By Samuel Kweku KUMAH, Donatus KUUZUME & Eugene Nii Ayaa TETTEH
In the global race toward net-zero, Ghana is not merely keeping pace—it’s attempting to redefine the rules. Confronted with the dual pressures of climate responsibility and constrained capital, the country is navigating a complex path where ambition meets adversity. One such solution is literally in the air: carbon.
Treating carbon credit as acceptable collateral, positions Ghana to convert its emissions reductions and climate assets into immediate financing for growth. In effect, the country’s efforts to cut greenhouse gases could backstop loans and investments, channelling global climate capital into local development.
Carbon credits 101: From Kyoto to Accra
Carbon credits are financial certificates issued based on the potential of projects that reduce greenhouse gas emissions—such as afforestation, renewable energy, and energy efficiency initiatives.
What began as a niche mechanism under the Kyoto Protocol has matured into a cornerstone of global climate finance—and Ghana is emerging as one of its most promising frontiers.
The original concept was simple but revolutionary: allow countries to trade the right to emit carbon, incentivizing emissions cuts where they’re cheapest.
Under Kyoto’s Clean Development Mechanism, developing nations like Ghana could earn credits by reducing emissions and sell them to industrialised countries falling short of their targets.
The Paris Agreement of 2015 expanded this vision, introducing “internationally transferred mitigation outcomes” (ITMOs)—a new generation of carbon credits designed to foster cross-border cooperation on climate goals. For countries like Ghana, this isn’t just about environmental diplomacy; it’s about exporting a new kind of commodity: avoided emissions, measured in tonnes of CO₂.
Ghana has moved from climate policy participant to carbon market pioneer. With a Carbon Market Office, digital registry, and Article 6 agreements with countries like Switzerland and Sweden, it has built the infrastructure to monetise emissions reductions.
In 2019, it became the first African nation to qualify for forest-carbon credit sales to the World Bank’s Carbon Fund, unlocking US$50 million for protecting cocoa-rich forests.
By 2023, its carbon credit supply was projected at 33 million tonnes—potentially worth US$500 million. The next step is financial integration: can carbon credits become collateral for loans, bonds, or blended finance?
Could Ghana use them to back infrastructure projects, repaid through carbon revenues or taxes? The answer is increasingly yes. Proceeds are already funding climate and development priorities, and Ghana’s early deals show how carbon finance can drive inclusive, sustainable growth.
Global precedents: Turning carbon into collateral
Ghana is not alone in reimagining carbon as capital. Around the world, a quiet financial revolution is underway—one that is steadily integrating carbon credits into the architecture of mainstream finance.
In Thailand, regulators have begun endorsing the use of carbon credits as collateral for climate-aligned lending, recognising their growing role in de-risking green investments. In the European Union, carbon allowances such as EU Emission Allowances (EUAs) are already classified as transferable intangible assets, making them eligible for use as security in financial transactions.
The European Central Bank has taken steps to “green” its collateral framework, reducing exposure to high-carbon assets and implicitly elevating the financial standing of low-carbon alternatives. Across European trading platforms, carbon allowances are now accepted as margin collateral—proof of their increasing liquidity, credibility, and institutional trust.
Elsewhere, countries are going even further. Australia and New Zealand have formally recognised carbon credits as personal property, a legal shift that enables their direct use as loan collateral under personal property security laws.
In New Zealand, courts have affirmed the tradability and enforceability of carbon credits, providing the legal certainty investors crave. In Vietnam, financial experts are urging lawmakers to establish a regulatory framework that allows banks to lend against carbon and digital climate assets—an initiative seen as essential to unlocking green capital.
Nigeria is engaged in a similar debate, with analysts advocating for carbon-backed lending to catalyse energy sector investment. Even in emerging markets, some forward-thinking lenders are already bundling carbon credits into all-asset collateral packages for renewable energy projects.
As global efforts to standardise carbon markets and accounting frameworks accelerate, the perceived risk of carbon assets is diminishing—clearing the way for their evolution from environmental instruments to financial mainstays.
A green guarantee for Ghanaian banks
Treating carbon credits as collateral could quietly revolutionise Ghana’s financial system, transforming climate-positive enterprises into credible guarantors of credit. Forest conservation projects like the Ghana Cocoa Forest REDD+ Programme already generate tradable credits by preventing deforestation.
If banks begin accepting these future credits as security, developers and community groups could access upfront financing for reforestation, monitoring, and rural livelihoods—repaying loans once carbon revenues materialise.
In this model, a standing forest becomes more than an ecological asset; it becomes a financial instrument, capable of anchoring rural development and environmental preservation alike. Agriculture and renewable energy offer similar potential.
Climate-smart farming, agroforestry, and soil carbon sequestration can all yield verifiable credits. If these future assets are bankable, cooperatives and farmers could secure financing for inputs, irrigation, and infrastructure—boosting productivity while building resilience.
Clean energy developers, too, can leverage carbon credit projects as a means to generate financing and attract early-stage investment. This reduces investment risk, lowers financing costs, and accelerates Ghana’s transition to a low-carbon economy. In effect, carbon-backed collateral embeds sustainability into the country’s financial architecture, aligning institutional lending with national climate targets.
The economic case for action is increasingly persuasive. Carbon-backed lending could unlock over US$1 billion in investment by 2030, boosting employment and GDP. It allows banks to diversify portfolios and extend credit to green ventures without excessive risk.
Global demand for carbon credits—driven by corporate net-zero pledges and regulatory compliance—is expected to surge, further strengthening their value. This innovation could also attract foreign capital. Climate-focused investors are actively seeking jurisdictions that treat carbon assets as credible financial instruments.
A Ghanaian banking system that integrates carbon into its collateral framework would stand out as a pioneer, drawing in capital and positioning the country as a continental leader in climate finance.
Most importantly, this approach creates a virtuous cycle: Ghana’s progress on emissions reductions would not only earn international recognition but also directly enhance its financial resilience by expanding the pool of usable collateral and investable capital.
But unlocking this potential requires more than vision—it demands legal and regulatory precision. Ghana is already laying the groundwork through the Environmental Protection Agency Act of 2025 and its Carbon Markets Framework.
A key step is legal clarity: carbon credits must be defined—whether as intangible property, financial instruments, or tradeable rights—to give lenders enforceable claims. Australia has already codified this approach, enabling carbon credits to be pledged as loan security. Ghana can follow suit through statutory or regulatory reform. Valuation and risk management are equally critical.
Historically, carbon credits were seen as volatile and opaque, but with the rise of regulated and voluntary markets, price discovery is improving. The EU’s carbon market, for example, offers futures contracts that provide price signals through 2030. Ghana’s credits—many of which are nature-based—trade in voluntary markets where prices vary, but efforts to standardise quality and pricing are gaining traction. Regulators can mitigate risk by applying conservative “haircuts” to collateralised credits—valuing them at 60 to 70 percent of market price—and limiting eligibility to high-integrity credits that are real, additional, and permanent. Ghana’s own registry emphasises transparency and quality, reducing the risk of banks holding devalued or non-compliant credits.
Moreover, carbon derivatives—such as forward contracts for future delivery—offer a more liquid and standardised asset class. A forward agreement with a reputable buyer for a set volume of credits at a fixed price becomes a de facto receivable, usable as collateral today. This approach blends environmental finance with traditional credit structures, creating a bridge between climate ambition and financial pragmatism. To make this work, Ghana’s financial regulators must evolve in step.
The Bank of Ghana and allied institutions could issue guidance on how to treat carbon credits as collateral—mirroring frameworks used for commodities like gold.
This includes defining how to perfect security interests, manage defaults, and account for carbon assets on balance sheets. International legal bodies such as UNCITRAL and UNIDROIT are already working to harmonise the treatment of carbon credits in commercial law. Ghana can engage in these efforts, ensuring its domestic rules align with emerging global standards—further boosting investor confidence.
The way forward: Seizing the carbon collateral opportunity
Ghana’s financial and political leaders stand before a rare opportunity—to transform the country’s climate ambition into a catalyst for financing and economic resilience. Realising this vision demands more than pilot programs; it calls for a robust policy architecture that supports carbon credits as legitimate collateral. Forward-thinking banks can take the first step by launching lending schemes for green ventures—secured in part by verified or forward-contracted carbon credits.
Banks can also use carbon credit discounting as a medium for upfront financing of verified and approved carbon projects. These pilots would provide a proof of concept, allowing regulators to observe and fine-tune the framework. Early risks could be mitigated through guarantees or co-financing from global climate funds and development finance institutions, creating a blended finance model that crowds in local participation.
However, demonstration must be matched by deliberate systemic reform. Ghana needs to establish a domestic cap-and-trade system, replacing selected levies on hard-to-abate sectors with emissions caps that allow firms to trade carbon allowances. This would create a local market where credits are generated, exchanged, and priced—building liquidity and confidence.
Guided by Stouffer’s Law of Intervening Opportunities, this proximity-based system would make it easier for Ghanaian businesses to participate than relying solely on distant international markets.
Alongside this, Parliament must amend the National Lending Act to accommodate floating-value, intangible assets like carbon credits. Clear provisions should cover valuation standards, enforceable security interests, and recourse mechanisms. Applying conservative loan-to-value ratios—say 60–70percent—would provide necessary prudence curbing innovation.
The Bank of Ghana must anchor this transition with bold regulatory leadership. Through targeted guidance aligned with the Ghana Green Finance Taxonomy (2024) Phase 1, the central bank can catalyse product innovation by encouraging carbon-backed loans, offering preferential risk weightings, or creating regulatory sandboxes. These actions would offer clarity and legitimacy without to carbon as an asset class within the financial sector.
Ghana is already a leader in carbon market readiness; now it must lead in carbon finance. Done right, the country could become a regional hub for climate-aligned banking—attracting capital, building resilience, and proving that carbon is not just an environmental liability, but a financial opportunity. It’s time to turn climate leadership into financial architecture—and let carbon finance Ghana’s next chapter.
>>>Samuel Kweku Kumah, is a sustainability professional with expertise in research, impact management, and sustainability reporting. Currently serving as the Research and Impact Management Officer in the Partnerships, Sustainability, and CSR department at Fidelity Bank Ghana, Samuel has demonstrated a robust capacity for implementing and reporting sustainability research and impact strategies that align with global standards.
>>>Donatus Kuuzume, Esq is a banker of 19 years’ experience. He is a sustainability finance professional at Fidelity Bank Ghana Ltd and a lawyer. He is a Barrister and Solicitor of the Supreme Court of Ghana.
>>>Eugene Nii Ayaa Tetteh is a seasoned credit and sustainability professional with over a decade of multidisciplinary expertise spanning finance, ESG, and project management. He holds advanced degrees in Accounting, Finance, and ESG, along with certifications in financial modelling, securities, and project management. His background reflects a strong blend of financial and environmental acumen, with a clear commitment to sustainable finance and strategic execution.
