Kenya’s move to tap FDI dollars in green project deals is timely

I have followed global climate forums since the pioneer Rio forum of 1992 when as an employee of Exxon in Kenya, climate science sounded incomprehensible and abstract, with fossil fuel producers avoiding the subject.

The 2005 Kyoto protocol introduced commercialisation of opportunities for global warming mitigation, with efforts focused on biofuels which later proved unstainable.

The climate change breakthrough came in 2010s when venture capital provided funding for research and technologies to upscale renewable energy production and applications at reduced unit costs.

Today it is global financiers (multilateral, bilateral and commercial) and investors who are driving green projects as sustainable business opportunities, with governments providing enabling policies.

This week President William Ruto at COP27 in Egypt signed off ready-to-implement green projects with Britain. The projects include hydro, wind, solar and geothermal power generation, electrified rapid city transport and irrigation projects.

This is the climate route that Kenya should walk, a strategy with significant opportunities for foreign direct investment (FDI) dollar inflows and jobs. This is as Kenya, together with other developing nations, continues to engage industrialised world on climate justice dialogues.

There was also the green hydrogen project signed with Australian investors. Green hydrogen is produced from electrolysis of sea water (to avoid impacting fresh water supplies) and uses electricity from renewable sources (solar, wind, geothermal etc.).

This is in contrast to “blue” hydrogen produced from fossil fuels like natural gas.

Green hydrogen is a growing alternative technology for use in transportation to replace fossil fuels and is in sharp competition with electric vehicles (EVs). Green hydrogen is also a feedstock for manufacture of ammonium fertilisers when combined with nitrogen from air.

With numerous competing energy sources, and availability of funding opportunities, it is proper that Kenya undertakes a fresh review of national energy supply and demand, to correctly draw a roadmap and timelines for the inevitable energy transition from fossil fuels.

The energy review should ensure that investments are correctly aligned with future national energy demands, and that least cost objectives are achieved.

The review should ensure protection of existing renewable energy investments from energy oversupply. Imports of energy (Tanzania natural gas and Ethiopian hydro) may need a relook with Kenya’s balance of payment being a key consideration.

This review should be independent, and not left solely to existing energy players who may have conflicting interests.

COP27 is an occasion and opportunity to take stock of how Kenya is transitioning from fossil fuels, while leveraging global commercial funding to finance deserving green projects.