Unlocking Malawi's Carbon Market Potential: A Path to Sustainable Development

Now the next story to explore Malawi's evolving carbon market. Key developments such as the advancement of Article 6 projects under the Paris Agreement and the state of forest carbon credits and the ongoing efforts to establish new trading laws and frameworks. We're joined by Sean Longwe from Ritz Attorneys. Thank you for joining us, Sean. Thank you for having me. One very critical question, Sean. This is something that was reported just 30 days ago by Carbon Pulse, which is of course, as you know, a very diligent force in this space. And they reported that as per the exchange with the Malawi government, in the past five years, the Malawi government has only managed to sell a fraction of its 1.5 million forest carbon credits. Why do you think that is? Well, I think the problem came in because of a lack of policy and a robust legal framework, which resulted in the local participants and the government not having the muscle and the impact to delve into these projects. So it was something like something new, which is really not on the minds of the economic players and the government. Right. And I suppose now they are looking to change this very rapidly. There are a bunch of things right now going on. A digital trading system, a new framework, compliant with international policy for REDD+, when it comes to voluntary markets, and as well as compliance markets. Give us a little bit of a picture about what's going on in Malawi right now to change shelving your carbon credits. Thank you very much. Malawi's carbon market has immense potential for growth, particularly with the recent auction of 1.5 million emission reductions on the digital carbon exchange, CDX. This is a significant step towards tapping into the global climate finance and positioning Malawi as a player on the carbon market. The growing international demand for carbon credits creates opportunities for Malawi to attract investments in sustainable development projects like reforestation, agroforestry, renewable energy. Just to delve into the recent initiative, which was generated from promotion of uptake and use of cleaner cooking technologies, the credits for the benefit across 550,000 households under the Paris and Article 6 of the Paris-Article agreement, which 12.5% proceeds would go directly into Malawi government to support environment, climate, and carbon initiatives. So, this initiative started with a minimum bid in 250,000 to the cap of 250,000 US dollars at a unit price of $10 per credit, and it was an initiative to enable Malawi to tap into the global market and also to allow investors to access into the Malawian carbon market. So, this is a significant step towards tapping into the new sources of capital for the much-needed climate action. Thank you. So, Sean, all these credits come from a mixed bag of voluntary compliance, all of it. Is it forest carbon credits, or is it cooking stove? Is it a mix? Is this the total? Yes, yes, yes. It's a mix, but it's concentrating on the voluntary market. And they're, wait, they're a mix, but they're all priced the same, $10 for per credit. Come again? So, they are a mix. The sources of these credits are mixed, but they are priced the same. Is that right? At $10? Yes, yes, yes, yes. I see. I see. And how does this transition into the digital platform, where one can in the future very soon start trading Malawi's carbon credits? Well, the digital carbon exchange offers a gateway for global participation in Malawi's carbon market, as alluded to earlier. So, it provides an efficient platform also for trading carbon credits, linking Malawi to carbon projects, to international players who didn't have the access which was there before. If it was there, it wasn't. There are issues to do with transparency, integrity. But this global participation is crucial, as it brings the necessary investment to scale up sustainable projects across the country. This is a needed investment, and this is a needed initiative. Also, the Malawi carbon markets initiative, which was formed to make sure that there is transparency, compliance, and equitable revenue distribution, is also in the pipeline, making sure and ensuring that this is a viable project, and these projects should have impact not only on the international players, but as well the communities. That's the more focus. Communities should also benefit from these initiatives.

Sean Longwe, Head of Business Development, Ritz Attorneys at Law joins CNBC Africa for this discussion. 

Malawi's carbon market: Innovations and challenges

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Malawi's carbon market: Innovations and challenges

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