Opinion
UAE buying Africa land for carbon credits smacks of “front running” a new market.
Front-running is when a broker or an investor joins a trade because they have foreknowledge of a deal which will impact the asset’s price. (Cleartax definition tweaked)
Front-running is also known as forward-trading or tailgating and, similar to insider trading, can be against market rules and laws.
Plus UAE might be accused of being conflicted as it hosts COP28.
The key in these deals is to ensure transparency for Africa’s taxpayers, who deserve a competitive process so they are getting a fair price.
That seems lacking here. See this paragraph:
“According to the memorandum of understanding, Blue Carbon would also receive 70% of revenues from the sale of carbon credits, while the Liberian government would receive only 30%. “Who owns the forest?” asked Andrew Zeleman, secretary of the National Union of Liberia’s Community Forestry Development Committee, “There shouldn’t be a middleman taking the lion’s share.””
Countries should consider selling carbon options instead of straight contracts to better ensure they get a market price that includes competitive tension.
Plus they might achieve an immediate premium, depending on the structure.
Snip:
The United Arab Emirates’ takeover of African forests
As the oil-rich country hosts COP28, an Emirati company has signed agreements in Liberia, Tanzania, Zambia and Zimbabwe to convert part of their land into carbon credits – acts of ‘greenwashing’ and ‘colonialism,’ some NGOs say.
By Clément BonnerotPublished on December 10, 2023, at 5:09 am (Paris), updated on December 10, 2023, at 5:09 am
With a handshake and a discreet smile, Sheikh Ahmed Dalmook al-Maktoum, accompanied by the Liberian finance minister, gave nothing away in front ophotographers on March 25. The young member of the ruling family of Dubai, one of the seven emirates in the United Arab Emirates (UAE), had just signed unprecedented memorandum of understanding with Liberia. Under the terms of the agreement, the Liberian government will grant the company he heads, Blue Carbon LLC, exclusive rights to one million hectares of its forests – 10% of the West African country’s total forest area – for 30 years.
Read more Article réservé à nos abonnés Liberia set to concede 10% of its territory to Emirati company for carbon credit production
“This bilateral association marks another milestone for Blue Carbon,” the prince told the Emirati press. The aim is ambitious: to “help transition to a low-carbon economical system” by enabling governments around the world reach “their Net Zero goals in compliance with the transferability of credits under Article 6 of the Paris Agreement.” The “credits” referred to by the sheikh are carbon credits, which companies can buy to avoid having to reduce their emissions.
Click link top link for story. Worth reading the whole thing.
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