The 2 million carbon credits that Jacob Zuma handed over to the Africa Voluntary Carbon Credits Market on behalf of Belarus came from Russia. A Joint Implementation forestry programme in Siberia
Joint Implementation: “The worst mechanism that ever existed”
Last week, I wrote about the Africa Voluntary Carbon Credits Market Forum that took place in Zimbabwe. The presence of Jacob Zuma, South Africa’s former president, at the Forum was one of the unusual aspects of the meeting.
Zuma is currently facing criminal charges in South Africa for corruption relating to a 1999 arms deal. He faces two counts of corruption, one count each of racketeering and money laundering, and 12 counts of fraud.
During the Forum in Zimbabwe, Zuma gave a speech on behalf of the Belarus African Foreign Trade Association. He also handed over a cheque for 2 million carbon credits payable to AVCCM Victoria Falls Carbon Credits Exchange Platform.
The carbon credits were labelled on the cheque as ERUs - emission reduction units.
Carbon Pulse described the carbon credits “questionable”, and wrote that,
There were few details available about the 2 million credits, making it unclear from where they were sourced or whether they were actual ERUs issued under the Kyoto Protocol’s Joint Implementation (JI) scheme. If they were in fact JI credits, they are unlikely to have come from Belarus as the country has not received any to date, according to UN data.
Carbon Pulse also reported that Russia and Ukraine had sold more ERUs between 2008 and 2020 than any other countries, adding that these came from “projects suspected of having minimal environmental integrity”.
Carbon Pulse wrote that,
Considering Russia’s and Belarus’ close ties, observers said it would not be surprising if these 2 million bequeathed ERUs were of Russian origin, as these credits would be difficult to sell anywhere else due to their dubious quality as well as international sanctions against Russia because of its invasion of Ukraine.
The carbon credits are from a Siberian forestry programme
Yesterday, Bloomberg confirmed that the carbon credits did come from Russia - from a Siberian forestry programme. Bloomberg’s journalists, Ray Ndlovu, Antony Sguazzin, and Natasha White write that,
One of the most controversial corners of the carbon offset market just got dragged into some of the world’s most fraught geopolitical issues. . .
Both Russia and Belarus have close ties to Zimbabwe and all three are under some form of sanctions from the US, UK and European Union. Zuma had close ties to Russia during his nine-year rule.
Bloomberg spoke to Alexandre Prezanti, a partner at London-based law firm Global Diligence about whether the transaction could be subject to sanctions. Prezanti told Bloomberg that,
“It is something of an unknown quantity. But there is potential in there in generating millions in foreign currency from western investors through an unregulated back door.”
The Victoria Falls Securities Exchange will oversee the Africa Voluntary Carbon Credits Market. Justin Bgoni, CEO of the Victoria Falls Securities Exchange, told Bloomberg that the Exchange hasn’t got an agreement with its subsidiary over the listing of these carbon credits. In addition, he said, the Africa Voluntary Carbon Credits Market is primarily interested in carbon credits there were generated in Africa.
Vitaly Zholnerovich is Deputy Head of the Investor Support Department at the National Agency of Investment and Privatization in Belarus. He told Bloomberg that the Belarus African Foreign Trade Association represents countries in the former Soviet Union, including Russia.
Zholnerovich said that,
“Belarus supports all initiatives which foster trade between Belarus and African Nations. Listing these emission reduction units in the Republic of Zimbabwe is a BAFTA Initiative in normal commercial business terms.”
An official from the National Agency of Investment and Privatization told Bloomberg that the credits are worth US$27 each, but sellers would be willing to accept a quarter of that in Zimbabwe.
Joint Implementation: “The worst mechanism that ever existed”
Bloomberg reports that the ERUs were generated between 2008 and 2012 under the Kyoto Protocol’s Joint Implementation system. The Russian company that still owns the ERUs hired a Belarusian broker to sell them.
In 2015, the Stockholm Environment Institute published an evaluation of the environmental integrity of Joint Implementation. The report states that,
Our findings indicate that use of JI may have enabled global GHG emissions to be about 600 million tonnes of carbon dioxide equivalent (tCO₂e) higher than they would have been if countries had met their emissions targets domestically.
The Stockholm Environment Institute found that in a random sample of 60 projects, additionality claims “do not seem plausible for 73% of the ERUs issued and are questionable for another 12%”.
Lambert Schneider was one of the authors of the study. He now works at the Öko-Institut, an environmental research organisation in Germany. Schneider told Bloomberg that, “We always knew that a lot of things went wrong, but we were surprised by some issues and how shocking they were.”
Joint Implementation is “maybe the worst mechanism that ever existed in terms of integrity,” Schneider said.
Great reporting, thank you!
Russia trying to side-step sanctions? What a surprise. Great way for Russia to bring in foreign exchange, especially when selling something devoid of real value! All investors must boycott this scam.