Tunisia has set an ambitious goal to reduce its carbon intensity by 62% and increase the share of renewables in its electricity production to 50% by 2035. Currently, renewables account for less than 10% of the country's electricity production. The country's Nationally Determined Contribution (NDC) 3.0 is estimated to cost $55 billion by 2035. The Tunisian government is exploring ways to finance this goal, including the carbon market.
The carbon market is a mechanism that allows countries to buy and sell carbon credits, which represent a reduction in greenhouse gas emissions. However, the market is not without its challenges. One of the main issues is the concept of additionality, which refers to the idea that a project would not have been implemented without the sale of carbon credits. In 2024, nearly a third of the voluntary carbon market was found to have failed to meet this criteria.
In Tunisia, the most promising carbon credits do not come from solar or wind energy, but from a lesser-known gas emitted by nitric acid plants. The Japanese government has already provided financing for several projects in Tunisia through the Joint Crediting Mechanism (JCM), including in Tozeur, Sidi Bouzid, Gabès, and El Fahs. These projects have the potential to generate significant reductions in greenhouse gas emissions.
However, there are concerns about the risk of double counting, where both the Tunisian government and a foreign company claim the same carbon credits. This issue raises questions about climate sovereignty and the need for clear rules and regulations. The European Union's Carbon Border Adjustment Mechanism (CBAM) also poses a challenge for Tunisia, as it will require the country to pay for the carbon content of its exports to the EU.
Several neighboring countries have already made progress in developing their carbon markets. Ghana has sold emission reductions to Switzerland, while Kenya has launched its own carbon registry. Morocco has also implemented a carbon tax. Tunisia, on the other hand, has been criticized by UN experts for inconsistencies in its reporting.
To develop its carbon market, Tunisia needs to establish a national authority, a carbon registry, and clear legal rules. The country also needs to prepare its exporters for the CBAM. Experts recommend a four-priority approach to develop the carbon market and turn climate constraints into a competitive advantage.
The development of Tunisia's carbon market offers an opportunity for the country to take a proactive approach to climate change and sustainable development. With the right policies and regulations in place, Tunisia can unlock the potential of its carbon market and achieve its NDC 3.0 goals. The country's success in this area will depend on its ability to balance the need for financing with the need to maintain climate integrity.
Key points
- Establishing a national authority and a carbon registry are crucial steps in developing Tunisia's carbon market.
- The country needs to prepare its exporters for the European Union's Carbon Border Adjustment Mechanism (CBAM).
- Clear rules and regulations are necessary to avoid double counting and ensure climate sovereignty.
