Ethiopia has generated approximately 70 million US dollars in revenue through carbon trading agreements with international partners, underscoring the country’s rising profile in global climate finance and environmental stewardship. According to Fana Broadcasting Corporate, a state-affiliated media outlet, the agreements were secured in partnership with several bilateral and multilateral institutions, including the World Bank, following substantial progress in afforestation and land restoration efforts.
This milestone is largely attributed to the country’s flagship environmental campaign, the Green Legacy Initiative, launched in 2019 under the leadership of Prime Minister Abiy Ahmed. The initiative was designed as a long-term national strategy to combat deforestation, restore degraded ecosystems, and enhance climate resilience. As of April 2025, Ethiopia has successfully increased its national forest cover to 23.6%, reflecting a notable ecological recovery in a country previously facing accelerated land degradation and biodiversity loss.
The carbon trading revenue stems from a series of memoranda of understanding signed with entities committed to global emissions reduction. Carbon markets operate by allowing countries or companies to offset their carbon emissions through the purchase of carbon credits from environmental projects such as afforestation, renewable energy, or methane capture. Ethiopia’s restored forest areas and planned tree-planting schemes now qualify for such credits under international frameworks.
Kebede Yimam, Director General of Ethiopian Forestry Development, noted that the agreements signal growing confidence among international development partners in Ethiopia’s commitment to sustainability and environmental governance. The planned planting of 7.5 billion seedlings in the forthcoming rainy season (June to September 2025) forms part of the initiative’s next phase and reflects a scaling-up of previous efforts. This figure adds to the already-planted 40 billion seedlings achieved over the last five years, according to Prime Minister Abiy Ahmed’s recent public address.
These developments align with wider continental ambitions to capitalise on climate finance mechanisms. The United Nations Economic Commission for Africa (UNECA) has frequently emphasised that carbon markets provide African nations with a strategic opportunity to leverage their natural capital, particularly forest and land ecosystems, to access new financial flows while advancing sustainable industrialisation and economic transformation. In UNECA’s analysis, Africa is poised to become a major supplier of high-quality carbon credits due to its untapped land resources and growing number of reforestation programmes.
Ethiopia’s Green Legacy Initiative not only provides ecological dividends but also social and economic co-benefits. Tree planting campaigns have employed thousands across the country, particularly youth and women, thus linking climate action to livelihoods and inclusive development. The ecosystem services from expanded forest cover also support water regulation, erosion control, and improved agricultural productivity, all of which contribute to the country’s long-term food and water security.
Moreover, Ethiopia’s reforestation success sets a valuable precedent for other African nations seeking to enter or scale their participation in carbon markets. Countries such as Kenya, Rwanda, and Ghana have also launched comparable greening programmes, but few have matched Ethiopia’s speed or scale. According to a 2023 UNEP report, Ethiopia ranks among the top three African nations in annual tree planting volume, supported by strong institutional backing and a growing framework for monitoring and verification of carbon outcomes—critical for the credibility of carbon credits.
However, while Ethiopia’s achievements have been praised internationally, experts caution that the sustainability of such initiatives depends on long-term planning, policy coherence, and community engagement. Forest conservation, unlike tree planting alone, requires ensuring that planted seedlings survive and grow to maturity, which necessitates follow-up funding, technical support, and environmental education. Independent audits and transparent reporting will be essential for maintaining trust in Ethiopia’s carbon credit offerings.
The World Bank and other global partners have signalled readiness to expand collaboration with Ethiopia on nature-based solutions, particularly under new climate finance windows such as the Climate Emissions Reduction Facility (CERF) and the Green Climate Fund (GCF). These funds aim to support countries that show strong results in reducing greenhouse gas emissions while promoting inclusive development.
In an era where global carbon markets are evolving rapidly, Ethiopia’s experience provides valuable insights into how emerging economies can simultaneously meet their climate goals and generate financial returns. With its increased forest coverage, enhanced environmental governance, and active engagement with international institutions, Ethiopia is emerging as a case study in climate-driven development.
As carbon pricing becomes more central to climate negotiations and investment strategies, the implications of Ethiopia’s success extend well beyond its borders. Its model may serve as a blueprint for climate-resilient growth, aligning national interests with global environmental objectives, while offering a replicable pathway for other countries in the Global South seeking equitable access to climate finance.
