- Kenya is estimated to generate Sh85 billion from carbon trading by 2030.
- Kenya has a limited regulatory framework and lacks requisite laws which makes carbon trading in the country an almost opaque undertaking.
A proposed Bill before the National Assembly aims to give individuals and communities a fair share in Kenya’s multi-billion shilling carbon trading business. Sponsored by Laisamis MP Joseph Lekuton, the Carbon Credit Trading and Benefit Sharing Bill, 2023, seeks to promote the development of the carbon credit trading sector while ensuring equitable sharing of benefits among stakeholders.
If passed, the Bill will establish the Carbon Credit Trading and Benefit Sharing Authority, providing policy direction and guidance for carbon credit trading in the country. The Authority will issue carbon trading permits to individuals and companies engaged in carbon trading business in Kenya.
President William Ruto has emphasized the need for carbon credits to benefit communities fighting the effects of climate change. Kenya is already a leader in generating carbon credits in Africa, accounting for over 20 percent of the continent’s volume. However, the country lacks a clear regulatory framework for buying and selling carbon credits locally.
The proposed legislation aims to address this gap by establishing a regulatory framework for carbon credit trading and benefit sharing. The Bill includes provisions for permit fees and the registration and regulation of carbon credit trading businesses.
Carbon credits represent 1 metric tonne of carbon dioxide removed from the atmosphere, and carbon credit trading involves buying or selling verified or certified carbon emissions, reductions, and removals in accordance with internationally recognized standards.
If the Carbon Credit Trading and Benefit Sharing Bill, 2023, becomes law, it could mark a significant milestone in Kenya’s efforts to combat climate change and foster sustainable development. The establishment of the Carbon Credit Trading and Benefit Sharing Authority would provide a much-needed framework to regulate and oversee the carbon credit trading business in the country, bringing transparency and accountability to the market.
With this regulatory framework in place, individuals and communities would have a clearer pathway to participate in carbon trading and access the benefits it can offer. Moreover, the Bill’s emphasis on fair and equitable benefit sharing ensures that the rewards of carbon trading would not be concentrated in the hands of a few but be distributed among stakeholders, including local communities impacted by climate change and conservation efforts.
In Northern Kenya, the shift from traditional tourism to investment in carbon projects as a revenue source highlights the potential for communities to play a more active role in climate action. By engaging in carbon trading, these communities can contribute to both environmental conservation and sustainable economic development, fostering a more resilient and inclusive future.
The proposed legislation also reflects the growing importance of carbon credits as a valuable environmental asset. As Kenya already leads in generating carbon credits in Africa, the establishment of a robust regulatory framework could attract more investments and encourage businesses to adopt cleaner and greener practices. This, in turn, could lead to a significant increase in the country’s carbon credit production, maximizing its potential to generate revenue and contribute to global climate efforts.
However, challenges lie ahead, not just for Kenya but for many developing countries, as carbon credit markets often lack proper regulation and agreed-upon prices. The Carbon Credit Trading and Benefit Sharing Bill’s provisions for a regulatory framework and the establishment of the Carbon Credit Trading Tribunal could serve as a model for other nations seeking to create more transparent and regulated carbon markets.
The potential impact of the Carbon Credit Trading and Benefit Sharing Bill, 2023, extends far beyond Kenya’s borders. As one of the leading carbon credit generators in Africa, Kenya’s commitment to establishing a regulatory framework for carbon trading can serve as a catalyst for similar initiatives across the continent and beyond.
By providing policy direction and guidance through the Carbon Credit Trading and Benefit Sharing Authority, Kenya sets a precedent for other nations to follow in developing their own carbon credit trading mechanisms. As more countries join the effort to combat climate change and promote sustainable development, a network of interconnected carbon markets could emerge, enabling global cooperation in reducing greenhouse gas emissions and preserving natural ecosystems.
The proposed regulatory framework is not only crucial for standardizing carbon credit trading but also for attracting international investments and partnerships. With clear rules and oversight, businesses and investors can have greater confidence in participating in Kenya’s carbon credit market. The increased flow of investments into climate-friendly projects would spur economic growth, job creation, and technological innovation, fostering a green economy in the process.
Moreover, by incorporating the principles of fair and equitable benefit sharing, the Bill acknowledges the importance of empowering local communities in the fight against climate change. By involving communities in carbon trading projects and ensuring they share in the financial benefits, the legislation promotes social inclusion and environmental stewardship. This approach aligns with global efforts to implement sustainable development goals and ensures that climate actions benefit those who are most vulnerable to the impacts of climate change.
Kenya’s potential to achieve 30 metric tons of carbon dioxide equivalent by 2030, generating approximately Sh85 billion annually, highlights the economic potential of carbon credit trading. Such revenues can be reinvested in further climate mitigation and adaptation projects, creating a virtuous cycle of sustainable development and environmental protection.
However, success will require continuous collaboration among various stakeholders, including government agencies, private sector players, civil society organizations, and local communities. Establishing effective channels for communication and engagement will enable continuous improvement and adaptation of the regulatory framework to address emerging challenges and opportunities.
As Kenya leads the way in implementing this groundbreaking legislation, it can actively participate in global discussions on carbon market standards and best practices. Sharing experiences and lessons learned can strengthen the international community’s collective response to climate change and accelerate progress towards achieving the objectives of the Paris Agreement and the United Nations Sustainable Development Goals.
The proposed Carbon Credit Trading and Benefit Sharing Bill, 2023, represents a vital step towards a more sustainable and inclusive future for Kenya. By creating a fair and transparent framework for carbon trading, the country can harness the power of this market to combat climate change, protect natural resources, and uplift local communities. As Kenya takes the lead in this endeavor, it sets an example for others to follow, accelerating the global transition towards a low-carbon and climate-resilient world.
