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Tanzania: The Carbon Trading Regulations of 2022

  • Legal Development 07 November 2022 07 November 2022
  • Africa

  • Energy & Natural Resources

The Government of Tanzania recently issued the Environmental Management (Control and Management of Carbon Trading) Regulations Government Notice Number 636 of 2022 (the Regulations). The Regulations apply to all carbon trading projects in Mainland Tanzania and are the first piece of legislation on carbon trading in the country. While the Regulations are new and first of their kind to be passed by the Tanzanian Parliament they must, however, operate together with ratified international treaties and any other written laws applicable on carbon trading. In this article, we provide an overview of the Regulations and the steps required to register a carbon trading project.

The Regulations came into operation on 28 October 2022 however, any person engaged in carbon trading prior to this date shall be required to comply with the provisions of the Regulations. A transition period of not more than one (1) year may be allowed to comply with the requirements of the Regulations and any payment due under the Regulations shall be paid during the transition period.

Key definitions

“Carbon credit” means the amount of one tonne of carbon dioxide or an equivalent of another greenhouse gases reduced for sale in the carbon trading project;

“Carbon trading” means buying and selling of verified or certified of carbon emission, reductions and removals in accordance with the recognised international carbon standard;

“Designated National Authority or National Focal Point” means the ministry designated under this Regulation to co-ordinate matters relating to environment and carbon trading projects in the Country;[1]

“Managing Authority” means the owner of the property involved in the carbon trading project;

“Minister” means the Minister responsible for environment;

“Ministry” means the Ministry responsible for environment;

“National Carbon Projects Assessment Technical Committee” means an ad hoc committee constituted by the Designated National Authority or National Focal Point to review and scrutinise the submitted Project Concept Note or Project Document; [2]

“Nationally Determined Contribution” means climate change action plan to cut greenhouse gases emissions and adapt to climate change impacts as provided under the Paris Agreement;

“proponent” means a legal or natural person proposing the execution of carbon trading project or programmes;

“Project Document” means a document with detailed description of the carbon trading project;

“Registrar” means the Designated National Authority or National Focal Point responsible for registration of carbon trading projects; and

“Relevant authority” means any Government institution responsible for registering entities involved in the carbon trading projects.

Objective of the Regulations

The Regulations were enacted to provide for the control and management of carbon trading projects in Tanzania. They provide a legal framework necessary for sustainable environmental management that enhances environmental conservation and the country’s contribution towards global efforts on greenhouse gases emissions reduction.

The requirement to register a carbon trading project

There are two (2) requirements:

  • a person shall not operate a carbon trading project that has not been registered with the Registrar; and
  • for the project to be registered with the Registrar, it needs to have the following elements:
    • obtain a letter of consent and participation of partners engaged in the project;
    • have clearance of ownership of the property involved in the project;
    • involve the local communities in the implementation of the project;
    • disclose relevant project information including costs incurred, verified emission reductions and estimated revenues;
    • indicate expected employment creation to the national experts and local communities;
    • indicate commitment to corporate social responsibility;
    • adhere to national priority carbon trading sectors;
    • be in line with national policies laws and strategies;
    • show how the project will contribute to the Nationally Determined Contributions;
    • adhere to transparency and fairness in business; and
    • adhere to national investment priorities, ecological, social, cultural and economic safeguards.

Steps to establish and operate carbon trading projects

  • the project proponent or Managing Authority shall apply for approval of the carbon trading project idea to the Designated National Authority or National Focal Point by filling the application form prescribed in the First Schedule;  
  • the completed application form shall be accompanied with proof of payment of a non-refundable application fee of between USD 250 (for citizens) and USD 500 (for non-citizens) as prescribed in the Second Schedule;
  • the Designated National Authority or National Focal Point shall within thirty (30) days process and respond to the proponent on the registration of the project idea;
  • where the requirements for application have been complied with the Designated National Authority or National Focal Point shall direct the proponent or the Managing Authority to develop a Project Concept Note. The project proponent (in collaboration with Managing Authority or project partners) shall have ninety (90) days from the date of registration of the project idea to develop a Project Concept Note.
  • the Project Concept Note shall then be submitted to the Designated National Authority or National Focal Point for review and scrutiny accompanied by proof of payment of project registration fees (1% of the expected CER from the project) as prescribed in the Second Schedule and consent from the Managing Authority in the form of extract minutes in line with established procedures of the respective authority;
  • the Designated National Authority or National Focal Point shall within thirty (30) days of receiving the Project Concept Note issue a letter of no objection for a qualified Project Concept Note as prescribed in the Third Schedule or a letter of recommendation for improvement of the Project Concept Note;
  • the project proponent (in collaboration with Managing Authority or project partners) shall have twelve (12) months to develop a Project Document after obtaining the letter of no objection. The proponent may by way of written notice request for an extension of time by stating the reasons for the delay to develop and submit the Project Document and an extension time of not more than six (6) months may be given;
  • the Project Document submitted to the Designated National Authority or National Focal Point must abide by accepted international standards on carbon trading including validation of the project where required;
  • the Designated National Authority or National Focal Point shall within thirty (30) days from the receipt of the Project Document and upon satisfaction that the Project Document meets all the requirements, submit to the Minister responsible for environment (the Minister) the project proposal for endorsement of implementation (the letter of endorsement shall be prescribed in the Fourth Schedule); and [3]
  • the proponent shall within two (2) years after receiving the endorsement start implementing the project.

Instances where the endorsement may be cancelled

The endorsement for project implementation may be cancelled in the following circumstances:

  • where the proponent has voluntarily cancelled the project by submitting an official notice;
  • where the endorsement was obtained through misrepresentation;
  • where the continued operation of the project activity is likely to be injurious to the environment or human health;
  • where the project activities are overridden by other public interests;
  • where there was insufficient or holding of information in the application process;  
  • failure to submit the Project Concept Note or Project Document within the prescribed time;
  • failure to commence the project activities within the prescribed time; and
  • non-compliance with the project requirements as stipulated under the Regulations.

Offences and penalties

It is an offence to:

  • provide false, misleading or deceptive information in order to secure an endorsement;
  • to fail to furnish information related or connected to the project as required by the provisions of the Regulations;
  • violate any conditions attached to the grant of endorsement under the Regulations; and
  • implement a carbon trading project without endorsement issued under the Regulations.

Any person who violates the provisions of the Regulations commits an offence and upon conviction shall be liable to a fine of not less than TZS 10 million (equivalent to USD 4,279) but not exceeding TZS 10 billion (equivalent to USD 4,279,000) or imprisonment for a term not exceeding twelve (12) years or to both fine and imprisonment. In addition, a person convicted of any of the above offences shall be prohibited from engaging in any carbon trading project.

The review process

  • a person aggrieved by any decision made under the Regulations save for a decision of the Minister may appeal to the Minister;
  • without prejudice to the above, any person who is aggrieved by the decision of the Minister may apply for a review to the Minister; and
  • the appeal or review above shall be determined by the relevant authority within fourteen (14) days from the date of receipt of the appeal or review.

If you have any questions about establishing and operating carbon trading projects in Mainland Tanzania, please contact Peter Kasanda, Amalia Lui or Esther Kilimba.

 

[1] According to regulation 8, the Ministry responsible for environment shall be the Designated National Authority or the National Focal Point.

[2] The National Carbon Projects Assessment Technical Committee established by the Designated National Authority or National Focal Point shall constitute a multidisciplinary of experts to advise on the carbon trading project submitted to them.

[3] According to regulation 45 of the Regulations, an endorsement for a carbon trading project shall not be transferrable.

End

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