Carbon Market

The carbon market is a global market in which carbon credits can be bought and sold in line with specific standards and guidelines. The goal of the carbon market is to reduce greenhouse gas emissions. There are a number of ways to participate in the carbon market in Rwanda and contribute to reducing greenhouse gas emissions.

What is the Carbon Market?

The carbon market is a global market in which carbon credits can be bought and sold in line with specific standards and guidelines. The goal of the carbon market is to reduce greenhouse gas emissions. 

Under the rules of the carbon market, countries are allocated a number of permits to emit carbon dioxide up to a certain level. If a country does not use all of its permits, it can sell the unused permits to another nation that wants to emit more carbon dioxide than its permits allow.

The carbon market was introduced by the Kyoto Protocol to allow more flexibility in how countries reduce their greenhouse gas emissions. It offers developed countries the possibility to invest in cost-effective mitigation options, with the goal of increased global ambition in greenhouse gas emissions reduction. 

The carbon market includes market mechanisms established under Kyoto Protocol, including the Clean Development Mechanism, International Emissions Trading, and Joint Implementation. These are regulated by the United Nations Framework Convention on Climate Change and the Voluntary Carbon Market. The Voluntary Carbon Market allows individuals and companies to offset or reduce emissions through various financing mechanisms.

What does the Carbon Market look like in Rwanda?

Despite its low level of emissions, Rwanda has the potential for a range of carbon market projects due to its vision to become a developed, carbon-neutral, and climate-resilient economy by 2050. The carbon market will play an important role in reducing greenhouse gas emissions and contributing to the sustainable development of the country.

In Rwanda, the Clean Development Mechanism (CDM) and Voluntary Carbon Market (VCM) are the two operational mechanisms. Carbon credits in Rwanda are currently dominated by improved cookstove projects which account for 87% of total Certified Emission Reductions issued, while lighting and solar together represent 9% and 4% respectively.

By December 2020, more than 2,250,000 carbon credits had been issued to Rwanda from the Clean Development Mechanisms and the Voluntary Carbon Market. All CDM activities have issued 724,320 Certified Emission Reductions (CERs) while the VCM activities have issued 1,525,680 Voluntary Emission Reductions (VERs).

How can I get involved in the carbon market in Rwanda through the Clean Development Mechanism?

If you have a project that can quantifiably reduce greenhouse gas emissions, the next step is to develop a project design document. Under the Clean Development Mechanism, eligible projects must be in the following fields: 

  • end-use energy efficiency improvements
  • supply-side energy efficiency improvement
  • renewable energy
  • fuel switching
  • agriculture (reduction of CH4 and N2O emissions)
  • industrial processes (CO2 from cement, HFCs, PFCs, SF6)
  • sinks projects (only afforestation and reforestation)

The project must then go through the national approval process led by the Rwanda Environment Management Authority, which is the National Designated Authority (NDA) under the Clean Development Mechanism. REMA then confirms if the project will assist Rwanda to achieve sustainable development. 

After the national approval, a designated operational entity will then review the project design document and, after public comment, decide whether or not it should be validated. These operational entities will typically be private companies such as auditing and accounting firms, consulting companies, and law firms capable of conducting credible, independent assessments of emission reductions. If validated, the operational entity will forward it to the Executive Board of Clean Development Mechanism (CDM) for formal registration.

The carbon component of a mitigation project cannot acquire value in the international carbon market unless submitted to a verification process designed specifically to measure and audit the carbon component. Therefore, once the project is operational, participants prepare a monitoring report, including an estimate of Certified Emission Reductions (CERs) generated, and submit it for verification by an operational entity. 

Verification is the independent determination by an operational entity of the monitored reductions in emissions. The operational entity must ensure the Certified Emission Reductions have resulted according to the guidelines and conditions agreed upon in the initial validation of the project. Following a detailed review, the operational entity will produce a verification report and then certify the amount of Certified Emission Reductions generated by the project.

Apply For Project Approval

Carbon Market Mechanisms

Carbon Market Framework