Lagos, Nigeria—The Clean Cooking Alliance (CCA) and the Voluntary Carbon Markets Integrity Initiative (VCMI) unveiled a comprehensive guide today to empower regulators in testing carbon market innovations through regulatory sandboxes. It was launched in conjunction with the West Africa Financial Institutions Carbon Markets Training and is designed to help governments and financial authorities test and refine carbon market regulations in a controlled, evidence-based way.
The guide, titled “Regulatory Sandbox to Support Carbon Markets: A How-To Guide for Regulators and Policymakers on Testing Carbon Market Innovations,” offers a step-by-step blueprint for creating controlled environments to trial cutting-edge financial products. These include carbon-credit linked bonds, securitized carbon transactions, blockchain-based registries, AI-driven monitoring systems, and tokenized credits. Supported by FSD Africa and produced under VCMI’s Access Strategies Program, it emphasizes evidence-based regulation tailored to diverse national contexts.
UNLOCKING CLEAN COOKING FINANCE
Carbon markets are constrained by structural challenges such as inconsistent credit quality, limited transparency, high transaction costs and regulatory uncertainty, the organisations said.
“Innovation in the clean cooking sector is advancing rapidly, and regulatory clarity will be critical to unlocking investment,” said Dymphna van der Lans, CEO of the Clean Cooking Alliance. “Regulatory sandboxes give policymakers a practical way to test new approaches, build confidence, manage risk, and protect the integrity of carbon markets.” The framework draws from CCA’s prior work, including a report and policy brief on “Financial Regulatory Pathways for Scaling Carbon Markets.”
In carbon markets, they provide controlled live environments for testing innovations while maintaining environmental integrity and investor protection. The guide covers governance mechanisms, risk controls, stakeholder roles and technical considerations.
AFRICA’S CARBON PIONEERS
The training event in Lagos is hosted by FSD Africa in partnership with the West African Alliance on Carbon Markets and Climate Finance from March 30 to April 1. These resources are guiding CCA's ongoing support to regulators in Kenya, with similar efforts underway in Nigeria.
FSD Africa, a specialist development agency established by the UK Government in 2012, supported the guide. “With many countries across Africa aiming to develop their carbon markets and become investment-ready, this guide offers timely and practical guidance to help financial institutions regulators develop carbon regulations that fit country contexts,” said Reshma Shah, Carbon Markets Lead at FSD Africa.
While the guide draws on experience from carbon markets linked to clean cooking and household energy access, it is designed for broad applicability across countries, technologies and carbon market segments.
BALANCING RISK AND REWARD
The guide is intended for capital markets authorities, financial regulators, central banks, climate finance innovators, carbon project developers and economic development partners. It is available in English, with a French version to follow.
VCMI is an international non-profit focused on high-integrity voluntary carbon markets. “Carbon markets hold significant opportunities for climate-positive growth in emerging markets and developing economies, but accessing growing demand for carbon credits requires specialist knowledge and tailored policies and regulations that have been tested in real world contexts,” said Mark Kenber, Executive Director of VCMI.
“Unlocking carbon finance is vital for climate resilience and sustainable development across West African countries and communities,” said Ousmane Fall Sarr, Coordinator of the West African Alliance on Carbon Markets and Climate Finance.