In Chikwawa District, farmer Maxwell Msona has spent the past eight years protecting three hectares of indigenous and exotic trees.
Motivated by environmental principles, Msona was later encouraged by forest officials in 2016 to try carbon markets, which promised financial incentives for forest conservation. However, nine years on, he has yet to see any tangible rewards.
“I didn’t fully understand the concept. I was protecting the forest because it was the right thing to do, not because I knew I could benefit from carbon credits,” says Msona, who also participates in protecting a community woodlot comprising over 5 500 trees.
His experience highlights the challenges faced by many smallholder farmers and communities in Least Developed Countries (LDCs) who struggle to access funds and profit from the global carbon markets for their efforts to reduce greenhouse emissions that fuel climate change.
Last year, negotiators at CoP29, the United Nations climate change conference held in Azerbaijan, resolved to addresses some of the LCDs concerns about carbon marketing.
The agreement creates standards for carbon credits under Article 6.4 of the Paris Agreement, which provides trusted and transparent carbon markets for countries as they collaborate to reach their climate goals
“This will be a game-changing tool to direct resources to the developing world. Following years of stalemate, the breakthroughs in Baku have now begun. But there is much more to deliver,” said Mukhtar Babayev, COP29 president after the agreement was made.
He added that current policies put the world on track for catastrophic warming of three degrees Celsius, according to the latest UN Environment Programme’s Emissions Gap Report.
“We are on a road to ruin,” he told delegates. “Whether you see them or not, people are suffering in the shadows. They are dying in the dark. And they need more than compassion, more than prayers and paperwork. They are crying out for leadership and action. COP29 is the unmissable moment that can chart a new path forward for everyone.”
Despite international efforts to reduce greenhouse gas emissions through market-based approaches like carbon trading, LDCs have found it difficult to negotiate fair carbon prices and benefit from trading systems.
The developing countries that produce the least global emissions bear the brunt of climate change fuelled by greenhouse gasses from wealthy nations.
Yet they remain on the periphery of global carbon marketing, which aim to create economic incentives for countries and companies to reduce their emissions.
This includes mechanisms like carbon credits, where emissions reductions in one location are “traded” or sold to offset emissions elsewhere. However, these mechanisms are often complex and difficult to navigate, especially for LDCs with limited capacity to meet the stringent requirements for participation.
Evance Njewa, deputy director for climate Change in the Ministry of Natural Resources and Climate Change, is the chairperson of LDCs in the annual global negotiations.
He said in an interview that the CoP29 resolution is a milestone in the full operationalisation of Article 6 of the Paris agreement as lack of clear rules and regulatory certainty about carbon markets has left LDCs unable to fully participate in carbon trading.
According to Njerwa, since the Arzebejan agreement sets strong standards for a centralised carbon market under the UN, making it easy for countries like Malawi to benefit from climate action.
Despite LDCs’ contribution to tackling environmental degradation and climate change , they struggle to negotiate favorable financial returns on the carbon market. As a result, many countries missing out on the potential funds that could be reinvested into sustainable climate adaptation and mitigation projects.
One of the key challenges LDCs face in carbon trading markets is the lack of transparency and fair pricing. The carbon prices offered through these mechanisms often don’t reflect the true environmental and social value of the carbon being sequestered, particularly in small-scale initiatives like Msona’s forest protection. Additionally, the complexity of carbon credit certification processes, along with administrative costs, creates barriers for smallholders and rural communities to fully participate and benefit.
The LDCs are concerned that they often receive only a fraction of the financial benefits from carbon trading despite their efforts to reduce carbon emissions. The market has been slow to establish clear, workable rules for participation.
Njerwa said the Azerbaijan agreement makes it easier for LDCs to benefit from carbon trading.
“We have been advocating for a deal that will contribute to the reduction of carbon emissions and contribute to sustainable development and poverty reduction, and the Arzebejian agreement is in line with these aspirations,” he said.
Last September, LDCs called for the establishment of a fair and transparent carbon market framework that reflects their needs and the contributions they make to global emissions reductions.
A transparent carbon trading system could ensure that carbon credits are properly accounted for and that LDCs receive their fair share of the economic benefits.
“Without clear guidelines and systems for accountability, LDCs risk being sidelined in the global carbon markets,” said Njewa.
According to the CoP29 presidency, finalising the full operationalisation of Article 6 negotiations could reduce the cost of implementing national climate plans by $250 billion per year by enabling cooperation across borders.
