Top Offset Project Must Hand Zimbabwe Revenue or Close

(Bloomberg) -- Zimbabwe’s Environment Minister said the operators of a project generating carbon credits from an area almost the size of Puerto Rico will have to give the government half its revenue if the initiative is to survive.

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The 785,000 hectare (1.94 million acre) Kariba forestry project, operated in part by South Pole, the world’s leading seller of offsets, will need to comply with rules announced Tuesday governing the sector including the flow of money due to the state, said Mangaliso Ndlovu, the Minister of Environment, Climate, Tourism and Hospitality.

The changes threaten to reverberate beyond the southern African nation. Governments around the world, from Gabon to Papua New Guinea, are seeking to profit more directly from securities generated by the climate warming carbon dioxide their trees remove from the atmosphere or from activities that prevent emissions. A carbon credit represents one ton of carbon dioxide equivalent and polluters purchase them to offset their emissions.

“One company signed for over 750,000 hectares,” Ndlovu said in an interview on Wednesday. “We will be giving them an opportunity to fix that,” he added, saying that retrospective payments will not be sought.

Those rules also stipulate that foreign investors can get a maximum of 30% of revenue from carbon credit projects and private local investors must get at least 20%

A spokesperson for South Pole earlier said it’s reviewing the Zimbabwe government’s announcement and “assessing the implications” for the Kariba project. its biggest money-maker.

South Pole has sold carbon credits from the Kariba project to a number of large companies, including Gucci, Nestle SA, Barclays Plc, L’Oreal SA and McKinsey & Co.

A meeting between government and all industry participants is planned for May 22, Ndlovu said.

Municipalities had, in the past, agreed to carbon credit deals with international investors for small amounts, meaning that millions of dollars had gone out the country, Ndlovu said. The country has been working on its carbon credit trading framework for sometime and also got further direction on how to proceed from proceedings at the COP27 summit held in Egypt in November.

“From now on, the ministry’s designated national authority will be the one processing all applications,” he said.

--With assistance from Benjamin Elgin.

(Updates with COP27 summit information in penultimate paragraph)

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