Uganda: Adopts Carbon Market Regulations 2024, Approves 70% Projects

• Uganda adopted new carbon trading regulations in 2024 after a nine-year development period.
• The Ministry of Water and Environment has received 84 project proposals, issuing letters of no objection for approximately 70% of them.
• Stakeholders at the East Africa Carbon Markets Forum emphasized the need for greater transparency, monitoring, and community benefit-sharing in carbon projects.
• The government is now prioritizing community benefit-sharing as a key criterion for approving carbon projects, a change from previous practices.
• Farmers are advised to understand the significant land and financial requirements (e.g., over 600 hectares and $73,000 for agroforestry) for viable carbon projects.

A key shift in the government's approach, as noted by Natifu, is the current emphasis on scrutinizing how communities will benefit from carbon projects before granting approval—a consideration that was not consistently applied in the past.

Uganda has officially adopted new carbon trading regulations in 2024, culminating a nine-year process to establish a formal framework for its burgeoning carbon market. This development comes as the Ministry of Water and Environment (MWE) reports a significant uptick in interest, having received 84 project proposals. The MWE has subsequently issued letters of no objection for approximately 70 percent of these submissions, signaling a robust pipeline of potential carbon initiatives within the country.

These new Uganda carbon market regulations 2024 were a central topic of discussion at the recent East Africa Carbon Markets Forum held in Kampala. The forum convened a diverse group of stakeholders, including government officials, investors, financiers, project developers, and technical experts, to deliberate on the expansion and governance of carbon markets across Uganda and the broader East African region. Bob Natifu, the Acting Commissioner for Climate Change and Carbon Trade at the MWE, highlighted the extensive period required to finalize these rules, underscoring the complexity involved in establishing a comprehensive regulatory environment.

Despite the positive momentum, stakeholders at the Kampala forum emphasized the critical need for enhanced monitoring, transparency, and community involvement to ensure the equitable distribution of benefits from the growing carbon industry. Anete Garoza, co-convenor of the forum and vice chairman of the Carbon Markets Association of Uganda, pointed out that carbon markets globally are still a nascent mechanism, frequently encountering issues related to integrity and effective monitoring. She specifically noted that some existing carbon projects have not adequately compensated communities engaged in activities like carbon sequestration and carbon dioxide removal.

To address these challenges, Garoza advocated for the implementation of digital systems and the cultivation of local expertise to bolster transparency and oversight within Uganda's carbon market. She also revealed that the MWE is actively developing a dedicated carbon registry, a crucial tool intended to improve market transparency. Furthermore, Garoza called for strengthened collaboration among government bodies, the private sector, and development partners to secure necessary funding for community engagement and broader climate action initiatives.

The MWE is also focusing on practical considerations for project developers and participants. Bob Natifu cautioned farmers against hastily entering carbon projects based solely on potential earnings from tree planting, stressing the importance of understanding the significant financial and technical prerequisites. Ministry assessments indicate that an agroforestry carbon project, for instance, typically requires more than 600 hectares of land and an investment exceeding $73,000 (equivalent to approximately Shs270 million) to achieve commercial viability.

To overcome these scale requirements, Natifu suggested that smallholder farmers could aggregate their land through 'programmes of activities,' enabling multiple farmers to participate collectively in a single project and meet the necessary scale for economic feasibility. A key shift in the government's approach, as noted by Natifu, is the current emphasis on scrutinizing how communities will benefit from carbon projects before granting approval—a consideration that was not consistently applied in the past. Kenneth Muhangi, chairperson of the Carbon Markets Association of Uganda and co-convenor of the forum, further stressed the importance of simplifying Uganda carbon trading rules to make them more accessible and understandable for ordinary Ugandans, thereby fostering broader participation in the carbon market.

Lawyers advising on carbon projects in Uganda must familiarize themselves with the recently adopted 2024 regulations and the increased scrutiny on project integrity, transparency, and community benefit-sharing. Compliance officers should review existing or proposed projects to ensure adherence to these tightened rules and prepare for potential changes in approval processes and monitoring requirements.

Source: Original reporting via The East African