Health is an unorthodox economic commodity. Its value, barely acknowledged when we have it, becomes priceless when we don’t. The instant a person falls seriously ill, finding a cure is immediately more important than the price paid for it. The same asymmetry in valuation applies to the health of our planet.
For centuries, the value humankind placed on the environment was nothing compared to the valuation given to economic development. European colonialists arriving in 19th-century New Zealand received compensation to cut and burn down its vast temperate rainforests. The market of the day valued sheep pasture over biodiversity. Those rules are changing – thanks to the mounting evidence that the climate and biodiversity crises are fundamentally interlinked, for better or worse. Putting a price on nature and creating a market that can finance efforts to protect and restore is, therefore, mission-critical if we’re serious about saving our planet and securing our shared prosperity.
That is the context in which my country, Gabon, can now offer a new financial instrument, the issuance of 90 million tons of sovereign carbon credits – the world’s largest – to transform global carbon markets with the speed and scale needed to make an impact. The voluntary carbon market is growing exponentially - up 60 per cent in 2021 to a total traded value of just under $2 billion – and they have a crucial role in scaling up nature-based solutions.
But given the current size of the market – only 344 million tonnes traded last year – sovereign carbon credits need to be part of the solution. Today, a market that has up-to-date traded on carbon credits from piecemeal projects focused in particular areas is being presented with a different model – a whole nation committed to green growth that delivers for people, nature and the planet. Gabon has laid out its entire environmental policy portfolio and territorial estate, from sea to shining rainforest. It is precisely the kind of transformative moment needed by the voluntary carbon market - still new, somewhat fragmented – towards its journey to maturity.
The compliance market, worth a multibillion-dollar annual turnover, shows the scale of the environmental financing available.
Now, Gabon can shift the dial in the voluntary market by offering a tranche of what might be regarded as” gilt-edged” carbon credits. I do not believe applying “gilt-edged”, a term usually reserved for high-grade bonds issued by national governments and private organizations, to Gabon’s carbon credits is an exaggeration. The scrutiny applied by experts from the United Nations Framework Convention on Climate Change was extraordinary in judging the impact of Gabon’s policy interventions from 2010-2018.
It was an exhaustive and, at times, exhausting experience that took us more than four years and several rounds of review. But from our point of view, this investment of time and comprehensive effort was made well worth it just ahead of COP27 with the UNFCCC’s final assessment. With our rich forests, which cover 88 per cent of our land mass, we had long known we were better than net-zero for carbon emissions as our forests take in much more carbon than our 2.3 million-strong population produce.
UNFCCC confirmed a baseline between 2000 and 2009 of 107,186,873 tonnes of CO2 taken out annually from the world’s atmosphere. Against this stringent baseline, Gabon was then evaluated to the extent to which its implemented policy portfolio (effectively its `good behaviors’) had taken yet more CO2 from the atmosphere. The answer was clear: From 2010-2018, an additional 90,636,103 tonnes had been removed from the atmosphere nationwide. It is based upon this assessment that we are today able to bring to market a tranche of 90,636,103 sovereign carbon credits. It is not just the UNFCCC retrospective research that makes our credits a class above. Gabon’s use of the proceeds from the sale of these credits makes them even more valuable. We are keen to show the multiplier effect of how those earnings will cascade down through our economy.
The plan is clear, a four-way split. A quarter of earnings from the sale of Gabon’s carbon credits will be reinvested directly into the forest through initiatives that will split the funding between rural development, i.e., the forest, its conservation and communities. Health, education and national infrastructure will take up 25% of the proceeds and the remaining 50% will be equally divided between sovereign fund investments to benefit future generations and debt relief. Each stage will be subject to public scrutiny and transparent accounting, a commitment that, once again, marks out sovereign carbon credits as a strong new player in the global carbon market.
In Gabon, we are proud to be first and are fully aware others will follow when we succeed.
Honduras has strongly indicated it will be the second nation to go down this route. It will not be the last. The crux of the matter, if we are to keep our planet healthy, is that we must tackle both climate and nature crises at the same time, with equal force and focus. It is why Gabon is betting on monetizing its efforts to safeguard the Congo Basin, the world’s largest carbon sink and our last line of defence in the fight against climate change. This region constitutes one of the most important wilderness areas left on Earth, covering five other countries with a 1.2 million square mile area.
What was once the “lungs” of Africa now services the world, as the Amazon has become a net emitter. If we lose our forests, every other measure becomes as pointless as putting a band-aid on a broken leg. The world has come to a defining moment – a challenge to wealthier nations and Global Business to test the veracity of their climate commitments to tackle environmental change and protect nature.
Gabon’s sovereign carbon credits present a tangible and ready tool to mobilize capital at scale towards mitigating climate change and improving the lives and livelihoods of billions across the continent and the globe. They also present a vital opportunity to shape a stronger global carbon market towards impact at scale. Gabon is happy to go “all in” but we can’t continue to go it alone.
Akim Mohamed Daouda is the Chief Executive Officer of Gabon’s Sovereign Wealth Fund