Indian Council of World Affairs

Abstract: Ghana has achieved a significant milestone in global climate cooperation by becoming the first African nation to trade carbon credits under Article 6 of the Paris Agreement. By transforming mitigation initiatives into a new class of green assets, Ghana has created a roadmap for development finance. This initiative offers a strategic opportunity for India to engage as a co-architect of a Global South-centred carbon market, acting as both a technology provider and project partner. This article examines Ghana’s carbon market system and potential for Indo–African South–South cooperation. 

Introduction 

Ghana has completed an official transfer of carbon credits under Article 6.2 of the Paris Agreement, making it the first nation in Africa and the second worldwide. In accordance with a bilateral agreement signed in 2020, it transferred more than 11,000 tonnes of verified emission reductions to Switzerland on 8 July 2025.[i] These carbon credits were generated by a clean cookstove initiative, which replaces traditional wood-burning cookstoves to reduce deforestation and carbon dioxide (CO₂) emissions. Ghana’s carbon-market initiatives are expected to create green jobs and generate about 1.1 billion dollars in investment by 2030.[ii] These developments position Ghana as a regional model for turning elimination actions into a sustainable revenue stream.

Understanding the Mechanism: How the Carbon Market Works

A carbon market is a financial system that allows businesses, governments, and/or individuals to trade carbon credits. Each credit represents avoidance, removal, or reduction of one ton of CO₂ or the equivalent quantity in other greenhouse gases.[iii] There are two distinct forms of markets: voluntary markets, where businesses buy offsets of their own volition without being required by law, and compliance markets, which are established by government regulation. The Paris Agreement’s Article 6.2 specifically facilitates voluntary cooperation between nations through the transfer of ‘Internationally Transferred Mitigation Outcomes’ (ITMOs),[iv] which are measurable reductions or removals of emissions measured in tonnes of carbon dioxide equivalent, essentially the currency of the new global carbon market. In real terms, carbon markets transform mitigation efforts into tradable units, such as the distribution of efficient cookstoves, the restoration of forests, the enhancement of industrial efficiency, or the implementation of clean mobility. While sellers use the proceeds to fund more mitigation and sustainable development initiatives, buyers (states or businesses) use these units to fulfil their climate obligations. These allow countries like Ghana to sell their excess emission reductions to buyers (like Switzerland), who use them to meet their national climate targets.

In 2022, Ghana published its carbon market framework, which created the ‘Ghana Carbon Registry’. This carbon registry outlines eligible mitigation practices and integrity standards to prevent double counting of emission reduction. It also manages a transparent process for vetting and monitoring green projects and a national database for ITMOs.  The framework also defines unconditional mitigation programmes under its Nationally Determined Contributions (NDC). These programmes are listed as ‘red list’  items, meaning that carbon offsetting is not allowed for them.  The country also created a ‘whitelist’ of pre-authorized technologies that are considered automatically additional to Ghana’s NDC baseline.

Source: Case study - Spark+ Africa Fund leverages carbon credit regime under the Paris Agreement to enable clean cooking in Ghana, Envirofit[v]

Ghana’s Article – 6 Bilateral Partnerships

Ghana has bilateral agreements[vi] based on Article 6 with Switzerland, Sweden, Singapore and South Korea. Under the Ghana-Switzerland bilateral agreement, Ghana has authorised a set of mitigation activities, including clean cookstoves, sustainable rice cultivation, composting and low-carbon mobility. The deal became operational with the initial transfer of around 11,700 tonnes of ITMOs.[vii] In addition to offering Switzerland high-integrity credits towards achieving its climate targets, these initiatives are expected to yield substantial co-development benefits as well as produce more than 100,000 ITMOs by mid-decade. 

Similarly, Ghana and Sweden have concluded a cooperative framework for projects that integrate mitigation with social benefits, such as energy access, urban mobility and waste management. Ghana has also signed an implementation agreement with Singapore and has ongoing negotiations with South Korea. These initiatives focus on high-integrity credits from sectors like waste, transport, buildings and nature-based solutions, highlighting North-South energy and climate cooperation. 

Ghana’s Carbon Positive Activities 

As part of its emission reduction strategy, Ghana has participated in a number of initiatives that generate carbon credits that can be further transferred as ITMOs.[viii] Clean cooking and household energy have been the most prominent affairs. There are large-scale distributions of efficient cookstoves, including projects supported by a World Bank outcome bond. These initiatives reduce biomass use and indoor air pollution while generating ITMOs for transfer to Switzerland. Ghana is preparing more ITMOs based on climate-smart rice cultivation, such as better water and fertiliser management, alternate wetting and drying techniques, and other practices that reduce methane emissions and boost output.[ix] It also focused on organic waste composting and enhanced waste management. Structuring these activities as mitigation actions creates long-term credit flows, supports city-level waste systems and encourages the growth of circular-economy enterprises.  

In addition, Ghana has launched a number of electric bicycle pilots and has promoted non-motorised transportation broadly,[x] which indicates that low-carbon transportation has become an increasingly important component of country’s ITMO portfolio. Ghana’s REDD+ (Reducing Emissions from Deforestation and Forest Degradation) programmes in cocoa landscapes have also earned results-based payments from multilateral partners.[xi] These programmes tend to combine carbon revenues with sustainable investments and community benefit-sharing mechanisms to create a model that integrates climate finance, agriculture, and forest conservation. Ghana’s indigenous carbon-market structure reflects its assertiveness to guarantee that international trade does not undermine domestic climate ambition. 

Ghana has also engaged in Public Private Partnership (PPP) model international engagements, such as Ghana’s Jospong Group and India’s EKI Energy partnership, which provides technical assistance in sectors like waste, clean cooking, and transport. They are aiming to mobilise around 1 billion dollars in carbon-credit-linked finance. As of May 2024, EKI has distributed nearly 300,000 cookstoves in Ghana, generating carbon credits that are sold as ITMOs, and the revenue is shared between two partners.[xii] EKI is further exploring solar cooking devices such as ‘Surya Nutan’ with Indian Oil and building local employment. In addition, the Indian startup Better Planet Footprints has signed an agreement with Ghana’s Ministry of Energy to produce and distribute one million improved cookstoves in Ghana.[xiii] This initiative is estimated to generate 1.25–1.5 crore carbon credits. This illustrates the co-creation of projects and the development of innovative Green Finance as an alternative to bilateral climate finance.

Fig 2.: Model of PPP Cooperation between India and Ghana

Source: Author

Significance of Ghana’s Approach for African Green Finance: 

Currently, Africa’s green transition faces severe constraints, given its financial vulnerabilities, with only 17.8% of mitigation and 20% of adaptation finance needs met between 2021 and 2022. With 76% of the public funding dependent upon bilateral and multilateral sources, Africa’s green finance remains uncertain, particularly in the light of geopolitical shifts such as the United States’ exit from the Paris Agreement.[xiv]

In this context, Africa needs to explore carbon taxes and expand its carbon markets in order to attract climate finance. In the current landscape, where the continent accounts for less than 4% of global emissions yet is disproportionately affected by climate change, Ghana’s introduction of a carbon market is an important step in the right direction. The country sets a practical model for translating NDCs into revenue-generating assets. By doing so, Ghana has created a momentum in the region and shows how carbon markets can fund climate adaptation in vulnerable sectors, such as agriculture and forestry without undermining sovereignty.

Nonetheless, scepticism towards participation in the global carbon markets persists in parts of Africa, as it might lead to ‘carbon colonialism’, questionable project effectiveness, and limited benefits reaching local communities. Despite these reservations, African countries have increasingly accelerated their participation, often relying on voluntary markets before programmes scale to Article 6 compliance. In this regard, Senegal and Côte d'Ivoire lead in nature-based solutions, such as Senegal’s mangrove restoration projects, generating over 1 million credits via the World Bank’s BioCarbon Fund. Similarly, South Africa operates Africa’s most advanced compliance market through its Carbon Tax Act (since 2019). Kenya and Zambia focus on clean energy projects, with Kenya’s electric mobility pilots and Zambia’s forestry REDD+ initiatives. Nigeria and Egypt have established carbon registries, respectively, to regulate their carbon markets. Alongside, the African Carbon Markets Initiative (ACMI), a collaborative effort launched in 2022 at COP27, unites more than 15 African countries to harmonise standards and aims to attract a $10 billion target in investments. These efforts highlight progress, but challenges such as registry interoperability and benefit-sharing continue to persist. In this pretext, Ghana’s carbon market framework presents a reliable template, as it draws a clear difference between NDC-linked activities and offset mechanisms through its red and white lists, highlighting its transparent approach. This approach can serve as a template for other countries, helping them address challenges like greenwashing and strengthen interoperability across markets. Moreover, Ghana’s Carbon Market Office signals institutional efficiency for maintaining comprehensive databases and evaluating high-integrity carbon credits. This creates opportunities for peer learning and experience sharing with other countries and strengthens Africa’s position as a collective force in the global carbon trade.

Way Forward

Ghana’s success in developing its carbon market initiatives opens avenues for expanded South–South cooperation, particularly with countries like India. India and Ghana formally adopted a framework for energy transition and industrialisation in November 2025, which commits India to supporting Ghana’s low-carbon economic path.[xv] In this context, a climate partnership between two countries provides a strong foundation for deeper collaborations, since both countries have their respective carbon market frameworks built on compensatory principles. Ghana’s approach to land-use-linked crediting is similar to India’s Green Credit Programme, which issues credits for tree planting on degraded land and other environmental activities through a regulatory register system. In addition, India’s Intensity-based carbon market represents a development approach rather than a purely market-driven model, which resonates with Ghana’s carbon finance framework.

Given the strong engagement between the two countries, they can share expertise in creating safeguards, benefit-sharing mechanisms, additionality regulations, and registry systems. There is a potential to create peer-learning platforms and collaborative capacity-building initiatives. In this framework, India can support Ghana through low-cost technologies and implementation experience, integrating them into the project pipeline and institutional frameworks.

Further, the India–Ghana partnership could advocate for global carbon market rules that protect host-country development priorities, ensure equitable benefit-sharing with communities and reflect the realities of the Global South. Such a partnership has the potential to shift the narrative from offsets as a mere compliance tool to cooperative climate action for the Global South, creating new lines of green finance and sustainable development. 

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*Ruheen Khatoon, Research Intern, Indian Council of World Affairs, New Delhi
Disclaimer: Views expressed are personal. 

Endnotes 

[i] Albert Oppong-Ansah. (2025, July 9). Ghana’s cookstoves fuel Africa-first carbon offset deal. SciDev.net. https://www.scidev.net/global/news/ghanas-cookstoves-fuel-africa-first-carbon-offset-deal/

[ii] Ghana’s progress report on engagements in international carbon markets 2024. (2025, March). https://cmo.epa.gov.gh/wp-content/uploads/2025/03/2024-Annual-Progress-Report_final-version_21325.pdf

[iii] UNDP. (2022, May 18). What are carbon markets and why are they important? UNDP Climate Promise. https://climatepromise.undp.org/news-and-stories/what-are-carbon-markets-and-why-are-they-important

[iv] UNEP. (2023, October 31). Carbon Markets. UNEP - UN Environment Programme. https://www.unep.org/topics/climate-action/climate-finance/carbon-markets

[v] (https://enabling.ch/media/attachments/2025/04/29/article-6-case-study-20-03-25.pdf)

[vi] Ghana’s Carbon Registry. (2022). Ghana-Swiss Cooperative Approach under Article 6.2 of the Paris Agreement – Carbon Markets Office. Epa.gov.gh. https://cmo.epa.gov.gh/ghana-swiss-cooperative-approach-under-article-6-2-of-the-paris-agreement/

[vii] Ibid.

[viii] Tutu Benefoh, D., & Kofi Ackom, E. (2016). Energy and low carbon development efforts in Ghana: institutional arrangements, initiatives, challenges and the way forward. AIMS Energy, 4(3), 481–503. https://doi.org/10.3934/energy.2016.3.481

[ix] Group, W. B. (2025, December 8). Cooking up Change: How Financial Innovation Can Help Transform Lives. World Bank; World Bank Group. https://www.worldbank.org/en/news/feature/2025/12/05/cooking-up-change-how-financial-innovation-can-help-transform-lives

[x] Klik Foundation. (May 21, 2025). Electric bicycles mitigation activity authorized by Switzerland and Ghana. Klik.ch. https://www.klik.ch/en/news/news-article/wahu-electric-bicycles-mitigation-activity-authorized

[xi] World Bank Group. (January 24,2024). Ghana Begins Receiving Payments for Reducing Carbon Emissions in Forest Landscapes. World Bank. https://www.worldbank.org/en/news/press-release/2023/01/24/ghana-begins-receiving-payments-for-reducing-carbon-emissions-in-forest-landscape

[xii] Ghana carbon Market Office. (January 20, 2024). Jospong Group signs MoU for carbon credits development. Cmo.epa.gov.gh. https://cmo.epa.gov.gh/jospong-group-signs-mou-for-carbon-credits-development/

[xiii] Albert Oppong-Ansah. (2024, July 31). Government to distribute million efficient cookstoves nationwide. Ghana News Agency. Ghana News Agency. https://gna.org.gh/2024/07/government-to-distribute-million-efficient-cookstoves-nationwide/

[xiv] Africa Climate Insights. (August 6, 2025). A Growing Gap: Investment for Climate Adaptation in Africa - African Climate Insights. African Climate Insights. https://africaclimateinsights.org/a-growing-gap-investment-for-climate-adaptation-in-africa/

[xv] Stephen Asante. ( November 3, 2025). India, Ghana embrace framework for energy transition, industrialisation   | Ghana News Agency. Ghana News Agency. https://gna.org.gh/2025/11/india-ghana-embrace-framework-for-energy-transition-industrialisation/