State to take 25 percent of private firms’ carbon credits revenue


President William Ruto arrives for the second day of the Africa Climate Summit with Deputy President Rigathi Gachagua (Left) and Cabinet secretary for Environment, Climate Change and Forestry Roselinda Soipan Tuiya (Right) at KICC, Nairobi on September 5, 2023. PHOTO | DENNIS ONSONGO | NMG

The government will take 25 percent of revenue generated by private companies from the sale of carbon emission reduction credits (CERs), if its proposals are approved.

The draft Climate Change (Carbon Markets) Regulations 2023 seeks to give the government a share of carbon credit revenue, which it says will be used to fund sustainable development.

“The share of proceeds in a carbon market project where a private entity is the proponent, shall be 25 percent of the aggregate earnings of the previous year,” reads the draft regulations.

“The 25 percent shall be paid to the consolidated fund for purposes of supporting sustainable development.”

A CER is equivalent to one tonne of carbon dioxide (CO2) and they are part of emission reduction efforts under the Kyoto Protocol.

A carbon market allows public and private entities to transfer and transact their emission reduction units, mitigation outcomes or offsets generated through carbon initiatives, programmes and projects at a fee.

The draft regulations classify carbon credits projects as national, community or private, with the community ones giving five percent of the revenues to their respective county and another five percent to the national government’s consolidated fund.

The move comes weeks after President William Ruto rallied Africa in passing the Nairobi Declaration on climate change which, among other things, is betting on the sale of carbon credits to net polluting entities to fund the continent’s growth.

Under the draft regulations, the government will establish a national carbon registry that will have details such as the number of carbon credits issued or recognised by Kenya.

There will also be sector registries such as that for aviation, forestry or energy, where entities will pay a registration fee to the sector registrar to be recognised and become eligible for accumulating carbon credits.

No person will be allowed to operate a carbon market project without being registered by the registrar.

“The registrar shall keep, maintain and update a register of all carbon projects under these regulations,” says the draft.

Those seeking to register carbon projects will be required to disclose ownership, and indicate how their project will contribute to nationally determined contributions and the number of jobs to be created.

Kenya’s updated Nationally Determined Contribution, which targets to cut greenhouse gas emissions by 32 percent in 2030, estimates that climate-related investment needs to amount to $62 billion (Sh9 trillion) by 2030.

The regulations empower the Cabinet Secretary (CS) for the environment to enter into international, multilateral or bilateral agreements with another approved country to trade carbons for internationally-transferred mitigation outcomes.

The CS will also be able to enter into agreements with private entities — whether local or international — to offset carbon emissions.

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