There is a growing potential for cleantech startups with the emergence of carbon credit financing as a significant opportunity. A senior partner at E3 Capital, a pan-African venture firm, emphasized the importance of clear regulations from African policymakers to drive the adoption of carbon credit financing during a recent event in Lagos.
Experts highlighted that the lack of regulatory frameworks and data is hindering the utilization of carbon credit funding across the continent. Despite some growth in Africa’s carbon credit financing sector, there are still gaps that need to be addressed.
According to Michael Olaitan, co-founder of a renewable energy startup, Powernow, carbon credits can help businesses offset capital expenditures in the long term, offering a chance for incremental benefits.
The global carbon credit market has reached a value of approximately $909 billion, with Africa projected to reach $82 billion in this market. Initiatives like the Africa Carbon Markets Initiative (ACMI) aim to generate significant carbon credits annually, potentially unlocking substantial revenue and job opportunities by 2030.
While acknowledging the potential benefits, Chidalu Onyenso, CEO of Earthbond, advised startups not to solely rely on carbon credit initiatives for funding, emphasizing the importance of diversified financing approaches to mitigate risks.
As Africa seeks to participate in the carbon credit financing market, stakeholders believe that establishing a regulatory framework and providing data to investors are crucial steps for the continent’s advancement in this sector.