Carbon Markets

Reducing emissions to generate community income

Participation in carbon markets, through the Kyoto Protocol’s Clean Development Mechanism (CDM) and voluntary carbon markets, is an opportunity to gain additional benefits from projects – such as reforestation and energy efficient initiatives – that reduce greenhouse gas emissions. Benefits include:

  • additional income to communities from the sale of carbon credits;
  • additional rigour to projects through auditing and verification required for compliance with carbon standards;
  • capacity building in communities through local leadership and training that is a necessary aspect of participating in carbon markets. For example, local community leaders at Humbo, Ethiopia have formed seven community cooperatives to provide local management for training and operations on the 2,728 hectare Humbo Community Reforestation Program.

The CDM market is currently valued at approximately US$2 billion. Based on market trends, both the CDM market and voluntary carbon markets are expected to grow. We have developed skills and external relationships with the World Bank and other compliance and trading parties to train and assist any World Vision office and their community stakeholders to participate and benefit in this market.

What is carbon trading?

Carbon trading is a market mechanism allowing those most efficient at reducing emissions to do so and trade their “carbon credits” with those who cannot reduce emissions as cost effectively. The Kyoto Protocol, which came into force in February 2005, requires industrialised countries to reduce greenhouse gas emissions by 5.2 percent compared with 1990 levels between the years 2008-2012. This has created an active market for carbon credits, worth approximately US$120 billion in 2007. As part of the Kyoto Protocol developed countries can undertake projects in developing countries through a program called the Clean Development Mechanism (CDM). This is designed to foster economic growth in developing countries (which are also most vulnerable to the impacts of climate change), but following a lower than “business as usual” carbon emissions pathway. Projects facilitating renewable energy production, energy efficiency and reforestation can earn credits under the CDM.

Ethiopia: Africa’s first large-scale CDM forestry project, providing socio-economic development from carbon sequestration in the compliance market

We have implemented the Humbo community-based natural regeneration project, Africa’s first large-scale CDM reforestation project, in partnership with the World Bank. This project has restored 2,728 hectares of degraded native forests and brought social, economic and ecological benefits to participating communities. Within just two years of implementation, communities were collecting wild fruits, firewood and fodder. They reported that wildlife had returned and erosion and flooding had declined. Participating communities are now receiving income from carbon trading through this project. (read more)

Ethiopia: A community-led carbon project in the voluntary market, with social benefits

World Vision Australia has partnered with World Vision Ethiopia to restore and protect the high montane forest on the slopes of Mt Damota, in this highlands of southern Ethiopia. The project involves local Soddo communities in environmental training and education programs, site rehabilitation, forest establishment, job creation initiatives and collaboration with the zonal government. Through a combination of tree planting and natural regeneration to reestablish the natural ecosystem, the project intends to sell carbon credits in order to guarantee its long-term sustainability. (read more)

Ethiopia: Efficient stoves save carbon, reduce the workload of women, and improve air quality

In Ethiopia, wood is the most important energy source for household cooking. Wood consumption is particularly high in rural areas, where the use of inefficient open fires wastes wood and exacerbates health problems associated with indoor air pollution. Health problems are particularly prevalent among young children, who tend to spend a large proportion of their time close to their mothers while they are cooking. The use of improved fuel-efficient stoves can reduce the production of smoke and harmful gasses within households, reduce the use of biomass and create significant household safety and labour-saving benefits. (read more)

Peru: Regenerating degraded landscapes through reforestation

The agroforestry and reforestation project in Canas Province is planting around 1.5 million trees across 1,000 hectares of degraded lands to mitigate environmental degradation and to sequester carbon into the landscape. Additional areas will focus on agroforestry by planting fruit trees to increase the income and food security of the communities. The project also includes community capacity building which will introduce sustainable farming practices, and improve community awareness of natural resource conservation and land governance issues related to the project. The project is also seeking to access carbon finance through the sale of carbon credits generated under the new Gold Standard A/Reforestation certification program in order to ensure long-term sustainability of the project. (read more)