mechanism in Namibia.

5. What are the key Carbon Market sectors and their contribution to a low-carbon economy?

The key sectors to contribute to Namibia’s low-carbon are mainly the land restoration, agriculture, forestry and renewable energy sectors. Apart from the GHG emission reductions and the additional financing, carbon projects can have benefits derived from the implementation of the mitigation activities through strengthened livelihoods and to boost inclusive green recovery from COVID-19. UNDP has also explored the use of renewable energy such as in the transport sector and will consider initiatives that overall facilitate the implementation of universal access to affordable clean energy.

Green Hydrogen Technology will be a potential area to collaborate with to develop the mitigation activities to benefit from Carbon Markets with increased awareness and understanding of measures of good practice not detrimental to the environment and livelihoods.

6. Carbon Finance and the Private Sector
Over USD 5 billion is required for the implementation of Namibia’s bold climate commitments under the Paris Agreement. Of this estimated amount, about 90% of the financing is expected to come from the international community and partnerships with the private sector. As such, most actions that need financing and mobilization of future resources will be a blend of national and foreign funds. Namibia will continue to mobilize funding for through multilateral financing mechanisms such as the Green Climate Fund (GCF) and Global Environment Facility (GEF), and through bilateral and multilateral relationships to support the implementation of its NDC.
Carbon Finance has been demonstrated to be a successful and effective way to de-risk private sector investment and accelerate low carbon investments in developing countries. Carbon Markets have the potential to crowd in large-scale investment to meet the conditional commitment of Namibia’s NDC through additional public and private climate finance.
There is a need to target the underlying barriers that create investment risks through long-term policy de-risking, also direct financial incentives are needed to address the urgency of climate change. It is critical that direct financial incentives and targeted de-risking measures are available for domestic investors to access lower-cost finance, and for international investors to scale-up investment in low Carbon Markets and invest in new markets such as hydrogen technologies.
Aggregated Green Bonds facilitated by the banking sector in partnership with State-owned Enterprises (SOEs) can be used to support Micro-, small and medium-sized enterprises (MSMEs) for low-carbon development.

7. How can the can Stakeholders partake in the Carbon Markets
Through the implementation of Carbon Markets in Namibia, the UNDP will optimize a non-exploitive, participatory decision-making process to ensure that policy frameworks address issues of inclusivity and improvement of livelihoods for the majority of the population.

The operationalization of Carbon Markets will require the early involvement of key stakeholders. A key component of UNDP’s support will involve the training of a coalition of national experts involving the government stakeholders, the private sector and the academia. With this pool of experts, Namibia will be able to demonstrate leadership in the region and become a frontrunner in the operationalization of Carbon Markets.

8. The Policy and the Legal Framework for Carbon Markets in Namibia
To guide the Carbon Market process, UNDP will develop policy briefs articulating the policy gaps, opportunities and recommendations to enhance national policies and implementation of the emission trading system. Legal experts will examine the guidance provided by the Fifth National Development Plan (NDP5), the Harambee Prosperity Plan II (HPPII) and other documents such as the National Climate Change Policy (NPCC) that provides a legal framework and overarching national strategy for the development, implementation, and monitoring and evaluation of climate change related activities in Namibia.

Donor: Japan
Budget: USD $1,003,042.00
Project duration: March 2022 – March 2023
Executing Partner: MEFT
UNDAF/CP Outcome(s): NDP 5: Pilar 3 – Environmental Sustainability
Expected CPD Output(s): Output 2.2: Scaled up integrated and innovative action on climate change mitigation
Target beneficiaries: Government ministries, SOEs, Private sector
Target sectors: Energy, Transport, Forestry, Waste Management, Finance, etc

For more information contact:
Uazamo Kaura
Head/Programme Specialist
Sustainable Environment Management, Energy and Resilience (SEMER)
United Nations Development Programme – Namibia

Postal Address: P/Bag 13329, Windhoek, Namibia
Mobile: +264 811500993
Email: uazamo.kaura1@undp.org
Website: https://www.undp.org/namibia
Petrus Muteyauli
Deputy Director: Multilateral Agreements
Department of Multilateral Agreements
Ministry of Environment, Forestry and Tourism


Postal Address: P/Bag 13306, Windhoek, Namibia
Mobile: +264-811288658
Email: pmuteyauli@yahoo.co.uk
Website: https://www.meft.gov.na/



OTHER RESOURCES
• Climate Explainer: Article 6 (worldbank.org)
• Cooperative Implementation | UNFCCC
• What You Need to Know About Article 6 of the Paris Agreement | World Resources Institute (wri.org)
• The Paris Agreement’s New Article 6 Rules | International Institute for Sustainable Development (iisd.org)
• COP 26: Implementing Article 6 of the Paris Agreement | Environmental Defense Fund (edf.org)
• In-depth Q&A: How ‘Article 6’ Carbon Markets could ‘make or break’ the Paris Agreement - Carbon Brief
• FAQ: Deciphering Article 6 of the Paris Agreement - Carbon Market Watch