Koko Networks, a Kenyan clean-cooking startup backed by international investors and development finance institutions, has shut down operations and laid off its entire workforce after the government blocked its ability to sell carbon credits.
- •The company, which distributed subsidized bioethanol fuel to low-income households, closed on Friday following internal deliberations that concluded it could no longer remain solvent without approval to monetize its emissions reductions.
- •The shutdown affects more than 700 direct employees and disrupts services to an estimated 1.5 million households that had relied on Koko’s fuel as an alternative to kerosene and charcoal.
- •Koko’s model depended on selling carbon credits to overseas buyers to offset the cost of supplying bioethanol at prices well below market rates.
The company sold bioethanol at roughly half the prevailing price and heavily subsidized cooking stoves, absorbing losses that were meant to be recovered through international carbon markets. The government’s refusal to grant a letter of authorization effectively cut off that revenue stream.
The closure follows reports that the company was facing imminent bankruptcy after failing to secure regulatory approval to proceed with carbon credit sales. Staff were informed of the immediate halt to operations and instructed not to return to work.
The shutdown also represents a setback for Kenya’s clean-cooking ambitions, which aim to reduce deforestation and indoor air pollution linked to widespread charcoal and kerosene use. Koko operated more than 3,000 automated fuel-dispensing machines nationwide and worked with thousands of independent agents.
Koko fuel quantified emissions reductions from lower carbon dioxide, methane, and black carbon output, generating credits certified under the Gold Standard framework. Each credit represented roughly one metric ton of carbon dioxide equivalent avoided.
Unlike many clean-cooking ventures that rely on the voluntary carbon market, where prices have remained depressed, Koko structured its business around compliance with carbon markets governed by international agreements.
In particular, the company sought to supply credits under the International Civil Aviation Organization’s emissions offsetting scheme, where prices have averaged around US$20 per credit. Access to these markets required authorization from the Kenyan government under Article 6 of the Paris Agreement. That framework allows countries to transfer emissions reductions internationally, provided the host government issues a letter of authorization and applies a corresponding adjustment to its national climate accounts to prevent double counting.
Although Kenya signed an investment framework agreement with Koko in mid-2024 intended to enable such transactions, the government ultimately declined to issue the required authorizations. The refusal effectively barred Koko from selling its credits as internationally transferable mitigation outcomes, cutting off the revenue stream that underpinned its subsidy model.
The collapse comes less than a year after the World Bank Group, through its Multilateral Investment Guarantee Agency, issued a guarantee of nearly US$180 million to support Koko’s expansion in Kenya. The political risk insurance was intended to protect against risks such as expropriation, civil unrest, and breach of contract. At the time, Koko projected it would add three million new customers by 2027.
Founded in 2013, Koko raised more than US$100 million in debt and equity from a mix of commercial banks, climate-focused funds, and strategic investors including Microsoft’s Climate Innovation Fund. Its model had been cited as a leading example of private-sector-led climate mitigation in emerging markets.
The government’s decision highlights growing tensions around carbon markets in Africa, where regulators are seeking greater oversight of how emissions credits are generated, authorized, and sold abroad.
For Koko, the regulatory impasse proved fatal, underscoring the vulnerability of climate-dependent business models to policy shifts. The company did not issue a public statement following the shutdown.
