Budget plan paves way for carbon trading hub

Local companies, such as Mumias Sugar Company and KenGen have made investments in electricity co-generation and geothermal development that are likely to earn them million of shillings in revenue over the years through carbon trading.

Mumias Sugar has invested in a project that uses sugar cane process waste — bagasse — to generate 35 megawatts of electricity and is likely to earn it Sh75 million annual revenue for the next 10 years from the sale of certified carbon emission to the Japan Finance Corporation.

KenGen, East Africa Portlands Cement and Muhoroni Sugar Company are also planning to venture into the carbon trading projects.

It is estimated that Kenya can produce 300 megawatts of electricity from agricultural residues such as bagasse from the sugar industry.

Kenya is also seeking to learn from Brazil — the world’s biggest exporter of sugar and ethanol made from cane — which has more than doubled output of the biofuel over the last six years to 27.5 billion litres in 2009, according to industry group Unica.

“It is our desire to learn from the Brazil’s best practices on bio-fuels in addition to other forms of renewable energy,” said Assistant Energy Minister Mohammed Mahamud, during a meeting between businesses and a government delegation from brazil which visited Kenya last week.

However, analysts have warned that such a trading system is highly complex and requires enormous resources and capacity development.

At the moment it is still not clear if the Kenyan government has the will or the resources needed to both develop and sustain such a system.

Failure by most African governments to set up a coordinating authority on climate change investment projects has been attributed to Lack of adequate skilled experts who can design proper carbon market projects.

National Environment Management Authority (Nema), which is charged with the responsibility of coordinating carbon market projects has fallen short in stimulating the Kenya’s carbon market properly by helping in projects development.

Policy guidelines

Reaching out to farmers, pastoralists and those in charge of conserving forests will be even more complex, and has not even been achieved by existing voluntary carbon markets in developed countries.

“The government should be able provide clear policy guidelines and increase budgetary allocation towards energy efficiency programmes,” said Ms Betty Maina, CEO Kenya Association of Manufacturers (KAM).

If successful, Kenya will join the global frenzy to combat climate change through creation of millions of new jobs for small scale farmers and pastoralists.

Since the carbon trading projects market is usually labour intensive, especially those that involve agriculture, it will boost employment opportunities in Kenya and Africa at large.