Environmental economic opportunities

Gabon to sell $2bn worth of carbon credits before COP27

Gabon is seeking to refocus its economy on sustainable forestry due to declining oil reserves. The Congo Basin rainforest covers 90% of the country and is known as the lungs of Africa. Here, Lee White, a former botanist and now Gabon's environment minister, stands next to an okoumé tree © David ROSE/PANOS-REA

For Gabon, forests are rich in with economic opportunity. The country plans to create 187 million carbon credits and sell half of them on the offset market.

At the Commonwealth meeting held in Rwanda between 20 and 26 June, Lee White, Gabon’s environment minister, said that his country wanted to “exploit its forests in a sustainable way to generate income”.

By preserving its forests, which represent 88% of its territory, the Central African country hopes to create 187 million carbon credits, of which “90 million will be sold” on the offset market “just before COP27” scheduled for next November in Cairo, Egypt, the minister said, as quoted by Bloomberg. According to an estimate by Allied Offsets (a data provider on carbon offsets), Gabon could thus make some $291m.

It is worth noting that the REDD+ (Reducing Emissions from Deforestation and Forest Degradation) mechanism of the UN Framework Convention on Climate Change is responsible for creating these carbon credits.

Successful strategy

In the space of 20 years, Libreville has inaugurated several national parks such as Akanga, Lopé, Birougou, Ivindo and Loango.

Although Gabon’s strategy to preserve nature while diversifying its economy is nothing new, it has only begun to bear fruit recently.

Gabon was the first African state to receive funding for its efforts to reduce deforestation. In 2021, it obtained $17m from the Central African Forest Initiative (CAFI), a programme launched in 2019 and supported by the UN that plans to disburse a total of $150m within the next 10 years. According to CAFI, these funds are intended to finance scientific research, promotion and implementation of sustainable forest management practices.

Wood and construction sectors rebound

On 27 June, the IMF disbursed an additional $155m to support the country’s economy, while stressing in its latest economic outlook that “Gabon is fully benefiting from the rebound in the timber and construction sectors”. Recently, after acquiring 49% of its capital from Criterio Africa Partners, TotalEnergies became the largest shareholder in Compagnie des Bois du Gabon (CBG).

“We are particularly pleased to extend our activities in Gabon to sustainable forest management, after more than 90 years of investment and economic activity in the exploitation of the country’s hydrocarbon resources,” said Nicolas Terraz, president of exploration and production at TotalEnergies. According to the French oil company, its investment in CBG marks the development of a new model of forest management, combining sustainable wood production, biodiversity preservation and carbon dioxide sequestration.

In line with its climate ambition, the company says it wants to invest $100m a year to fund projects that will generate at least 5m tonnes of CO2 credits per year by 2030.

Ambitious targets

June was a particularly fruitful month for the country, as on the 27th, the Gabonese Strategic Investment Fund (FGIS) joined the Net-Zero Asset Owner alliance, a UN-launched initiative that commits to transitioning several investment portfolios to carbon neutrality.

The FGIS, which aims to set new targets every five years and report annually on its progress, is the first African sovereign wealth fund that has committed to financing zero-emission activities by 2050. This new collaboration is in line with Gabon’s Plan d’Accélération de la Transformation (PAT).