Time flies with great content! Renew in to keep enjoying all our premium content.
Prime
KenGen earns Sh4bn from carbon credits sales
Kenya Electricity Generating Company (KenGen) workers walk at the Olkaria II Geothermal power plant near the Rift Valley town of Naivasha, Kenya on February 15, 2018.
Kenya Electricity Generating Company (KenGen) is set to receive $32.05 million (Sh4.14 billion) by January from the sale of its certified emission reductions (CERs), offering a sneak peek into the lucrative market of climate change initiatives.
The electricity generator, which has been looking for a buyer of 4.62 million tonnes of CERs, says it has entered into a contract with Sintmond Group—a Nairobi-based firm that offers energy solutions, inspections and waste disposal or recycling.
Sintmond is based in Imara Daima and is backed by Hitachi Zosen Inova (HZI) — a waste management technology provider based in Zurich. HZI announced its entry into Kenya in 2022 through a partnership with Sintmond.
KenGen disclosed that it entered into a contract in mid-April, allowing the firm to purchase the CERs by end of January next year. The KenGen price amounts to about $6.94 (Sh897) per tonne.
The carbon credits are from KenGen’s six projects—Olkaria II geothermal expansion project, redevelopment of Tana Hydro Power Station project, optimisation of Kiambere Hydro Power Project, Olkaria IV Geothermal Project, Olkaria I Units 4&5 Geothermal Project and Ngong Wind.
The six are classified as clean development mechanism (CDM) projects under the Kyoto Protocol that set emission reduction targets for countries and technological and financial transfers to countries to support climate change mitigation and adaptation initiatives.
The first KenGen project to be issued with carbon credits under the CDM initiative was the Tana hydroelectric power project, which received 57,458 carbon credits on March 13, 2020.
Carbon credits trading involves the purchase of credits by firms that have exceeded their emission limits. Most of the trading happens in carbon trading exchanges in the US and Europe.
The carbon credits, also known as carbon offsets, are permits that allow owners to emit a certain amount of carbon dioxide or other greenhouse gases. One credit permits the emission of one ton of carbon dioxide or the equivalent in other greenhouse gases.
The sale of the 4.6 million tonnes of CERs leaves KenGen with a balance of 1.84 million tonnes. KenGen says in the latest annual report the balance were earned recently from three Olkaria CDM projects.
KenGen pledged to voluntarily dedicate 10 percent of the income from sale of CERs to support neighbouring communities in a programme themed Community Benefit Programme. This means the sale will see about Sh410 million go to communities surrounded by the six projects.
The balance will go into financing expansion of existing projects and also support development of climate resilient energy programmes.
KenGen is placing itself at a strategic position to participate in the carbon market frameworks under the Paris Agreement through development of innovative energy technologies that are green, renewable and of low carbon.