With cleantech startups poised for explosive growth, carbon credit financing could be a game-changer for the sector.  Vladimir Dugin, a senior partner at E3 Capital, a pan-African venture firm, said at Moonshot by TechCabal in Lagos that African policymakers must establish clear regulations to drive the adoption of carbon credit  financing.

Panelists noted that the lack of laws and data is slowing the uptake of carbon credit funding on the continent. While Africa has witnessed an increase in carbon credit financing, gaps persist which must be addressed. 

“Carbon credits help businesses subsidise capex in the long run, providing an opportunity for marginal gains,” said Michael Olaitan, co-founder of renewable energy startup Powernow.

The global carbon credit market is valued at around $909 billion. In Africa, the carbon credit market is projected to reach $82 billion.  

Organisations like the Africa Carbon Markets Initiative (ACMI) aim to produce 300m carbon credits annually, potentially unlocking at least $6 billion in revenue and creating 30 million jobs by 2030.

Chidalu Onyenso, CEO of Earthbond, cautioned that startups should not rely on carbon credits initiatives as their sole funding source despite the potential.

”Blended financing is key in ensuring that startups do not put their eggs in one basket,” Onyenso said.

As Africa looks to tap into the carbon credit financing market, fund managers and founders believe the continent needs to develop a regulatory framework and avail data to investors.