The Kenya Private Sector Alliance (Kepsa) is calling for a predictable regulatory framework for carbon trading.
According to the alliance, the framework will enhance transparency in carbon trading and aid the creation of a level playing field, a conducive environment for all players and actors.
While presenting a memorandum on the Climate Change Amendment Bill 2023 to the National Assembly Departmental Committee on Environment, Forestry and Mining at Parliament Buildings, Kepsa team highlighted the opportunity for carbon trading on businesses by indicating that through the private sector, Kenya has the potential and capacity to close the nationally determined contribution targets and net zero emissions gap to support the realization of the transition required to align the global economy to a 1.5°C scenario.
The team comprising (Ms Joyner Okonjo – KEPSA Legal Advisor, Ms Faith Ngige – Climate Business Information Network Kenya (CBIN-K) Coordinator, Mr Ebenezer Amadi – Program Manager at Sustainable Inclusive Business and Ms Miriam Bomett – Kenya Association of Manufacturers (KAM)) also stated that carbon markets provide an approach to commercialize carbon emissions reduction interventions.
According to the KEPSA memorandum, Kenya’s share of global greenhouse gas emissions is 0.15 per cent. Nonetheless, measures such as requirements for zero targets for individual companies, and international and local regulations on low carbon climate resilient development such as cross-border adjustment mechanisms (CBAM), will negatively impact Kenyan exports, especially horticulture.
The memorandum asserts that, as a result, Kenyan products will not be globally competitive as most trading partners in the international trade arena will make a shift to implement carbon adjustment measures. This is gradually becoming a tariff and non-tariff barrier to trade and might lead to our exports being shunned in certain regional trading blocs and markets.
The memorandum also outlined some of the challenges businesses face in compliance with emissions requirements’ such as insufficient information on the nexus between climate and business, limited information on carbon trading and carbon markets; lack of technical capabilities on mapping emissions and technologies such as renewable power sources; limited access modalities to climate change finance.
It is also observed that the carbon market currently is primarily an export market and there are hardly local companies involved in carbon offsets.
Carbon interventions, also require high capital intensity for project development and a limited number of project developers, operating in Kenya and Africa as a whole; the high reliance on brokers and traders to bring supply to the market is increasing the cost of trading in carbon markets making it unreachable to local investors, especially the Small and Micro Enterprises.
In recent years, Kenya has been diligently carving a niche for itself in the global fight against climate change. The country’s proactive approach, highlighted by the establishment of a burgeoning carbon credits market, has garnered attention on the international stage.
Building on this momentum, Kenya’s President William Ruto articulated a bold vision during COP27 in Egypt, aiming to position Kenya as a leading exporter of carbon credits in Africa.
Available figures indicate that Kenya already has the largest carbon credits market share in Africa, at over 24 per cent.
Kenya’s Strategy for Carbon Market Dominance – Kenyan Wallstreet
