Celebrated a few days ago, Earth Day 2022 had an interesting theme - ‘Invest In Our Planet.’ The ambitious statement read, this is the moment to change it all — the business climate, the political climate, and how we take action on climate. Now is the time for the unstoppable courage to preserve and protect our health, families, and livelihoods.

This notion was also highlighted in the recent, highly awaited IPCC 2022 Report: Mitigation of Climate Change. Every few years, The Intergovernmental Panel on Climate Change (IPCC), a scientific group assembled by the UN to monitor and assess all global science related to climate change, releases a report that focuses on different aspects of climate change. The latest update Shines a light on how we can limit further climate change, noting multiple actions that should be taken and enhanced as quickly as possible. These actions include noticing Methene levels, switching to renewables, using electric transportation, building walkable cities, adopting recycling, and offsetting our emissions.

In recent years, offsetting emissions has slowly but surely become a crucial part of the global climate challenge, with technology, investment, and endless innovation supporting the notion that limiting our footprint must go hand in hand with a balancing act. What goes in must come out.

Credit where it’s due

Carbon footprint offsetting consists of neutralizing the amount of CO2 emissions emitted by individuals, companies, organizations, products, or services. An excellent example of this would be an airline offering carbon offset flights, meaning that when a customer purchases a ticket, they can also contribute to a carbon offset program. This is called "carbon credit.” When a person or company wants to offset its CO2 emissions, they need to acquire the number of carbon credits corresponding to the volume of its greenhouse gas emissions. The credits are linked to offsetting projects varying from forestry to renewable energy.

The price of carbon credits has been highly volatile in the past few years, currently ranging from <$1 per ton to >$50 per ton. The price depends on the project type, the carbon standard, the offsetting location, the co-benefits associated with the project, and the vintage year. Circling back to the flight example, an economy-class flight from London to New York emits an estimated 0.67 tonnes of CO2 per passenger, according to the UN’s civil aviation body, the International Civil Aviation Organization (ICAO). An average plane conducting such a flight would be carrying 400 passengers. With an average of 3$ per ton in carbon credit consumer prices for 2022, an airline would have to spend approximately 1791$ to offset a flight. Not a hefty price tag, right?

So why aren’t all companies around the world doing it? As awareness of the issue increases among consumers and investors alike, I can only think of one remaining reason - project availability. The carbon credit value chain is simply not approachable enough, and all sides of the equation must make themselves more aware in order to make this industry bigger.

Africa can become a green growth giant

Rwanda’s Ministry of Infrastructure has been working with the private sector to scale up renewable and sustainable solutions in the past few years, slowly taking over a hefty portion of traditional industries, including energy and transportation. One example is electric mobility, with the country putting in vast resources to amp up local stakeholders of green solutions, seeking to eventually generate carbon offsets from the greenhouse gas reductions that electric vehicles will generate compared to combustion engine motorbikes.

Green growth has been a cornerstone of Rwanda’s national development strategies since 2011 and is incorporated in all growth strategies, with carbon credits being at the forefront of the ongoing revolution. In general, government engagement in carbon credit markets tends to increase the value of credits generated in the country, eventually enhancing local green investments. According to a recent policy paper released by IGC, South Pole, and the Shell Foundation, the funds brought through the sale of carbon credits can incentivize and pay for carbon reduction in Rwanda. This can count toward the conditional measures listed in the Nationally Determined Contribution (NDCs) listed in the Paris Agreement and complement existing planned efforts. In this way, carbon markets can complement Rwanda’s green growth strategy.

Renewable energy, green infrastructure, and electric mobility are not only here to provide sustainable solutions. Utilized correctly, they can be growth drivers and investment incentivizes. With some added supportive regulations and policies, Rwanda can quickly become the go-to location for big corporations from around the world looking to offset their carbon emissions. The country’s growing renewables sector, and more specifically, the increasing use of solar home systems to connect millions to power in their remote communities, is a fertile ground for carbon credits and should be better utilised by the government and the private sector alike.

With the tools already used, the rising private sector engagement, and the increasing international interest, the future seems bright and green.

The writer is an entrepreneur and investor,leading sustainability-driven companies in Africa and the Middle East