INTRODUCTION
On 27th October 2022, the Minister of State, Vice President’s Office (Union and Environment) issued the Environmental Management (Control and Management of Carbon Trading) Regulations, 2022 made under Sections 75 and 230(2)(s) of the Environmental Management Act, Cap. 191. The objective of the Regulation is to provide for the control and management of carbon trading projects to ensure sustainable environmental development by enhancing environmental conservation while within the limits of the country’s contribution towards global efforts on greenhouse gases emissions reduction. This publication, therefore, reviews and highlights the salient features of the Regulations, compliance and regulatory framework established to monitor and control carbon trading projects such as the sale of carbon credit in the country.
THE REGULATIONS PROVIDE THE FOLLOWING
Objective the objective of these Regulations is to provide for the control and management of carbon trading projects by providing legal framework necessary for ensuring sustainable environmental development by enhancing environmental conservation and country’s contribution towards global efforts on greenhouse gases emissions reduction (Regulation 5).
Carbon Trading is defined as buying and selling of verified or certified carbon emission, reductions, and removals in accordance with the recognized international carbon standard
Carbon Credit has been defined as the amount of one tonne of carbon dioxide, or an equivalent of another greenhouse gases reduced for sale in the carbon trading project.
Proponent is described as a legal or natural person proposing the execution of carbon trading project or programmes.
The Designated National Authority or National Focal Point means the ministry designated under this Regulation to co-ordinate matters relating to environment and carbon trading projects in the Country. Currently this is coordinated by the Ministry of State, Vice President’s Office (Union and Environment)
Registrar is the Designated National Authority or National Focal Point responsible for registration of carbon trading projects.
GENERAL ENVIRONMENTAL PRINCIPLES
These Regulations requires any person or governmental organ tasked in decision making, control and/or management of Carbon Trading to do so in line with the general environmental principles.
The said Environmental Principles have been described under Regulation 4 as:
- Sustainable Development,
- Environmental Integrity, and Sustainability;
- Transparency;
- Efficiency;
- Inclusion of Socio-Economic and Environmental Co-Benefits;
- International Standards and Equity
ADMINISTRATION AND INSTITUTIONAL FRAMEWORK Regulation 6 confers responsibilities to the Minister responsible for Environment to oversee the general control and management of carbon trading through issuance of guidelines to Government Ministries, Departments, the Council, and Local Government Authorities, any other Public or Civil Society Organizations or even Private Institutions.
It is pertinent to note that on 17th May, 2024 the Minister issued the National Carbon Trading Guidelines that provide national procedures and requirements for undertaking carbon trading projects in Mainland Tanzania and Zanzibar.
As per Regulation 7, the Minister may also delegate his functions to the National Authority or National Focal Point that shall issue guidelines on his behalf.
The functions of the National Authority are provided under Regulation 9 to include; link the country with international processes for climate change, issuance of policy guidelines on carbon trading, register carbon trading projects under compliance and voluntary mechanisms, keep a register of all carbon trading projects in the country and most importantly constitute a National Carbon Assessment Technical Committee to review and scrutinize the Project Concept Note and Document for carbon trading project registration.
Essentially the Regulations establishes the following institutional framework for the administration of Carbon Trading in Tanzania
- The Minister responsible for Environment
- National Authority or National Focal Point (Registrar) responsible for registration of carbon trading projects;
- National Carbon Projects Assessment Technical Committee includes multidisciplinary experts to advise on carbon trading project submitted and is an advisory Committee to the National Authority or National Focal Point.
- Director – responsible to advise the Government on measures for the control and management of carbon trading
- Sector Ministries -Responsible to provide sectoral technical, administrative and legal advice on carbon trading project
- The Ministry responsible for local government authorities -to oversee and coordinate implementation of policies and guidelines related to carbon trading projects
- Regional Secretariat responsible to oversee and coordinate carbon trading projects within the Region
- Local government Authorities that oversees carbon trading projects at the council level;
- Managing Authority is responsible to preparing and implementing project; including providing evidence of ownership of the property involved in the carbon trading project;
- Proponent is responsible to developing and implementing carbon trading project
- The village government or mtaa responsible for supervising the implementation of carbon trading contracts by safeguarding local community interest in carbon
REQUIREMENTS FOR CARBON TRADING REGISTRATION
Regulation 23 allows both a Individuals and Companies or Organizations to operate in carbon trading projects. It provides further that for a Proponent’s project to be considered it must possess relevant expertise on carbon trading, possession of financial capacity to invest in carbon trading projects and adherence to all legal requirement in the operation of a carbon trading projects.
Regulation 24 provides for the conditions for registration of a carbon trading project to meet the conditions such as the proposal to be in line with national policies, laws, and strategies; indicate how the project shall contribute to the Nationally Determined Contributions; adhere to national priority carbon trading sectors; obtained a letter of consent and participation of partners engaged in the project; clearance of ownership of the property involved in the project; indicate expected employment creation to the national experts and local communities; and etc.
Most importantly Regulation 25 requires that the project must undergo Environmental and Social Impacts Assessment in accordance with the Environmental Impacts Assessment Regulations. This is very important to ensure adherence to General Principles of Environment provided under Regulation 4 and ensuring the projects approved are within the carbon emissions developing countries projects are required to undergo under the Reducing Emissions from Deforestation and forest Degradation in Developing countries (REDD+) safeguard standards assessment.
STEPS FOR REGISTRATION OF CARBON TRADING
Control and Management of carbon trading project comes after its registration. Regulation 26 provides for the steps to establish and maintain carbon trading projects in Tanzania. Upon application and payment of requisite fees, the Registrar shall within 30 days respond on the registration of the project idea. If approved, the Registrar shall direct the Proponent to develop a Project Concept Note.
THE PROJECT CONCEPT NOTE
Regulations 27 provides guidelines for the establishment of a Project Concept Note that must be developed within 90 days from the date the project idea was approved by the Registrar.
The Concept Note must include title, name and contacts of the Proponent, brief project description, proposed activities, Stakeholders to be involved, proposed project location, site, and size, potential project benefits, sources of finance and estimated investment costs, mode of financing or crediting mechanisms and adherence to environment and socio-economic safeguards.
The Concept Note shall be submitted to the Registrar accompanied with the proof of payment of prescribed fees and Consent of the Managing Authority.
PROJECT DOCUMENT
The Project Document means a document with detailed description of the carbon trading project. The development and its submission are guided by Regulation 28 that requires it to be developed within 12 months from reception of the Letter of No Objection from the Registrar. However, subject to an application for extension of time with adequate reasons, the Registrar may grant extension of time of not more than 6 months.
Upon its submission, the Registrar shall within 30 days either issue a Letter of Recommendation if the Project needs improvement or if it has met the requirements, submit to the Minister the Project Proposal for endorsement of implementation.
COMMENCEMENT, MONITORING AND CANCELLATION OF THE PROJECT
The implementation of the project is required to start within 2 years after the endorsement according to Regulation 30.
However, the said endorsement shall be cancelled as per Regulation 31 in instances where there is failure to submit the Project Concept Note or Project Document within the prescribed time; failure to commence the project activities within the prescribed time; non-compliance with the project requirements prescribed in these Regulations. It can also be cancelled where the Proponent voluntarily cancels the project by submitting an Official Notice.
Further, the said endorsement can be cancelled where it was obtained through misrepresentation; where the continued operation of the project activity is or is likely to be injurious to the environment or human health, where the project activities are overridden by other public interest; and where there was insufficient or holding of information in the application process.
OFFENCES, PENALTIES AND LIABILITIES
Regulation 37 (1) established offences against implementation of carbon trading project without being issued with an endorsement, or violation of conditions attached to the grant of endorsement, or failure to provide required information relating to the project, or submission of false, misleading, or deceptive information to secure an endorsement or violation any provision of the Regulations
Regulation 37 (1) (d) provides for penalties of a fine not less than TZS 10 million but not exceeding TZS 10 billion or to imprisonment not exceeding 12 years or to both. Most importantly to note, Regulation 37 (2) prohibits any person who is convicted because of these offences from engaging again in any carbon trading projects.
RIGHT TO REVIEW
Regulation 49 (1) gives an opportunity to any person aggrieved by any decision under the Regulations except the ones made by the Minister to appeal to the Minister responsible for the Environment.
Such a decision may be, for example, the decision of the Registrar to deny approval of the Concept Note or Project Document or Registration. The Review or Appeal shall be determined within 14 days from the date of its reception.
