DENIS TUKAHIKAHO PhD: Uganda’s $31M carbon deal is just the beginning—now let’s plant more trees.

Denis Tukahikaho Ph.D. is an expert on Cooperatives, Financial Inclusion and Renewable Energy Investment

KAMPALA – The Green Climate Fund (GFF) has approved a USD 31 million (UGX 107.7 bn) as a result-based payment for Uganda in recognition of measurable success in reducing deforestation and green gas emissions. The unwinding follows a project write up on Uganda REDD-plus results -based payment for emission reduction (2016-2017) and this an effort out of collection action from all Ugandans.

In my previous article dated Sept 1 2025, I assured my readers that Uganda’s GDP will be driven by carbon pricing revenue before 2030. Since the global carbon pricing revenue hit record high of UDS 104 billion USD in 2024, the World Bank predictsthat Carbon pricing mechanism will represent 54% of Global GDP by 2030 and thus I predict that Uganda’s GDP will be anchored on carbon price revenue of between 25% -30% by 2030.

To achieve decarbonization targets, the world needs to mobilize approximately USD 7.4 trillion annually by 2030 to meet decarbonization goals and avoid the worst impacts of climate change and Uganda needs to mobilize around 28.9 billion USD to achieve her decarbonization goals. The challenge is that to achieve our Nationally determined contribution (NDC), we have focused more on external financing at 85% and internal financing at 15%.

While looking at climate finance geopolitics, Uganda needs to focus more on internal sources of climate financing than external sources. The development in the carbon market trade in Uganda is promising and Ugandans should plant more indigenous trees while investing in clean development mechanism for emission reductions. We are at a take off stage and carbon market will give the most promising incentives to Ugandans since creation. Trees are becoming an economic rent while taking over real estates based on investment decisions in regard to initial cost of investment vs pay back period, rate of return and return on assets. The tree economic rent model will be explained for Ugandans to make more rewarding economic choices for people, planet and profit and more investment is needed despite financing gaps;

Though the emerging markets and developing economies (EMDEs) are facing a particularly significant financing gap, emerging markets and developing economies excluding China require over USD 2 trillion per year to meet their climate targets and transition to cleaner energy systemshowever, these countries are at a disadvantage compared to advanced economies when attracting investment; In 2022, only 15% of global climate finance flows went to EMDEs (excluding China) and this underscores a disparity in resources and support. Furthermore, many EMDEs are fiscally constrained and burdened by high debt, which limits their governments’ ability to directly fund climate initiatives, or to incentivize private investment and the structural challenges present a need for innovative financial mechanisms and tailored support to unlock our full potential to drive global climate action.

While international finance remains impactful, bolstering domestic markets is critical to achieving long-term climate and development goals. In this context, carbon markets offer a promising means of bridging the financing gap. Carbon markets facilitate the trade of carbon credits, effectively by providing a mechanism for financing carbon reduction projects by accurately pricing the negative externalities of CO2 emissions. In 2024, the global voluntary carbon market had a value of USD 1.4 billion and though this had decreased from a value of nearly USD 2 billion in 2022. According to World Bank this is expected to grow to between USD 10 billion and USD 40 billion by 2030 as demand for carbon credits accelerates due to a confluence of factors. The factors include, the new Nationally Determined Contributions (NDCs)—to be communicated by governments in 2025, the implementation of the Carbon Offsetting and Reduction Scheme for International Aviation Phase II mechanism, and progress on Paris Agreement articles 6.2 and 6.4 frameworks are all expected to spur demand for carbon credits and drive up their prices. Still, the corporate net zero commitments and growing pressure from stakeholders, mandatory extra-financial reporting requirements e.g., the EU Corporate Sustainability Reporting Directive, the IFRS directive and road map on S2 scope 1,2 3 and the sectoral standards are also likely to contribute to these trends. Therefore, a reverse must be made for Carbon markets that have been typically established for specific sectors or components of the economy, rather than operating economy-wide.