Land Grabs for Carbon

Are carbon offset megadeals the future of conservation in Africa?

In 2023, Blue Carbon, a Dubai-based company, signed a Memorandum of Understanding with the Liberian government for the exclusive rights to generate and sell carbon credits on about 2.5 million acres of Liberia’s forests. Blue Carbon will have those rights—which covers approximately 10 percent of Liberia’s total land area—for 30 years, and will retain 70% of the revenue from the sale of carbon credits. Blue Carbon has also negotiated several other massive MoUs in Africa and elsewhere.

Blue Carbon aims to leverage Africa’s forests to help decarbonize developed countries and multinational corporations. Like other conservation measures—debt-for-nature swaps that pay debt-ridden countries to conserve biodiversity-rich land and sea, or wildlife preserves in poor countries funded by wealthy environmental NGOs—Blue Carbon’s offset programs take advantage of cash-strapped countries willing to cede the rights to their land in exchange for short-term financial compensation.

Blue Carbon agreements encompass 8% of Tanzania’s land (20 million acres), 10% of Zambia’s land (20 million acres), and 20% of Zimbabwe’s land (18 million acres). In October 2023, Blue Carbon signed its most recent deal for another several million acres of forest in Kenya. The company has also reached agreements with other countries, including Papua New Guinea, Dominica, the Bahamas, Niger, and St. Lucia, and has ongoing negotiations with Pakistan.

News of these deals has been met with concern. International conservation groups are worried about the potential harm to wild spaces leased out to Blue Carbon. Indigenous groups are worried about what the MoUs might mean for their rights to the land. And skeptics of carbon credits have repeated long-standing concerns about the ability of carbon credit markets to have any effect at all on carbon emissions.

The concerns are valid. Offsets are, in effect, payments from the world’s largest carbon emitters to the world’s poorest countries to maintain high emissions lifestyles. Land for carbon deals are likely to stall the development of African countries, cede sovereignty to external actors, and threaten the livelihoods of people living off the land.

And yet, it is difficult for governments of poor countries to turn down the vast sums of money offered. This is especially true as rich countries have refused to provide new resources for climate mitigation and adaptation while insisting that African countries meet Net Zero goals. The burgeoning carbon credit market lacks domestic and international regulatory oversight, which has resulted in deals that may neither benefit local communities nor legitimately reduce atmospheric carbon levels. The speed and lack of transparency by which transactions are occurring in Africa is problematic and it is not at all clear if the opportunity cost of the land under conservation has been properly evaluated in terms of its alternative uses and income-earning potential.

Funky Accounting

Blue Carbon was established under the patronage of Sheikh Ahmed Dalmook Al Maktoum, a member of the Dubai ruling family, to generate carbon credits from the preservation of forests that will then be sold to third parties as a way to offset their carbon emissions. Al Maktoum has no experience managing forests or trading carbon. Most carbon credits are traded in voluntary carbon markets, allowing companies to offset emissions. Blue Carbon can potentially sell carbon credits generated by carbon sinks in Africa and elsewhere to governments around the world, enabling them to apply credits towards national emissions reduction pledges. The company has entered into a partnership with First Abu Dhabi Bank, the UAE's largest financial institution, to secure funding for the company's forest conservation and carbon credit projects.

Carbon markets operate under Article 6 of the Paris Agreement but key issues remain unresolved. At COP28, governments faced challenges in reaching consensus, including on the process for authorizing emissions reductions for transfer to other countries, the potential revision or revocation of such authorizations, the scope for carbon trading to achieve Nationally Determined Contributions, and activities eligible under Article 6.

Carbon offsets remain highly controversial. The carbon accounting process is characterized by technical complexities and political dynamics. Carbon in its various forms is quantified by financial markets but offsets resulting from these calculations often have limited tangible solutions to address atmospheric carbon concentration. A considerable amount of research has highlighted discrepancies between claims and actual emissions reductions achieved.

Moreover, problems persist regarding "additionality" and the potential for double-counting, further undermining the credibility of offsets. Claiming carbon credits for forests that would, in any scenario, remain untouched by development makes no difference in atmospheric carbon. The problem is exacerbated when companies with little oversight can sell carbon credits for the same region over a decades-long timeline.

A 2023 study found that 90% of rainforest carbon credits approved by Verra, the largest carbon credit standard, did not actually represent emissions reductions. Verra’s rainforest credits claim carbon emission reductions based on the protection and preservation of existing forests. Blue Carbon’s African forest carbon credit plan follows the same logic. The study found that Verra’s estimated emissions reduction did not come close to matching the real emissions prevented by forest preservation. Just months after the study was released, Verra announced that their rainforest credit process would be replaced by 2025.

Despite concerns about offsets, Africa’s forest carbon is seen to be of enormous value. The Africa Carbon Markets Initiative, launched at COP27 in Egypt, aims to catalyze over $100 billion in new financing, mostly from the sale of offsets linked to forest conservation. Blue Carbon is by no means the only major player in the carbon credits market. Switzerland’s KliK Foundation purchased carbon credits from Thailand's Energy Absolute in December 2023. Singapore’s government has signed agreements with Papua New Guinea and Ghana for the sale of carbon credits.

Who Benefits?

The deals vary in specifics.

In Zimbabwe, a portion of the revenues generated from the carbon credits is meant to finance social projects aimed at improving the living standards of the communities residing within the project areas. Zimbabwe will take 50 percent of revenues, with another 20 percent going to communities that depend on the land.

In Tanzania, Blue Carbon's partnership with the government focuses on conserving, managing, and registering forest resources in the first phase, including approximately 138,000 acres of mangroves. Tanzania's taxation regime for carbon credit trading is among the strictest, having been introduced shortly before Blue Carbon signed its MoU with the country's forestry agency in February. Under this MoU, the Tanzanian government will retain 61% of the revenue from carbon credit sales, with the remainder likely going to Blue Carbon or other stakeholders involved in the project. Local communities and governments are to benefit more than potential foreign buyers or developers.

No one knows if African governments or citizens will benefit from the sale of carbon credits. Among other things, the opportunity cost of forest preservation and conservation has not been taken into account. While both Tanzania and Zimbabwe will receive financial remuneration for stored carbon, it comes at the cost of limiting economic development of the land through agricultural modernization, industrial production, or urbanization.

In the Liberia case, there are legitimate concerns about the lack of transparency, and the impact on local communities and customary land rights. Unlike in Tanzania and Zimbabwe, Liberia has no established legal framework governing the issuance, sale, or taxation of carbon credits. And it is unclear how much Blue Carbon plans to invest in the project, how the carbon credits will be harvested, and what methods will be used to verify the credits' validity. The agreement does not specify the type of certification standards that will be employed, nor does it address transaction costs or financing mechanisms. There are also concerns about the number of livelihoods lost as land is converted from human use to conservation.

According to environmental activist and researcher Chris Lang, the Blue Carbon deal potentially violates several key laws in Liberia and contradicts both the United Nations Declaration on the Rights of Indigenous Peoples and the Liberian Constitution.

As governments and corporations around the world feel pressure to meet self-imposed emissions reductions targets, the value of African forest carbon will likely increase. This is the bet that Blue Carbon has made. By getting into the market for African carbon credits early, Blue Carbon can buy low and sell high.

While the initial funds that Blue Carbon provides for the land can be used by African governments, and when possible, local communities, to improve livelihoods, the actual value of the land—whether for carbon credits or other economic uses—is not taken into account. At best, Blue Carbon is monetizing landscapes while providing dubious climate benefits. At worst, these deals take advantage of poor countries by profiting heavily from forest offsets while foreclosing long-term development opportunities.

Land Grabs For Carbon

Blue Carbon’s deals in Africa are notable for their size, but as the carbon market grows, it is possible that even larger swaths of Africa’s forests and land will get bought up for carbon credits. Even if African governments make a pretty penny off of developed countries and large corporations attempting to make their GHG emissions numbers look better, the economic and social impact of these land grabs for carbon could be significant.

Wealthy countries have underperformed on their promise of providing $100 billion to poor countries for climate mitigation and adaptation and development finance has seen a decades-long decline. These conditions make the financial gains from carbon credits seem appealing. But sacrificing the economic development of regions that will be “preserved” for carbon credits for short-term carbon payments is short-sighted, and a disavowal of the ethical responsibility of wealthy countries to address their own high levels of carbon emissions.

It’s bad enough that the climate benefits of offset programs are dubious. But the real outrage is that even if it's not dubious, it is yet another way that the rich world is balancing its climate agenda on the backs of the poor world, paying pennies on the dollar for offsets that foreclose critical development opportunities for the global poor.

Instead of paying cash-strapped African countries to stay poor and “store carbon,” rich countries and international institutions must reject cheap solutions and fulfill their promises of development finance for poor countries to escape poverty, invest in energy and infrastructure, and become more resilient to climate change.