Carbon credits have the ability to propel Africa’s move towards clean transport, creating new avenues for sustainability and innovation. They provide a unique opportunity to generate revenue while supporting the transition to greener, more sustainable mobility solutions. This approach also has the potential to enhance collaboration between countries and industries, helping to meet global climate goals while driving local development.
What are carbon credits?
Carbon credits are units that represent one ton of Green House Gases reduced or eliminated from the atmosphere and they are generated through the operation and execution of carbon projects. They can be used in the voluntary market as well as the regulated market. The voluntary market is where carbon credits are commonly traded to public or private companies seeking to offset the carbon footprint created by their activities. On the other hand, the regulated market is where they are often used to completely or partially offset the obligations that some companies have in various countries under mechanisms like carbon taxes and Emissions Trading Systems (ETS). Carbon credits which are generated by various projects, can be bought by private or public organizations to compensate for their emissions.
ITMOs under Article 6.2 of the Paris Agreement
The Paris Agreement includes a new system of carbon credits called ITMOs. Internationally Transferred Mitigation Outcomes (ITMOs) are a system of carbon credits, (that is, represents a ton of Green House Gases (GHG) reduced or eliminated from the atmosphere) that allow for the transfer of emission reductions between countries but must be verified by an external entity.
In simple terms, if one country cuts its emissions down to a level beyond what is required based on its Paris Agreement target, it can sell the excess reductions to another country that has failed to meet its emission reduction target and requires assistance in achieving said targets.
This arrangement also enables the country that has exceeded its domestic emission targets (that is, the selling country) to profit from the sale of its ITMOs to the buying country (that is, the country that has failed to meet its domestic emission targets). It allows some nations to meet their emission reduction targets while others can gain economic advantages by reducing emissions past their national goals.
ITMOs are part of a system under the Paris Agreement (Article 6.2) that facilitates the trading of verified emission reductions between countries and hence provides a framework for countries to transfer their GHG alleviation performance to other countries so that they can meet their commitments to reduce emissions. ITMOs are globally utilized and represent international cooperation in striving toward global climate objectives.
Even though ITMOs are mainly traded and used by countries, enterprises can also take part as operators, project developers, buyers or even sellers provided it is conducted under certain intergovernmental framework agreements.
Carbon credits for e-mobility
Zeroca, a company specializing in the development, aggregation, and transaction of high-quality carbon credit programs, focuses specifically on the e-mobility sector. Offering an ‘as-a-service’ model, Zeroca enables e-mobility asset owners and operators to participate in carbon credit programs without any risks or costs.
Zeroca’s approach is centered around acting as a carbon credit program aggregator, with a particular focus on the emerging premium compliance markets, especially through Paris Article 6 ITMO transactions based on existing and upcoming bilateral agreements. The company provides comprehensive support throughout the entire process, from carbon credit development to registration, validation, and issuance, ensuring a smooth and efficient experience at every step for clients looking to participate in high-quality carbon credit programs.
The E-mobility assets the company focuses on are; Buses, Trucks, Motorcycles, Public Charging, Trains, Vessels, Vehicles, Cargo Equipment and Ground Airport.
Zeroca projects in Africa
Zeroca already has a number of completed projects around the world and in Africa, countries like Kenya and Ghana are in the Initial approval stage, Uganda and Mozambique are under consideration/preparation, and finally, Nigeria and South Africa are under preparation.
Who can take part?
Zeroca works with e-mobility asset managers and owners such as:
- Operators of electric vehicle fleets such as buses, trucks, taxis, delivery vehicles, mining equipment, industrial logistics, port & airport people, goods movers, etc.
- Charge point owners and operators (CPOs).
- Electric vehicle manufacturers (OEMs), importers, and dealerships.
- Leasing companies or owners of vehicle assets (e.g. buses, trucks, etc.) lent to operators.
Payment
- For every 1,000 electric motorcycles, you can get up to US$50,000 per year.
- For each standard urban electric bus, you can get up to US$3,000 per year, and for a fleet of 100 buses, you could receive 3 million USD of extra revenue without cost.
- Per electric delivery truck, you can get up to US$2,000 per yea,r and for a fleet of 200 trucks of different sizes you could receive US$4 million.
- For public charging infrastructure, per kWh of electricity sold at a charger, illustrative revenue potential is in the range of US$1.5-2.0 cents from carbon credits.
- For other e-mobility assets, the amount of carbon credits and payment depends on the type/size of equipment and usage rates.
It is important to note that smaller companies with smaller fleets can combine efforts to earn carbon credits. By collaborating, these companies can collectively meet the scale required to generate carbon credits, which they may not be able to achieve on their own. This approach allows them to share the financial benefits of carbon credits, reduce costs, and maximize the impact of their emissions reductions. By pooling their resources, smaller companies can play a meaningful role in driving sustainability and contribute to a greener future, all while benefiting from the financial incentives offered by carbon credit programs.
Carbon credits offer significant benefits to the e-mobility sector in Africa, making investments more profitable by providing long-term financial returns. While carbon credits may not fully cover the additional costs associated with e-mobility projects, they provide a results-based funding model, rewarding emissions reductions over 5-10 years. Although third-party financing is an option, it can be costly. Nevertheless, the potential for sustained payments and increased profitability makes carbon credits a valuable tool in accelerating Africa’s transition to sustainable transport and driving innovation in the region.
See also: OP-ED: So, What are Uganda’s National E-Mobility Priorities?
