Kenyan developers are making a significant impact in the world of carbon credits, with four individuals in particular raking in billions from major corporations like Netflix, Shell, and Apple.
This emerging trend of cashing in on carbon credits in Kenya is part of the growing Voluntary Carbon Markets (VCMs) sector.
But before we delve into how Kenyan developers are capitalizing on VCMs, it’s important to understand the history and purpose of these markets.
Compliance Markets were the original form of carbon markets, where governments set caps on industries’ CO2 emissions.
However, due to challenges with caps and allocation methods, VCMs were introduced to assist in reducing emissions.
In 2023, President William Ruto signed the Climate Change (Amendment) Bill into law, laying the foundation for the regulation of carbon markets in Kenya.
The World Bank previously estimated the cost of eliminating a ton of carbon dioxide to be between $40 and $80Â based on the Paris Climate Agreement. Yet, the specific prices paid for these Kenyan credits remain undisclosed.
This new law not only regulates carbon markets but also strengthens the country’s capacity for climate resilience initiatives.
A significant aspect of VCMs is the ability to buy and sell carbon credits in a marketplace. Carbon credits represent the reduction, avoidance, or removal of one tone of carbon dioxide (CO2) and are traded by developers who work on projects that reduce emissions.
One example of the impact these projects can have is the Equator Initiative’s report, which highlights that mangrove forests store over 1,500 metric tons of carbon per hectare, significantly more than terrestrial forests.
Kenya has been a leading issuer of VCM carbon credits in Africa, second only to the Democratic Republic of Congo. This trend of growth over the past decade showcases the success of Kenyan developers in the carbon credit market.
In 2022, according to data from the World Bank, there was a significant decline in the number of carbon credits issued, with a total of 475 million being issued, a 22 percent drop from the previous year.
Despite this decrease, the Kenya Electricity Generating Company (KenGen) was able to generate revenue of Sh12.7 million from trading carbon credits.
At the 28th United Nations Climate Summit (COP28) held in Dubai in December last year, Kenya joined other nations in emphasizing the importance of carbon markets as complementary to emission reduction efforts. The countries stressed the need for transparency and high-integrity standards to maximize the effectiveness of these markets.
This highlights the potential for Kenyan developers to create carbon credits through various initiatives such as tree planting, renewable energy projects like solar and wind farms, hydropower plants, and energy efficiency projects.
Additionally, Kenya is set to draw down its first funds from the $551.4 million Resilience and Sustainability Facility (RSF) secured from the International Monetary Fund (IMF) in July.
Developers in Kenya looking to create and sell carbon credits must adhere to verification standards like the Verified Carbon Standard (VCS), the Gold Standard, and the Climate Action Reserve (CAR).
Kenya’s voluntary carbon market is gaining traction among global players, with tech giants and oil companies jumping into the fray. With Africa’s carbon credit potential unlocked, Kenya aims to harness this market to combat climate change and drive sustainable development.
Kenya has emerged as the second largest issuer of VCM carbon credits in Africa in 2022, following the Democratic Republic of the Congo, marking a significant progression in the country’s efforts towards sustainability and environmental conservation over the past decade.
In conclusion, Kenyan developers are making waves in the world of carbon credits through their innovative projects and partnerships with major corporations. The rise of VCMs and the recent regulatory legislation in Kenya have set the stage for further growth in this sector, allowing developers to continue making a positive impact on reducing emissions and combating climate change.
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