Rwanda looks to carbon markets to drive sustainable development

By The Inspirer.

Rwanda is seeking to attract investment through carbon markets to support climate action, boost economic growth and protect biodiversity, with the government stressing the need for strong oversight and cooperation across sectors.

Dr Bernadette Arakwiye, Minister of Environment and chair of the governing board of the National Carbon Market Authority, said this on Friday, October 9, during a meeting in Kigali involving government officials, development partners, board members and private sector representatives.

The meeting focused on strengthening coordination to ensure Rwanda benefits from opportunities in the growing carbon market.

Arakwiye said the initiative could not succeed through the efforts of environmental institutions alone, given its links to several parts of the economy.

“Carbon markets are linked to energy, agriculture, forestry, transport, industry, finance, investment and international cooperation. No single institution can manage this programme alone,” she said.

She added that the governing board was responsible for setting strategic direction, coordinating stakeholders and ensuring accountability, rather than taking over technical responsibilities or managing individual projects.

How carbon markets work

Carbon markets allow companies and countries to buy and sell carbon credits, which represent verified reductions or removals of greenhouse gas emissions. One credit generally represents one tonne of carbon dioxide, or an equivalent amount of another greenhouse gas.

Projects that reduce emissions can generate credits, which may then be sold to organisations seeking to support climate action or meet applicable climate commitments.

Such projects include distributing energy-efficient cookstoves, generating energy from waste, expanding renewable energy and protecting forests. To qualify, they must demonstrate measurable emissions reductions and meet recognised verification standards.

Reliable monitoring is essential to ensure credits reflect genuine climate benefits and that the same emissions reductions are not counted more than once.

Supporting Rwanda’s climate targets

Rwanda established the National Carbon Market Authority in 2023 to facilitate participation in international carbon markets and help mobilise funding for climate-related projects.

The authority develops the rules and procedures for approving projects, verifying credits and preventing double counting.

Rwanda aims to become a low-carbon, climate-resilient economy by 2050. It has also committed to reducing greenhouse gas emissions by 38 per cent by 2030 compared with projected emissions under a business-as-usual scenario.

Carbon markets could help finance projects in clean energy, sustainable agriculture, modern technologies and natural resource conservation, supporting the country’s efforts to meet these targets.

Multiple sectors have a role to play

The government says the success of carbon markets will depend on effective collaboration across the economy.

In the energy sector, projects could promote renewable power and reduce reliance on fossil fuels. Agriculture initiatives could improve farming practices and land management, while forestry projects could focus on planting trees, restoring degraded forests and protecting existing woodland.

Industry and transport could also benefit from investment in technologies that reduce emissions.

Financial institutions and private investors are expected to help provide the capital needed to develop and implement these projects.

Clear responsibilities, coordination and effective monitoring will be crucial to ensuring that projects deliver the expected results.

International partnerships offer further opportunities

Article 6 of the Paris Agreement provides a framework for countries to cooperate on reducing emissions, including through the transfer of verified emissions-reduction outcomes towards climate targets, subject to agreed rules.

Rwanda and Singapore signed an agreement on carbon market cooperation on May 6, 2025. The partnership could facilitate investment in eligible projects and the transfer of carbon credits under rules agreed by both countries.

Such arrangements could help Rwanda attract investors and mobilise additional financing for climate action.

Credibility will be key to success

While carbon markets offer opportunities to attract investment and generate revenue, their value depends on delivering real, measurable environmental benefits.

Projects must demonstrate genuine emissions reductions, and credits must be properly verified. Initiatives must also safeguard the environment and the interests of local communities.

Strong oversight, transparent reporting and accountability are therefore essential to prevent fraud, double counting and the issuance of credits that do not represent genuine emissions reductions.

For Rwanda, the priority is to ensure carbon markets do more than facilitate the trading of credits: they must also help finance climate action and contribute to long-term economic and environmental development.