New regulation green lights carbon trading in Ethiopia

Source: The Reporter

A new regulation approved by the Council of Ministers enables the formalizations and legalizes the practice of carbon trading in Ethiopia.

The ‘Forest Development, Protection, and Utilization’ regulation organizes private forest developers into categories based on size and sets service fees that must be paid to the government from the sale of carbon.

Small-scale developers, which are classified as those using a land area of less than five hectares, will be obliged to pay 5 percent and 15 percent service fee to the federal government and regional government, respectively. Large-scale developers, those utilizing more than five hectares, will be charged the same percentage.

“The federal government, regional government, and communities involved in participatory forest management shall share five percent, 15 percent, and 80 percent of the revenues, respectively, from the sale of carbon and other sources of income” from community and participatory forest development projects, according to the legislation.

The regulation defines criteria for the registration, ownership rights, and payment regarding carbon stock and related issues. It stipulates that forest developers are eligible to receive payment from beneficiaries for ‘forest ecosystem services,’ which can include the provision of drinking and irrigation water, the supply of electric energy, and flood protection.

The lengthy regulation also introduces ratio schemes for rates to be paid on carbon trading revenues and guidelines for sharing the revenues between stakeholders at the federal, regional, developer and local community levels.

An upcoming directive will determine how developers can acquire a certificate for developing, tending to, utilizing and sustainably managing a forest.

Large-scale developers will be required to submit a feasibility study and environmental and social impact assessment document prior to developing and utilizing a forest. They will also have to submit evidence from the appropriate authority prior to harvesting threatened indigenous trees grown in a forest developed on their property.

The regulation also includes several provisions regarding incentive packages the government will allocate to forest developers. These include lease-free access to land, use of carbon sequestration to generate forex, access to priorities if the developer engages in redeveloping degraded land, tax holidays, access to financing and other forms of technical support.

Developers will be required to create job opportunities, utilize improved forestry technologies, substitute imports, and generate foreign currency, among other responsibilities.

All developers will be obliged to prioritize indigenous forest varieties.

THE AUTHOR: Selamawit Mengesha

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