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.
The Capital Markets Authority (CMA) is the process of setting up regulations and guidelines that will lead to creation and regulation of a carbon credits market in Kenya. The country has made significant steps in establishing its carbon credits market, though still in its infancy and fragmented.
Available figures indicate that Kenya already has the largest carbon credits market share in Africa, at over 24%.
Record-Breaking Transaction Signals Kenya’s Carbon Potential
A significant milestone in Kenya’s journey towards becoming a carbon trading powerhouse occurred on June 14th, 2023 where the nation achieved an unprecedented milestone by selling over 2.2 million tonnes of carbon credits at the Nairobi Auction to prominent Saudi Arabian firms. Notable participants included industry giants such as Saudi Airlines, Saudi Electric, Dubai Islamic Bank, and the renowned Saudi Aramco, the second-largest firm globally.
This landmark transaction not only solidified Kenya’s presence in the carbon credits market but also underscored its capacity to attract interest from major international players. The sale demonstrated the country’s potential to emerge as a pivotal player in shaping the global carbon trading landscape.
To position Kenya as leading carbon credits market, Luke Ombara, CMA Director of Policy and Market Development said the regulator plans to do a carbon assessment across the country in order to map all the stakeholders, what role they play and how these roles can converge into making Kenya a carbon trading powerhouse in Africa and the world.
He said that after Kenya undertakes an initial assessment and determination of actual demand and what it can potentially sell, this will inform the policy approach.
Mr Ombara said Kenya has the option of either setting up voluntary markets- which will function outside of compliance markets and enable companies and individuals to purchase carbon credits on a voluntary basis with not intended use for compliance purpose.
“Ultimately, there will be need for a window or trading platform in which carbon credits are sold and bought, to bring together the buyers and sellers. That platform will require to be regulated and CMA will take guidelines from the International Securities Commission that has discussion papers on how to regulate carbon markets and how regulators should approach their oversight roles as well as maximize the full potential of the carbon market,” said Ombara.
ALSO READ; Kenya Sells Record 2.2m Tonnes of Carbon Credits to Saudi Firms
