Botswana

Implementation period: 2021-2025 Funding amount: US$500,000 Window: Readiness

In the context of its 2021 National Climate Change Policy, Botswana considered the adoption of a carbon tax mechanism with the objectives of identifying potential sources of additional revenues for the government, while incentivizing green growth.  Early efforts under the PMI program focused on exploring the distributional impacts of a carbon tax in Botswana and on policy interactions with sectoral policies. The scope of the program has since been amended to better align with client needs and evolving government priorities on greening the economy. This includes substantial renewable energy initiatives to scale up and advance towards climate and development goals.  

Objectives & Activities

The revised scope was agreed upon through discussions with a new inter-ministerial Steering Committee and seeks to provide technical assistance on:  

• Assessing the potential impacts of a domestic carbon tax to improve fiscal resilience and sustainability: Evaluate macroeconomic and distributional impacts to inform decision-making and develop recommendations for repurposing revenues and addressing any regressive impacts of the carbon tax
• Supporting the development of a strategy for participation in international carbon markets: Assist in finalizing a robust national policy framework and facilitate capacity building on participation in carbon markets
• Capacity building on Renewable Energy Certificate (REC) markets: Strengthen institutional understanding of RECs and their linkages with international environmental attribute certificate markets to support renewable energy scale-up
• Assessing infrastructure needs for carbon market implementation: Identify institutional and data-related requirements to enable operationalization of carbon markets and the development of interoperable infrastructure  

All the above activities will leverage stakeholder consultation and facilitate cross-sectoral engagement to align views and expectations across government, private sector, and other relevant stakeholders. 

Additional Resources

• Botswana’s Updated NDC (2024)
• Botswana National Climate Change Policy (2021)
• Botswana National Energy Compact (2025)