eastern provincial administration

CLIMATE CHANGE FUND, CARBON TRADING AND GREEN BONDS

The Ministry of Green Economy and Environment (MGEE) has taken note of the statement that the Centre on Environmental Justice (CEJ) issued through an interview disseminated on various media platforms on Sunday, 23rd January 2022.
The CEJ’s concerns focused on the implementation of environmental sustainability commitments that the Government of the Republic of Zambia made through the 2022 National Budget speech which was delivered by the Minister of Finance and National Planning on 29th November 2021.
First and foremost, we commend the CEJ for its work on environmental issues and for remaining engaged with Government operations in this area.
The Ministry of Green Economy and Environment now wishes to update the nation on the various aspects of environmental sustainability that the CEJ raised in its statement to the media.
As CEJ observed, the Budget speech addressed climate change adaptation and mitigation, natural resources management and early warning systems as these are key to achieving environmental sustainability. A lot is being done to actualise these as we outline below:
1. Innovative climate financing through green bonds: The Securities and Exchange Commission (SEC) has developed Green Bond Guidelines and the same have been Gazetted. In addition, the Listing Rules at the Lusaka Securities Exchange (LuSE) have also been developed and approved. Government is now working on the design of Green Bond incentives which may include (among others) zero rating withholding tax on interest to incentivise investors and targeting tax deductibility for issuance costs of Green Bonds to incentivise issuers.
Currently, sensitisation is being conducted among potential green bond issuers and investors. The development of a pipeline of potential projects to be financed through green bonds is also underway. At an appropriate time, the Ministries of Finance and National Planning and Green Economy and Environment will jointly and officially launch the Green Bond Programme.
2. Carbon Trading: The public may wish to know that international rules which will govern trading in carbon trading instruments were just finalised at the United Nations Climate Change Conference of Parties (CoP26) in Glasgow, Scotland in the United Kingdom in November 2021. While the Government is currently preparing stakeholders on the opportunities and how they can participate in this market, it is important to point out that Government has been facilitating the participation of project developers in the carbon market under the Kyoto Protocol since 2006 when it set up administrative mechanisms to support project developers. Government will, however, be making adjustments in 2022 to these mechanisms to incorporate the outcomes of CoP26.
Government has gone further to promulgate Statutory Instrument No. 66 of 2021 on Forest Carbon to ensure carbon trading is regulated and interests of communities are protected. The Climate Change Bill, once enacted, will comprehensively provide for all aspects of carbon trading. Government can only create a conducive policy and legal framework to facilitate the operations of the carbon market, but the actual players in this market are the private sector, financial institutions, business houses and the communities who should seize the opportunities.
3. Climate Change Fund: The public may wish to know that this Fund is already provided for in the 2022 National Budget. The Government of the Republic of Zambia has provided Sixteen million one hundred thousand Kwacha (K16, 100, 000.00) as seed money but hopes to leverage on financing from other sources, including Cooperating Partners and the private sector. As CEJ has rightly indicated, Government will learn from the pitfalls that characterised the previous Funds and ensure that this Fund serves its purpose.
We agree and thank CEJ on a number of points they raised which have provided the Ministry an opportunity to provide this update. We further wish to reiterate that the New Dawn Government is serious on pursuing a green growth agenda. This will also be reflected in the levels of funding to this sector. We acknowledge that climate change is a real challenge and cuts across all sectors and, therefore, requires the efforts of all stakeholders in addressing it.
We urge other organisations to partner with Government and play their respective roles in ensuring that we realise our collective aspiration of greening the Zambian economy.
Issued By:
Chibaula D. Silwamba (Mr.)
Information, Education and Communications Officer
MINISTRY OF GREEN ECONOMY AND ENVIRONMENT
MGEE/5/6/1
25th January, 2022