How to register carbon projects
Carbon markets can bring investment into communities and landscapes that have long struggled to attract finance. But they can also create expectations before any money has been earned. That is why registration matters
Blair Atwebembeire. (Courtesy)
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OPINION
By Blair Atwebembeire
Carbon projects are attracting entrepreneurs and investors in Uganda. But before a forest, clean cookstove or waste project can earn money from carbon credits, it must pass through a government approval process.
For a landowner with degraded land, a carbon project can offer hope: restore the land, create jobs and earn income from the carbon stored by the returning trees.
For an entrepreneur, the opportunity extends further. Protecting forests, distributing clean cookstoves or capturing emissions from waste may generate carbon credits that can be sold to companies seeking to meet climate commitments.
One carbon credit generally represents one tonne of greenhouse-gas emissions reduced or removed from the atmosphere.
The promise is attractive, but a carbon credit does not arise simply because trees have been planted or an investor has shown interest. Uganda’s climate-change laws require a project to move through several stages.
The developer first submits a request with a project idea note to the minister responsible for climate change. It describes the proposed activity, where it will operate, its expected climate benefit and the people likely to be affected.
The developer must also be legally registered in Uganda. This gives the Government an early opportunity to assess the idea before the developer spends heavily on technical studies and project design. The minister ordinarily has 21 working days to consider the application. If more information is required, the developer may be given seven working days to provide it.
If the idea is accepted, the minister issues a letter of no objection. This is the first green light, but it is not final approval. It allows the developer to study and design the project. It does not guarantee that credits will be produced or permit their sale.
The letter is valid for 24 months, with progress reports required every six months. If it is refused, the applicant must be given reasons and may appeal to the High Court within 30 days.
During this period, the developer must answer the difficult questions. Who owns the land? Does the project have a secure right to operate there? Can the promised emission reductions be achieved? Will the expected income meet the project’s costs?
The developer must also consult affected communities. People need to know whether the project will change how they farm, graze animals or use forests — and what they will receive in return.
The findings are captured in a project design document. Where an environmental and social impact assessment is required, it is also undertaken at this stage.
Applying for approval
Once the studies are complete, the developer applies for approval of the full project. The application includes the project design document, a feasibility study or business plan, a recommendation from the relevant government agency and a benefit-sharing plan. The benefit-sharing plan must explain who will benefit, what they will receive and how disagreements will be resolved.
This is important because a carbon project may last for decades. Its success can depend on landowners and communities continuing to protect trees, use cleaner technology or change how they manage the land. Promises made at the beginning must therefore be clear enough to survive long after the excitement of launching the project has passed.
The minister then decides whether to approve the project. Approval allows implementation to begin, but it does not replace other permits. Depending on the activity, approvals may still be required under land, environmental, forestry, water, wildlife or local-government laws.
An investor should therefore look beyond the carbon approval and establish whether the project has every permission it needs to operate.
Implementation
Once approved, the project must deliver what it promised. Trees must survive. Forests must remain protected. Clean cookstoves must actually be used. Waste must be captured.
The project then measures its results, which are independently verified. Credits are issued for the emission reductions or removals that can be proved — not simply for the figures predicted in the business plan.
Before the credits are sold, Uganda’s registration and transfer requirements must also be met. Some international transfers require further approval from the Minister and may attract additional charges.
Carbon markets can bring investment into communities and landscapes that have long struggled to attract finance. But they can also create expectations before any money has been earned. That is why registration matters.
For the entrepreneur, it tests whether the idea can become a business. For the investor, it exposes the risks. For landowners and communities, it provides an opportunity to understand what the project will demand and what it will give in return.
The carbon credit may be what eventually reaches the buyer. The land, agreements, work and patience behind it are what give it value.
The writer is a commercial, environmental and climate change lawyer. He advises businesses, project developers and institutions on commercial transactions, environmental regulation and climate governance.