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KenGen-backed Sh107bn fertiliser factory set to sell carbon credits
Kenya Electricity Generating Company PLC (KenGen) Olkaria Geothermal well undergoing tests through discharging in preparations for electricity in this picture taken on February 21, 2025.
Kenya’s first $832.76 million (Sh107.3 billion) green fertiliser project targets to sell carbon credits in the lucrative compliance market by removing carbon dioxide from the atmosphere.
A compliance market is a government-regulated scheme for trading carbon credits—permits that allow owners to emit a certain amount of carbon dioxide or other greenhouse gases. One credit permits the emission of one tonne of carbon dioxide or the equivalent in other greenhouse gases.
A regulatory filing on the green fertiliser project and its associated geothermal power plant shows that the project will help Kenya avoid about 600,000 tonnes of carbon dioxide equivalent annually. The project backers said this is comparable to removing an equivalent of more than 130,000 fossil-powered cars from the Kenyan roads each year.
“By displacing fossil-based fertiliser imports and establishing a renewable, circular carbon manufacturing base, the Geothermal Power and Green Ammonia Fertiliser Plants project will avoid approximately 600,000 tonnes of carbon dioxide equivalent (CO2e) per year, equivalent to removing over 130,000 cars from Kenyan roads annually,” the regulatory filing said.
The disclosure adds that the project will also support Kenya’s goal of cutting greenhouse gas emissions by 32 percent below business-as-usual levels by 2030 and “serve as an anchor project for carbon credit exports under the Article 6.2 bilateral cooperation framework”.
Article 6.2 refers to a provision of the United Nations Framework Convention on Climate Change under the Paris Agreement that allows countries to trade carbon emission reductions directly with each other through bilateral agreements.
The Naivasha-based geothermal-powered fertiliser plant will be built through a joint venture by the State-run Kenya Electricity Generating Company (KenGen) and China’s Kaishan Group.
Kaishan’s local unit, Kaishan Terra Green Ammonia Ltd, will construct and operate the facility. KenGen will supply 165 megawatts of geothermal energy to power the production of green ammonia and fertiliser for the project for 30 years.
In its filing, Kaishan Terra Green Ammonia Ltd says the ammonia will be classified as “green” because it will not use fossil fuels to produce hydrogen or power the plant, avoiding the emissions linked to conventional ammonia production.
The disclosure comes at a time when Koko Networks shut down after disagreeing with the Kenyan government on the limit of the carbon credits the clean energy startup would sell in the lucrative compliance markets.
Trade Cabinet Secretary Lee Kinyanjui said Koko Networks wanted to sell more credits, leaving little for other players.
M-Gas, a startup where Safaricom has a stake, recently revealed that it had secured a Letter of Approval from the Kenyan government to begin selling credits in the global markets.
Kaishan said to secure long-term climate benefits and financial stability, the project would follow a structured carbon crediting plan aligned with international market standards.
The initial crediting period will last 10 years, with the option to renew twice if the project continues to meet environmental and operational requirements.
This could extend carbon revenue generation to 30 years, providing predictable returns while supporting reinvestment in efficiency improvements and low-carbon technology upgrades.
The Naivasha-based plant has the capacity to produce between 200,000 and 300,000 tonnes of ammonia-based fertiliser every year.
The facility is expected to stabilise local fertiliser prices by reducing dollar-denominated import exposure, KenGen said in a statement, projecting to generate an estimated $13 million (about Sh1.68 billion) in annual net profit from the plant on completion.
