Mongabay · Natuur

South Africa’s new gold rush: Big promises, closed books in new carbon frontier

South Africa's spekboom succulent is at the center of a new nature-based carbon sink initiative, backed by a $120 million World Bank bond and significant interest from international corporations like Amazon. This emerging sector, focused on ecosystem restoration funded by carbon markets, faces scrutiny due to a lack of transparency and the potential for projects to fail, as highlighted by past scandals.

The spekboom (Portulacaria afra), a drought-adapted succulent, is being promoted as a key solution for carbon sequestration in South Africa. The World Bank has established a $120 million outcome-based bond to support restoration projects focused on the Albany thicket biome, where spekboom grows naturally. Amazon's commitment to purchase carbon credits from the first project funded by this bond has provided confidence to other financiers, raising questions about the tech giant's influence in this nascent sector.

Mongabay's investigation reveals that this industrial-scale ecosystem repair, funded by carbon markets, is increasingly dominated by international corporations. The opacity of their investment promises and operations makes scrutiny difficult, serving as a cautionary tale for the sector. This is the third part of an investigation into spekboom-led ecosystem restoration in South Africa, a collaboration involving independent science writer Leonie Joubert, Stellenbosch University School for Climate Studies, and the Henry Nxumalo Foundation.

One restoration project, Return to Thicket, is replanting spekboom on 2,100 hectares of degraded farmland in the Eastern Cape province. The project aims to sequester an estimated 10.3 metric tons of carbon dioxide per hectare annually over 30 years. Notably, many of the plants used by Return to Thicket were salvaged from another restoration project in the area that closed down when its international backer withdrew, underscoring the risks associated with opaque project financing.

The World Bank's $120 million bond is specifically designed to fund the restoration of the Albany thicket biome, which is highly degraded. Mass planting of spekboom is seen as the most viable method for repairing the region, with payments for this work coming from carbon markets. The first project to utilize the bond expects to generate around $500 million for the local farming community over 40 years through wages, rental income, carbon credit revenue sharing, and other initiatives.

The investigation highlights concerns about transparency and accountability in the nature-based carbon offset sector, drawing parallels to the Lake Kariba scandal in Zimbabwe, where a forest conservation project was found to have grossly inflated its carbon credit claims. Following this scandal, South Pole, a major carbon credit broker, quietly closed its spekboom restoration operation in South Africa, leaving an unknown number of people jobless and hectares of land abandoned. South Pole declined to provide details about the closure, calling it an "early-stage pilot."

Amazon's role is significant as it has committed to buying carbon credits from the first developer to draw on the World Bank bond. While not directly investing in the farming community or offsetting its own emissions, Amazon plans to sell these credits to supply chain partners through its new carbon credit exchange, the Sustainability Exchange. The company has been vague about the pricing and administrative fees associated with these transactions, which industry watchdogs warn can obscure profit markups and hinder public scrutiny.

The first major project to benefit from the World Bank bond is Singapore-based Imperative Global Solutions Pte. Ltd., which has launched a large-scale spekboom planting initiative. The company secured $91 million in loans, including $25 million from the World Bank bond, to expand its operations. Imperative plans to have 100,000 hectares under spekboom by 2030, expecting to draw down 41.6 million metric tons of carbon dioxide equivalent over 40 years. Amazon has agreed to purchase 1.95 million credits from this project.

Imperative anticipates generating $500 million for the community from its initial 60,000 hectares over 40 years. The actual amount realized will depend on the carbon sequestration achieved, future carbon credit prices, and revenue-sharing agreements with farmers. Imperative rents land from farmers rather than buying it, allowing for broader land acquisition. The accuracy of carbon drawdown projections is still developing, with actual accumulation only becoming clear after 10-15 years.

The market price for spekboom-generated carbon credits is uncertain, with estimates ranging from $20 to $45 per credit. Amazon has not disclosed the price it will pay for its 1.95 million credits, but the company states they will be high-value and purchased at a fixed price for an extended period. Mongabay estimates Amazon's expenditure could range from $39 million to $87.75 million.

Workers at nurseries like Hive Ecosystems are experiencing a temporary boom in jobs due to these planting projects. However, many in the local community do not fully understand the mechanics of carbon credits or how they translate into promised financial benefits. There is a prevailing hope that these investments will revitalize the local economy, which has long relied on extractive industries and is now facing agricultural decline.

The shift towards ecosystem repair as a new frontier for development, driven by global financiers, suggests that 'farming carbon' could be the new gold rush for South Africa. This presents both opportunities and potential risks, particularly concerning the transparency and accountability of these large-scale, internationally-backed projects.

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