The Environmental Management (Control and Management of Trading) Regulations, 2022, establishes a legal and institutional framework for managing carbon trading projects in the environmental sector. It outlines the roles of various authorities, the procedure for project approval, and the distribution of financial benefits from the sale of carbon credits.
Administrative and Institutional Framework
- Ministry of Environment: Serves as the Designated National Authority (DNA), with the Minister authorised to approve carbon trading projects.
- Local government authorities: Oversee and monitor carbon trading projects within their jurisdictions.
- Managing Authority (MA): Implements carbon trading projects, ensuring compliance with legal standards including property ownership and government engagement.
- Project proponent: Manages the registration, development, and implementation of carbon trading projects, and sells the carbon credits.
Project Approval and Registration
- Application for approval: Proponents must submit an application to the DNA using a prescribed form.
- Project Concept Note: Post-approval, proponents have 90 days to develop a concept note in collaboration with the MA or project partners.
- Project Document: After receiving a letter of no objection, the project document is developed within twelve months and submitted for final approval.
Requirements for Carbon Trading
- Projects must support the nationally determined contributions (NDC) and align with priority carbon trading sectors.
- Consent from project partners and proof of property ownership are required.
- Local community involvement and transparent disclosure of project details are mandatory.
- Projects must demonstrate potential for employment creation and undergo environmental and social impact assessments. REDD+ projects need to meet specific safeguard standards.
Verification and Certification
Verification of the project shall be done in compliance with the accepted international carbon trading standards.
Benefit-Sharing
- MA's share: The MA receives 61% of gross revenues from carbon credit sales.
- Remaining revenues: Out of the remaining 39%, 31% is retained by the proponent, and 8% is paid to the DNA as regulatory fees.
