The government says Kenya is creating an enabling environment to inspire confidence in investors and attract carbon finance in the country’s climate-positive growth drive.
Speaking at the Carbon Markets Conference in Nairobi in April, Bianca Gichangi, a carbon markets expert and adviser at the Office of the Climate Envoy, Executive Office of the President of Kenya, said the country has been active in the carbon markets space for more than two decades and is a leader in Africa with around 23 percent market share of voluntary carbon credits issued.
According to Ms Gichangi, carbon markets are prioritised as a pivotal component of Kenya’s climate-positive growth and carbon credits are envisioned as the next major export.
This is why on the path to realising this vision, Kenya has marked notable strides by establishing robust legal and institutional frameworks through amending the Climate Change Act to incorporate carbon markets and is close to finalising regulations that provide clarity on implementation.
But what is carbon trading and what are carbon markets?
Dr Olufunso Somorin, the regional principal officer of, the climate change and green growth programme for East Africa at the African Development Bank Group(AfDB) said we are in an era where we need trillions, if not billions to respond to the devastating impacts of the climate crisis.
“There is an international mechanism under Article 6 of the Paris Agreement that sets out how countries can pursue voluntary cooperation to reach their climate targets.
“It enables international cooperation to tackle climate change and unlock financial support for developing countries.”
This, he says, means that under Article 6, countries can transfer carbon credits earned from the reduction of greenhouse gas emissions to help one or more countries meet their climate targets.
Through this mechanism, a company in one country can reduce emissions and have those reductions credited for sale to another company in a different country.
That second company may use them to comply with its emission obligations or to help it meet net-zero targets.
Dr Somorin said there are three tools countries can draw upon under Article 6, one of which is the Paris Agreement Crediting Mechanism (PACM)—the UN’s new high-integrity carbon crediting mechanism.
“This international mechanism allows possible projects for climate mitigation such as carbon sequestration—the process of capturing and storing atmospheric carbon dioxide to reduce the amount of the gas in the atmosphere in efforts to ease global warming—to happen in developing countries paid for by a country paid for by a country or entity in a developed country.
“So if you can’t fully achieve emissions reduction in your country because of the system, there’s an opportunity for you to achieve emissions reduction in another country, and that reduction in another country generates carbon credits which can be sold by the country supplying those credits to the countries that are in demand of those credits, that trading is what the carbon markets are about, it’s a very complex market,” he said.
The expert adds that there is a very big difference between carbon trading and greenwashing.
“One key element of the carbon market is that it is a trust market, when I pay you to generate carbon credits, you have to do it. Greenwashing is misleading the public to believe that an entity is doing so, it promotes false solutions to the climate crisis that distract from and delay concrete and credible action.”
Greenwashing manifests itself in several ways, including claiming to be on track to cut a company’s emissions when no credible plan is in place, being purposely vague about a company’s operations or materials used, applying intentionally misleading labels such as “green” or “eco-friendly,” which do not have standard definitions and can be easily misinterpreted, implying that a minor improvement has a major impact, or promoting a product that meets the minimum regulatory requirements as if it is significantly better than the standard.
According to the UN, the science is clear.
“Greenhouse gas emissions, such as carbon and methane, from human activities are wrapping the Earth in a blanket of pollution that has warmed the planet and led to severe impacts such as more intense storms, droughts, floods, and wildfires.
Greenwashing undermines credible efforts to reduce emissions and address the climate crisis. Through deceptive marketing and false claims of sustainability, greenwashing misleads consumers, investors, and the public, hampering the trust, ambition, and action needed to bring about global change and secure a sustainable planet.”
This is why, according to Ms Gichangi, Kenya will soon be unveiling frameworks to promote high-integrity carbon market activities and provide an enabling policy environment for investment and flow of carbon finance into enhancing energy access, safeguarding our terrestrial and marine ecosystems, boosting agricultural yields, and contributing to green industrialisation.
“There’s an opportunity to build technical capacity and generate employment for our burgeoning population. End-to-end integrity in carbon markets is crucial to ensuring the credibility and effectiveness of carbon market activities, providing confidence to investors and stakeholders that carbon credits represent genuine environmental and social benefits. It safeguards against double counting and fosters transparency that enhances trust in the carbon market system,” she said.
Ms Gichangi added that last year, at the world’s biggest climate meet in Dubai (COP28), President William Ruto launched the Africa Green Industrialisation initiative, building upon the Nairobi Declaration, with a vision to propel green industries in the country and on the continent.
Kenya, endowed with abundant renewable energy, aspires to boost its renewable energy production from 3GW to 100 GW by 2040. This ambitious goal will position Kenya as a premier green industrial hub, attract international ventures, and foster the adoption of carbon management technologies, she said.
According to the government, the rise of e-mobility in Kenya is set to reduce reliance on fossil fuels, mitigating urban air pollution and enhancing public health.
“Carbon revenues can subsidize electric vehicle technology, promoting its adoption while leveraging more climate finance through public-private partnerships.
Additionally, the country aims to address energy access challenges by utilizing carbon finance to subsidize transformative high tier clean cooking technologies, benefiting 45 million Kenyans without access to clean cooking by the end of the decade,” Ms Gichangi added.
Dr Somorin agrees with Ms Gichangi that the ordinary Kenyan can and will benefit from all this.
“The question should be how can an average group of people within a defined scope of project benefit?”
Here explains that there is an opportunity within the carbon market structure which is an incentive market for the ordinary people to benefit but in order for that to happen it has to be done at scale which means people have to register as a group or community and do projects together.
This is because the cost of transacting most carbon projects is very high which is why one has to do it at scale for it to make economic sense.
“This is why we have been here for two days; to discuss how we can turn carbon market opportunities in priority sectors into real investment.
We have been expounding on different innovative finance models and the role local financial institutions can play in supporting private sector project developers as well as unpacking the complexities of pricing and building infrastructure to enhance integrity, transparency, and accounting, “MS Gichangi said.
On the question of the amount of land / trees needed to execute carbon trading initiatives, Dr Somorin told climate action that there are multiple approaches when it comes to removing carbon dioxide from the atmosphere.
“Some of the opportunities that give the biggest emission reduction are largely land-based first of all which is why there’s a lot of interest in trees and forests, this is what we call nature-based solutions.
The reason for this is because of the biology of life, a tree absorbs carbon dioxide from the atmosphere and releases oxygen and so when you have millions of trees the more photosynthesis happens but when it comes to how many trees one needs, there’s no straight answer, this is because no two trees sequester carbon the same way.”
He explains that there is a difference in sequestration between an older tree and a younger one, there’s also a difference in sequestration between a tree in Europe and a tree in Africa as well as tiny trees that are fast growing and huge trees that are slow growing.
“We have an advantage in Africa because the type of tree species that we have here are the best when it comes to sequestration globally, that’s why there is a lot of interest.”
Apart from trees, he points out that biofuels can also be used for carbon trading.
Dr Somorin reminds that the world is on the threshold of transitioning from the petroeconomy, fuelled by carbon from the past, to the bioeconomy, fuelled by biomass created through photosynthesis.
The petroeconomy is overwhelmingly carbon positive—contributing carbon to the load already imposed, and increasing at the rate of approximately eight gigatonnes per year.
The bioeconomy is widely considered to be carbon neutral, in that the carbon emitted through burning replaces the carbon absorbed during the growing of the crop.
However, a furious debate has been ongoing over the real degree of carbon neutrality achieved by biofuels, with some produced in temperate climates such as North America and Europe being argued to be almost entirely carbon positive, due to the heavy inputs of fossil-fuelled activities and products such as fertilizers.
“If you shift from fossil fuel powered systems to clean energy systems such as hydro, geothermal, wind or solar energy that is a potential carbon project and in fact some of the geothermal projects in Kenya have been funded through carbon finance,” he told Climate Action.
Ali Mohammed, the special envoy on Climate Change at the Office of the President of the Republic of Kenya said that contrary to what many people have been saying, the government does not do carbon credit deals in secret.
“We do things in broad daylight, go for meetings and discuss potential investment opportunities as well as framework for collaborations with partners and investors, there is nothing secret about that.”
