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How a Kenyan start-up is Harnessing Carbon Markets in Africa

In an innovative approach to revolutionising energy provision in developing countries, Koko Networks, a Kenyan start-up, has tapped into international carbon markets to bring clean cooking fuel to over a million households.

With more than $100 million raised in carbon finance within the past four years, Koko Networks is able to subsidise clean energy cooking in Kenya, helping families transition from cheaper, but more hazardous, charcoal.

Koko’s CEO and co-founder, Greg Murray, explains that they founded the company with carbon as the driving force, acknowledging the potential of utilising non-government economic subsidies to address the role that governments have traditionally played in the energy sector. This model could be implemented in any of the 60 tropical forest nations across the world, where a significant portion of the population relies on charcoal for cooking.

Instead of relying on charcoal, Koko’s customers use ethanol, which is produced from either corn or sugarcane, on the company’s twin-hob stoves. These stoves are designed with an airlock to minimise fumes, ensuring a safe cooking experience. The ethanol fuel can be purchased from Koko vending machines located in local corner stores, allowing customers to conveniently refill reusable bottles.

By reducing the use of charcoal, which contributes to deforestation, Koko Networks is able to generate audited carbon credits that can be traded on international markets. However, instead of treating these funds as additional revenue, the company chooses to reinvest the value into subsidies for its customers. This approach not only contributes to environmental sustainability but also makes clean energy cooking more affordable and accessible to the wider population.

The success of Koko Networks’ carbon market approach is not only limited to Kenya. The potential for replicating this model in other tropical forest nations is immense, providing an opportunity to address both energy poverty and environmental concerns. By leveraging carbon finance, countries can adopt a more sustainable energy system and reduce their dependence on harmful cooking practices.

Koko has successfully reduced the cost of stoves by an astounding 85 percent and fuel consumption by 25 to 40 percent. Not only does this make cooking more affordable for households across Africa, but it also has far-reaching benefits for the environment and public health. In this article, we will delve into the details of Koko’s solution and explore how it is transforming lives.

How a Kenyan start-up is Harnessing Carbon Markets in Africa
Koko Networks is able to issue carbon credits on the international markets. But rather than treating funds as additional revenue, it returns the value to customers in subsidies.

The introduction of Koko’s stove technology has resulted in a substantial reduction in costs for households. With an 85 percent decrease in stove cost and a 25-40 percent reduction in fuel usage, this innovative solution is now affordable for a much larger number of households. CEO Murray stated, “We’ve successfully transferred over $100 million worth of carbon value to the Kenyan people. This targeted subsidy is where carbon truly belongs.”

As the price of carbon continues to rise on international markets, Koko is able to generate additional revenue from credits, allowing them to further reduce costs for their customers. One key factor in Koko’s ability to access carbon finance is their successful selling of credits into compliance markets. These government-backed schemes require companies to offset their carbon emissions, providing an opportunity for Koko to sell their credits.

Currently, Koko sells carbon credits into a compliance market in South Korea and plans to expand into a similar scheme in Singapore next year. Furthermore, they have recently formed a partnership with Mizuho Bank to develop and sell carbon credits in Japan starting from 2026.

With the support of investors like Microsoft Climate Innovation Fund and serving a significant portion (one-third) of households in Nairobi, Koko has reached the milestone of one million customers. They are also expanding their services to nine other towns throughout Kenya and plan on launching operations in Rwanda this year.

Charcoal, aside from causing deforestation, emits harmful fumes and soot when burned, which contribute to an estimated three million premature deaths annually due to household air pollution. This problem is particularly critical in Africa where nearly one billion people lack access to clean cooking solutions as reported by the World Health Organization in 2020. However, with initiatives like Koko’s stove technology, cleaner alternatives are becoming increasingly accessible and affordable for these populations.

The impact of Koko Networks extends far beyond the provision of clean cooking fuel. By promoting the use of ethanol, the company is also fostering the development of local biofuel industries, which can help boost rural economies and create employment opportunities. The use of ethanol as a cooking fuel also reduces indoor air pollution, leading to improved health outcomes for families.

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