Tanzania’s Carbon Market Misses the Mark

TANZANIA: TANZANIA, a nation blessed with vast forests and renewable energy potential, should be a key player in the global carbon market. Yet, despite its natural advantages and strategic role in climate mitigation, the country is falling far short of expectations. A recent audit by the Controller and Auditor General (CAG) paints a sobering picture of missed opportunities and underperformance. Between January 2023 and July 2024, Tanzania earned just 36bn/- from carbon trading, barely 3.0 per cent of the projected 1.26tri/-.

The stark gap highlights deep structural and institutional weaknesses that have undermined the country’s ability to tap into one of the fastest-growing segments of the green economy.

“Inadequate alignment of the regulatory framework with international agreements has limited the country’s participation in global carbon markets. Tanzania has underutilised its carbon trading potential,” said the audit report.

During a recent climate change meeting for heads of public institutions and organisations, Vice-President Dr Philip Mpango said the government has increased its efforts to conserve the environment and combat climate change. He also reiterated the commitment to addressing the challenges hindering the development of carbon trading in the country.

“The government is committed to enhancing the contribution of carbon trading to environmental conservation and economic development. The National Carbon Monitoring Centre [NCMC], which is now officially recognised, has been playing a central role in coordinating this sector within the country,” said Dr Mpango.

Dr Mpango also directed NCMC and relevant authorities to resolve the challenges currently slowing the growth of the carbon trading industry in the country.

The audit for 2023/24 reviewed 56 carbon trading projects registered across the country, where only four have progressed beyond the planning phase, while the remaining 52 remain inactive.

This slow implementation has not only limited revenue generation but also blunted progress toward environmental goals.

Tanzania’s carbon market is also overly concentrated. Forestry accounts for 55 per cent of registered projects and energy another 32 per cent. Sectors with huge untapped potential like agriculture, waste management and livestock remain marginal players, said CAG.

The VP directed the Office of the President, Regional Administration and Local Government (PO-RALG), the Attorney General’s Office and regional governments to meet and establish a unified approach to managing the sector. He also underscored the value of learning from other countries’ carbon trading operations to understand how they handle emerging challenges.

Dr Mpango called for greater transparency in carbon trading contracts, saying that clear agreements would facilitate smoother operations and eliminate distrust, which has been fuelled by intermediaries whose selection processes are often unclear.

The VP instructed the NCMC to accelerate special educational programmes in districts and villages under PO-RALG to increase awareness of carbon trading and its benefits.

The CAG report said no projects have been registered in the transport or industrial sectors, despite their significance in global emission reduction efforts.

The CAG attributes this imbalance to a lack of structured guidance, poor awareness and limited technical support.

Minister of State in the VicePresident’s Office (Union Affairs and Environment), Eng Hamad Masauni said the establishment of the NCMC will not only aid environmental conservation but also enable the country to participate in international carbon markets, stimulating investment in other sectors and boosting the national economy.

By February 2025, the centre had received a total of 71 project applications in areas such as natural forest conservation, afforestation, pastureland preservation, agriculture and agroforestry, energy and solid waste management.

“The implementation of these projects is expected to contribute an average of 1 billion US dollars (about 2.4tri/-) annually through the sale of carbon credits for these respective projects,” said Eng Masauni.

The Zanzibar Minister in the Office of the First Vice-President, Harusi Said Suleiman expressed gratitude to the Union government for its increased efforts in environmental conservation across both Tanzania and Zanzibar.

She called for collective efforts in capacity building and sensitisation on carbon trading to ensure that all stakeholders and the community in Zanzibar are not left behind.