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Growing need for investments in carbon credit projects with Capital Alternatives

By Edited Oct 27, 2015 1 0

investments in carbon credit projects with Capital Alternatives

Carbon trading was introduced through the method of over-the-counter transactions between companies and governments, and with the entry of institutional investors, the carbon credit sector is now getting highly competitive. After the formation of the Kyoto Protocol, dedicated carbon exchanges are trading in carbon credits.

The most advanced market in carbon credits was established by the European Union in 2005 when the Emission Trading Scheme was launched, and in 2011, the Australian government announced the implementation of a carbon tax, where a rate of $23 per tonne will be given for carbon credits.

Why invest in carbon credits?

  1. The global carbon credit market is set to grow by 13% (Point Carbon).
  2. In the past decade, a series of laws and free trials were introduced by EU mandating low carbon economy and this is the next era of EU trade where a trade war has started between countries. ( The New York Times, 22 February 2012)
  3. The Insurance Bureau of Canada urged people and government to seriously consider the changing weather patterns and it blamed the weather change as the cause behind New Brunswick floods. The insurance company’s Chief Executive Officer, Don Forgeron said “the year 2010 was the warmest since 1948 and the number of severe weather events became two times in five to ten years.”
  4. In the US, the total damage from climate change was of value $55 billion. The National Climatic Data Centre claimed the floods along the Mississippi and the upper Midwest happened due to weather changes.
  5. Chairman of the Grantham Research Institute on Climate Change, at the London School of Economics and Political Science, Lord Stern, who is also a leading economist, said “low carbon economy  will create opportunities, investments and growth. “
  6. Carbon financing policies and economic incentives encourage tree planting and forest conservation, and climate change provide the opportunity to alleviate poverty.

Understanding Agroforestry through land investment in Africa

Agro-forestry refers to tree planting projects, where investors plant certain species of trees and grow crops, which can absorb the highest amount of carbon from the atmosphere. The projects hire extension agents who are trained and recruited locally, and these agents assist in mapping, advising and monitoring farm related activities.

There are many socio - economic impact of these investments where the local population gets the opportunity to generate income through crop selling, carbon payments, and these projects contributes to improve socio-economic infrastructure. These transformations provide better housing, health, education, clean water, transportation and shops to the local communities and these projects also contribute to increase crop yield and enhance food security.

Investors can participate in carbon sequestration projects in sub-Saharan region. A focus on efficient sustainable implementation of agriculture will improve the lives of smallholders in Africa, prevents environmental degradations and enhance food security in the region.

As the population of the sub-Saharan region is growing, poverty remains the major issue. In 2008, the region was hit by food crises and there is a great demand for increasing rice yields, which is the staple food of the region.

In Kenya, the use of low cost agricultural technology and proper methodologies changed the conventional agriculture patterns and enhanced production. Investors are promoting new methodologies in farming which helps to increase resilience to climate change, boost productivity and get internally approved carbon credits. Investors can get farmlands at a low investment start up in Sierra Leone backed by flexible land owning government policies, to achieve valuable carbon credits and monetary benefits from the sale of crops.

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