27 March 2024

Carbon Credits - New Developments And Trends In Ghana

Carbon Credits represent a tradable permit for an entity's right to emit one metric ton of carbon dioxide or other greenhouse gases into the atmosphere
Ghana Environment
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Carbon Credits represent a tradable permit for an entity's right to emit one metric ton of carbon dioxide or other greenhouse gases into the atmosphere.1 Essentially, a buyer compensates for their carbon emissions by supporting projects that reduce or offset an equivalent amount of carbon elsewhere.2 The concept was developed under Article 6 of the Paris Agreement, with the aim of reaching net zero3 climate targets.4

Carbon credits promote environmental responsibility and contribute to overall efforts to mitigate climate change by ensuring that corporation are aware of their carbon footprints, and are making significant efforts to reduce same.5 For example, where a company granted a credit of 1000 tons of carbon dioxide equivalent (CO2e) annually, successfully emits only 500 tons of CO2e within the given year, it will have an excess of 500 tons in carbon credits, which it can either sell or transfer to another company on the carbon market.6

In the carbon market, eligible companies receive carbon credits in the form of carbon offset certificates to mitigate their carbon emissions.7

Carbon Markets: Compliance vrs Voluntary

Carbon markets offer a way for companies and individuals to support emissions reduction efforts and achieve environmental goals. The carbon market operates through two main avenues: Compliance Markets and Voluntary Markets.

Compliance Markets, also known as mandatory or regulatory markets, function under government-imposed rules put in place to control emissions.8 Participants engage in buying and selling carbon credits or offsets in adherence with these regulations, often referred to as "cap-and-trade" systems.9 Governments or international bodies that oversee these markets, set limits on greenhouse gas emissions and require entities to comply.10 Under this system, projects must undergo a validation and registration processes to offer credits, ensuring real and measurable reductions.11 On the other hand, Voluntary Markets, operate independently of compliance requirements, allowing trading of carbon offsets outside of regulatory mandates. These markets support corporate or individual environmental commitments but cannot be used to meet specific compliance targets like Nationally Determined Contributions (NDCs) under the Paris Agreement.12 Offsets traded in voluntary markets must still be verified by independent third parties and adhere to specific standards.13

Both Compliance and Voluntary Markets play an important role in the fight against climate change. Compliance Markets offer a way for governments to regulate emissions and ensure that entities are meeting their obligations. Meanwhile, Voluntary Markets allow companies and individuals to take action and support emissions reduction efforts on their own terms.

Importance of Carbon Credits

Carbon markets offer a promising avenue for investment opportunities, technology transfer, and job creation in Ghana. The primary objective of carbon trading is to reduce global emissions, propelling the transition towards a low-carbon economy. This process helps entities lower their carbon emissions through the cap-and-trade compliance market or the voluntary market.

In addition, carbon trading has the potential to enable technology transfer from developed nations to developing ones, such as Ghana, which currently lacks the necessary technological expertise for its development. Ghana's participation in low-carbon technology markets, as buyers, sellers, or innovators, has been limited, highlighting the need for such transfers to bolster its progress in this sector.

Carbon markets also offer an opportunity for private companies to invest in and advance renewable energy projects, contributing to clean energy production and the reduction of carbon emissions. Moreover, they can invest in clean energy technologies applicable across various industries like manufacturing, agriculture, transportation, and the power sector. Businesses focused on waste management and recycling can leverage carbon trading by undertaking projects aimed at recycling products with minimal carbon emissions. These initiatives can qualify for carbon credits, allowing companies to sell their excess credits.

Carbon trading in Ghana has the potential to attract investments in renewable energy, energy efficiency, and other low-carbon projects, benefiting the economy through local and cross-border transactions. Investments directly contribute to job creation, and carbon trading offers a chance to generate new employment opportunities, thus lowering the unemployment rate. Financial institutions also play a crucial role by providing financing options such as Green Bonds for carbon reduction projects, facilitating the growth of sustainable initiatives in the region.

Overview of the Ghanaian Carbon Market Landscape

The carbon market in Ghana has experienced significant growth, with notable achievements in recent years. The establishment of a Carbon Market Office (CMO) under the Climate Change Unit of the Environmental Protection Agency (EPA) has paved the way for voluntary under Article 6 of the Paris Agreement in Ghana. In 2023, the CMO received thirty-five (35) Article 6 project requests in its pipeline, of which nine (9) were fully on boarded onto the Ghana Carbon Registry (GCR) and assigned mitigation activity participation identification numbers (MID).14

In addition, Ghana's framework on the international carbon market and non-market approaches was published in January 2023,15 aligning with the country's broader climate finance efforts and contributing to greenhouse gas mitigation policies.16

G2G bilateral cooperation has also played a significant role in Ghana's Carbon Market growth. Ghana signed an agreement with Switzerland in November 2020 to implement Article 6 of the Paris Agreement, allowing up to twelve (12) projects developed under this arrangement.17

Ghana has also completed negotiations with Sweden for a bilateral carbon market agreement pending ratification by Parliament.

Furthermore, G2P collaborations have led to partnerships aimed at advancing Ghana's mitigation goals under Article 6 of the Paris Agreement. For example, the Swedish Energy Agency and Stella Futura have partnered to support Ghana's carbon market efforts.

Overall, Ghana's carbon market landscape is thriving, with a range of public and private entities working towards the country's climate goals.

The Global Carbon Council (GCC) and the West African Alliance on Carbon Markets and Climate Finance (WAA) have signed a Memorandum of Understanding (MoU) to promote carbon market instruments in West Africa. As a member of WAA, Ghana is set to benefit from this MOU. Under the agreement, GCC will utilize its expertise to issue high-quality carbon credits using GCC's expertise, and the provision capacity-building workshops and training programs.

This collaboration marks a significant step toward advancing the implementation of Article 6 of the Paris Agreement.

Requirements for Participating in Ghana's Carbon Market

Ghana's framework on the International Carbon Market And Non-Market Approaches outlines the authorization process and timelines for Internationally Transferred Mitigation Outcomes (ITMOs).18

The regulatory requirements under the framework include;19

  1. An application to the EPA for authorization or permit
  2. Issuance of Letter of Authorization (LOA) for eligible mitigation activities.
  3. Registration of permit holders on the carbon registry
  4. Updating all activities regarding authorized carbon credits on the registry.

Voluntary Carbon Market (VCM) are also permitted and provided for by the framework in Ghana. VCMs allow carbon emitters to offset their emissions by purchasing carbon credits emitted by projects targeted at removing or reducing greenhouse gas from the atmosphere.20 VCM projects are exempt from certain requirements and can obtain formal recognition through the framework procedures.21

The framework also provides requirements for the development of mitigation activity as follows;22

  1. Mitigation Activity Developers must be legally incorporated entities in Ghana.
  2. Developers should use approved methodologies or propose new approaches outlined in the framework.
  3. Those engaging in voluntary carbon markets must seek formal recognition for the carbon offset credits through the steps outline in the framework.
  4. Eligible mitigation activities must be validated by an independent entity
  5. Upon authorization, developers can submit documentation to the Carbon Market Office (CMO) for registration on the Ghana Carbon Registry (GCR).
  6. ITMOs from authorized activities must undergo verification by an independent entity, and issuance occurs after a positive examination of monitoring reports. For VCM projects, the CMO must be informed of any issued carbon offset credits.
  7. Mitigation Outcomes (MOs) must be created on the GCR.
  8. MOs transfer shall only occur on the GCR.
  9. Activity developers must have digital accounts and receive mitigation activity identification numbers in the GCR for tracking.


Carbon credits and carbon offsets play crucial roles in the fight against climate change. They encourage emissions reductions and promote environmental responsibility. In Ghana, the Carbon Credit Framework is making strides towards mitigating the effects of climate change. Collaboration between the government businesses, and individuals is imperative to drive meaningful action and create a sustainable and resilient future for generations to come.


1. South Pole, "Carbon Credits Explained" assessed 19/03/2024.

2. Article 6.4 Mechanism assessed 19/03/2024.

3. Net zero refers to the balance between the amount of greenhouse gas (GHG) that's produced and the amount that's removed from the atmosphere.

4. ibid.

5. ibid.

6. ibid.

7. ibid.

8. supra @ 2, page 15.

9. ibid.

10. ibid.

11. ibid.

12. ibid, page 16.

13. ibid.

14. Ghana's Report on the Implementation of Article 6 of the Paris Agreement 2023, page 4.

15. ibid.

16. ibid.

17. ibid, page 9.

18. ibid, page 32.

19. ibid

20. EEX, "Voluntary Carbon Markets" assessed 05/02/2024

21. ibid.

22. ibid.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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