With conviction on the path towards cooperative climate action

Interview with Dr Daniel Tutu Benefoh.

Dr. Daniel Tutu Benefoh

Head of the Ghana Carbon Market Office (CMO)

Dr Daniel Tutu Benefoh, Head of the Ghana Carbon Market Office (CMO), has worked for Ghana’s Environmental Protection Agency (EPA) for over 20 years. The CMO was founded as part of the development of Ghana’s climate protection strategy. Part of Ghana’s Ministry of Environment, Science, Technology & Innovation (MESTI), the CMO reports to the Environmental Protection Agency and carries out the tasks and functions assigned to it in the national climate protection policy.

KliK Foundation: Mr Benefoh, Ghana was an early adopter of the cooperative approach of Article 6 of the Paris Agreement. What made Ghana seize this opportunity?

The whole motivation for this work was originally based on the poor performance of Ghana in the Kyoto Protocol phase. In Ghana, we had only four projects registered, and none of them were able to issue. However, on the Programme of Activities (PoAs) side, we had quite a few projects. This motivated our policy makers to make Carbon Market 2.0 work well. Then there was the motivation that we wanted a political commitment to ensure that the NDC is achieved. One of the ways to dothis was to mobilise carbon finance to complement the investments required to achieve the NDC. And we wanted to take control of the whole process. We promised that we would address all the barriers that had prevented the private sector from participating in Carbon Market 1.0: relating to the upfront costs of transactions, access to investment, bureaucracy and streamlining deposits.

What were the challenges on the way to Ghana’s first bilateral agreement?

With an Memorandum of Understanding between Ghana and Switzerland, the political engagement was initiated. But because this was new for Ghana, we then had to mobilise multiple actors, people who were upfront and engaged. First, I had to convince my immediate boss that this will work, for him to, in turn, convince his boss to then convince the minister. That was a lot of internal convincing, that we can do this, and that this will work. Then we came up with an approach to convince others, colleagues at the various ministries: an internal reorientation that this could work.

A priority was then to put together a team that would negotiate with the Switzerland side. There was a real mobilisation of efforts, in the midst of a pandemic. This caused pros and cons, the pro was that everybody was at home, and this was one of the ways to engage to engage effectively, while saving valuable time. The con was that not everybody had the mindset to conduct the negotiations, because they had family issues etc. So, when we got to November 2020, and finalised the texts, we looked back at a meaningful and phenomenal process of coming up with a text that is acceptable to both sides.

What had to be considered when implementing the agreement in Ghana?

The first thing was the idea to propose a national framework that will guide us, not only us, but the developers and any other potential country in addition to Switzerland that would want to engage. I drafted the framework myself, from scratch. Then I shared it with a lot of people. It took about three months. Mischa Classen, then with the KliK Foundation, spent some time on it. Colleagues from the World Bank, UNDP and a colleague of mine from UNFCCC then looked at it. After the consultation, there were about 100 comments to deal with. Because we wanted the document to become a government policy, we went to cabinet for approval. After the framework was adopted, BAFU and our Ministry of the Environment came up with a political roadmap aimed at guiding the implementation of the agreement, to integrate the refinements within the framework in order to align with the requirements in the agreement.

«We wanted a political commitment to ensure that the Nationally Determined Contributions are achieved.»

What are the key aspects of the framework to ensure that Ghana meets its NDC without the risk of overselling?

We have carefully analysed this with the NDC baseline. Now the first important step was the percentage of the national total emissions covered in the NDC, around 88 per cent. It means that 12 per cent of the emissions in the national inventory were not in the NDC. Within the NDC, we had divided it into what we call the unconditional part with around 35 million tonnes, the rest of it, around 39 million tonnes, being the conditional part. Our argument is that the unconditional measures are our red list areas. These measures are not additional and will happen any-way because the government will mobilise money to invest in them. The additional 39 million tonnes can be achieved with the carbon market. So that is how we are avoiding overselling by not authorising emission reduction activities from the red list.

How is the area of conditional measures defined?

We have established a marginal abatement cap which computes the cost of reducing one tonne of emissions for the measures, comparing them against each other. For if you draw a curve, the activities that are costly are the ones that are the “highhanging fruit” and the ones that are less expensive are the ones that we want to spend our money on. So we used the costs to determine which activities are allocated to either the unconditional or conditional parts of the NDC. There is a whitelist for the percentage of the conditional NDC, activities which are eligible.

«Not authorising emission reduction activities from the red list is how we are avoiding overselling of carbon credits.»

What recommendations would you make to other countries working on implementing the A6 mechanism?

We need to recognise that Article 6 is only one of the means to achieve the NDC and to raise the ambition of the NDC. This is very important to me. It creates a functional link between Article 6 and the NDC. Countries need to understand that, and that this is also the way to avoid overselling. A second aspect is that they should bear in mind as they consider Article 6 that there are several prin- ciples required to define eligibility. These include how to increase the ambition for the NDC, how to ensure high integrity of the NDC units, how to promote sustainable development and, very importantly, how to establish a national system. A third aspect is that we need to get the private sector on board. Otherwise, we spend a lot of time preparing everything, but that does not translate into unlocking investment on the ground. So how to make sure that you take the private sector with you? Fourth, countries need to have a dedicated functional team, because participating in Article 6 is going to put a greater administrative and technical burden on countries, and somebody has to do the work.

The Ghanaian framework sets out the issuance of an ITMO fee. Can you give us an insight into what it will be used for?

Beyond the framework, we have a law, a bill in parliament, and part five of it is a bill on climate change, including the establishment of a mitigation ambition fund. The proposal is that about forty per cent of the amount will go towards investing in generating additional carbon credits in relevant mitigation sectors. And then fifty per cent will go to finance adaptation, to the Ministry of Finance. And then, ten per cent will be used to set up a fund to support project development costs. So that if you are a small business and you are interested in this market, but you cannot afford the upfront costs, this fund can help you get started. And then the 20 US cents per ITMO will be for administrative costs. Once the law is passed and the fund is established by law, this will be the structure of what happens to the money.

Overselling of carbon credits
The risk of overselling of carbon credits means that a country sells too many emission reduction units abroad and misses out on its own NDC.