Carbon markets have emerged as a vital economic tool in the global race to reduce greenhouse gas emissions and meet climate targets.
They promise a win-win situation, allowing industrialised nations to offset emissions by funding greener technologies and sustainable development in poor countries.
Yet, this promise remains largely unfulfilled for Malawi. Instead of reaping the benefits of climate capitalism, the country is trapped in a carbon trading system that operates more like a black hole—swallowing potential gains with little to show in return.
Malawi’s voluntary carbon market, particularly under the Clean Development Mechanism (CDM) and Article 6.2 of the Kyoto Protocol, lacks transparency and accountability.
As a result, the local actors implementing the interventions that reduce emissions get crumbs while foreign carbon project developers quietly walk away with the lion’s share.
Carbon offsets are arguably the country’s only commodity produced and sold abroad without the government knowing the volume exported or the revenue earned, says a source working with a project funded by USAid and UK Aid.
This secrecy would be unacceptable in any other economic sector, yet it persists in the carbon space.
The core problem lies in Article 6.2 of the Kyoto Protocol and its implementation through the Paris Agreement.
While the article outlines mechanisms for emissions trading, it remains vague on critical issues such as governance, transparency and fair benefit-sharing.
Several global studies—including those by Martínez-Serrano, Schneider, and La Hoz Theuer—highlight how these loopholes have allowed over-crediting, profit secrecy and fraud.
The result is a market skewed heavily in favour of powerful international actors, leaving poor countries like Malawi with little leverage or protection.
This regulatory weakness has real consequences.
In Malawi, watchdog groups like the Civil Society Network on Climate Change and international partners like USAid have sounded the alarm.
They say that developers do not disclose how many cookstoves or other technologies have been distributed, how many credits have been generated or what the credits were worth when sold abroad.
Worse still, there is no clear record of how much—if any—of the proceeds are reinvested into Malawi’s development.
Even former minister of Natural Resources and Climate Change Michael Usi attributed the problem to a lack of “proper systems and procedures” in carbon trading governance.
This is deeply troubling, especially given the potential of carbon finance to support Malawi’s development.
With the right policies in place, revenues from carbon trading could support clean energy expansion, reforestation efforts, climate resilience infrastructure and even health and education.
Instead, these funds are vanishing into a regulatory vacuum.
Globally, the carbon market is booming. In 2023 alone, the value of traded carbon dioxide permits reached nearly $950 billion, according to the London Stock Exchange Group.
Malawi’s slice of this pie could be significant if only the country could track it, tax it and invest it.
We urgently need bold reforms.
First, Malawi must establish a robust legal and regulatory framework to govern carbon markets.
This includes mandatory registration and reporting for all project developers, transparency around credits generated and sold and a clear mechanism for benefit-sharing with communities.
Second, the government must create a central carbon market authority or strengthen the existing Designated National Authority to coordinate and oversee all carbon-related activities. This body must be independent, well-resourced and empowered to enforce compliance.
Third, Malawi must insist on fair contracts with carbon developers that prioritise local benefits, technology transfer and capacity building. Communities on the frontlines of climate action must not be treated as pawns in a global emissions game.
Finally, civil society and the media must play a watchdog role.
The carbon market is complex, but that’s no excuse for secrecy. The public deserves to know how much is being earned in their name—and where it is going.
Malawi cannot afford to be a passive bystander in the global carbon economy.
If the world is serious about climate justice, then mechanisms like carbon trading must work for countries like Malawi, not around them.
It is time to fix the black hole in our carbon market—before it swallows our hopes for a sustainable future.
