Zambia looks to make inroads under Article 6.2 emissions trading; signs MOU with Sweden

Zambia signed a memorandum of understanding with Sweden for bilateral climate cooperation under Article 6.2 of the Paris Agreement, as the African country looks to accelerate its involvement in international emissions trading.

The pact with Sweden, signed Aug. 21, paves the way for negotiations of a bilateral agreement to foster cooperation for carbon credit transactions under Article 6.2.

"The next steps are to negotiate suitable emission reduction projects and sign a binding bilateral agreement," the Swedish Energy Agency, which signed the MOU with Zambia's Ministry of Green Economy and Environment, said in a statement.

Article 6.2 sets out a system of national accounting for greenhouse gas emissions, with common principles that countries can adopt to allow cross-border exchanges of credits. Countries can adopt credits, known as Internationally Transferable Mitigation Outcomes, under Article 6.2.

The cooperation will help deepen relations between Sweden and Zambia, said Swedish Ambassador to Zambia Johan Hallenborg.

"Zambia's government has identified a need for investments in the energy sector," he said. "Sweden is already supporting Zambia and other African Countries through the Beyond the Grid Fund for Africa and to the rehabilitation of the Kariba Dam. More investments can be made possible through climate cooperation under the Paris Agreement."

"Through this cooperation Sweden can focus on Zambia's specific needs in relation to the energy sector and Zambia's climate targets."

Sweden has been looking to increase its activity under Article 6.2, having signed a bilateral agreement with Ghana and MOUs with Nepal and the Dominican Republic.

Article 6 progress

Zambia is mulling approving letters of authorization for 10 carbon projects as it looks to make significant progress on its national carbon framework.

Like many African countries, Zambia is keen is keen to scale up its participation in both compliance carbon and voluntary carbon markets.

Since December 2022, Zambia received 39 applications, reviewed 30 project concept notes and was close to issuing letters of no objection to 10 carbon projects, which could lead to the transfer of cross-border carbon credits, said Douty Chibamba, Permanent Secretary of the Ministry of Green Economy and Environment.

A letter of authorization is needed from the host country for the project permitting the use of corresponding adjustment under Article 6.2.

Corresponding adjustment is a fundamental requirement for carbon trading between countries under Article 6. These must be made when a country buys carbon credits from another country to meet its climate targets, known as Nationally Determined Contributions.

When buying carbon credits from another country to meet its climate targets, a country must obtain a corresponding adjustment to avoid double counting carbon credits that are traded between countries.

National carbon framework

The country's Ministry of Green Economy and Environment said that it expects the implementation and design of its National Carbon Registry to be completed by December.

"It is a very significant milestone for the country because as a country we will be able to have a track record, a system that sits within the country where we are able to monitor all the different projects that are taking place as well as taking note of all the sustainable development impacts that come from these projects, the greenhouse gas emission reductions that come from these projects, how much finance these projects are bringing into the country will all be tracked in this system," said Elaine Kafwimbi, National Coordinator, Supporting Preparedness for Article 6 Cooperation Program.

"So, it's a very important system for us to have as a country so that it helps not only our project implementation planning, but also to create a landscape around how much financing we need as a country to plan for climate change mitigation and adaptation," she added.

Earlier this year, Switzerland and Ghana authorized the transfer of cross-border carbon credits from a cookstove project under Article 6.2 of the Paris Agreement.

The Transformative Cookstove Activity project in rural Ghana will distribute 180,000 improved cookstoves, the countries and companies involved said in a joint statement Feb. 29.

Many countries see Article 6 as a key tool to stimulate decarbonization and private investment, which can lead to reductions in greenhouse gas emissions.

Platts, part of S&P Global Commodity Insights, assesses a wide range of high-quality voluntary carbon credits funding projects that demonstrate additionality, permanence, exclusive claim and cobenefits.

The value of these credits can vary from CORSIA-eligible offsets (Platts CEC, $17.05/mtCO2e) to household device offsets ($3.90/mtCO2e) and tech carbon capture offsets ($132/mtCO2, all Aug. 20 assessments).