The Kenya Private Sector Alliance (KEPSA) is urging the establishment of a reliable regulatory framework for carbon trading. This initiative, according to Kepsa, would promote transparency in carbon trading and establish a fair competitive environment for all stakeholders.
During their presentation of the Climate Change Amendment Bill 2023 to the National Assembly Departmental Committee on Environment, Forestry, and Mining at Parliament Buildings, the Kepsa team highlighted the potential impact of carbon trading on businesses. They emphasized that Kenya’s private sector possesses the capability to contribute significantly to meeting the nationally determined contribution targets and bridging the gap towards achieving net-zero emissions. This action is crucial for aligning the global economy with the ambitious 1.5°C scenario required for a sustainable future.
The team is composed of Ms. Joyner Okonjo – KEPSA Legal Advisor, Ms. Faith Ngige – Coordinator of the Climate Business Information Network Kenya (CBIN-K), Mr. Ebenezer Amadi – Program Manager at Sustainable Inclusive Business, and Ms. Miriam Bomett – Kenya Association of Manufacturers (KAM), emphasized that carbon markets offer a viable avenue for commercializing initiatives aimed at reducing carbon emissions.
As outlined in the KEPSA memorandum, Kenya’s contribution to global greenhouse gas emissions stands at 0.15 percent. However, the team expressed concerns about certain measures, including the imposition of zero targets on individual companies and the introduction of international and local regulations related to low-carbon climate-resilient development, such as cross-border adjustment mechanisms (CBAM). These measures could adversely affect Kenyan exports, particularly in the horticulture sector.
The memorandum further argues that such actions might erode the global competitiveness of Kenyan products, as many trading partners in the international arena are shifting towards adopting carbon adjustment measures. This trend is progressively evolving into a barrier to trade, involving both tariff and non-tariff implications. This scenario could potentially lead to the exclusion of Kenyan exports from certain regional trading blocs and markets.
Addressing the challenges faced by businesses in complying with emissions requirements, the memorandum highlighted various issues. These include insufficient information regarding the interplay between climate and business, limited knowledge about carbon trading and markets, inadequate technical capabilities in emissions mapping and renewable energy technologies, and restricted access to climate change finance.
Additionally, it was observed that the current carbon market is largely export-oriented, with only minimal local participation from companies engaged in carbon offsets. The nature of carbon interventions necessitates substantial capital investment for project development, further complicated by the limited pool of project developers operating within Kenya and Africa as a whole. Moreover, the reliance on brokers and traders to facilitate market entry increases trading costs, making it particularly challenging for local investors, especially Small and Micro Enterprises (SMEs), to engage.
In recent times, Kenya has emerged as a proactive player in the global fight against climate change. Notably, the country’s efforts, highlighted by the establishment of a growing carbon credits market, have garnered international recognition. Building on this momentum, President William Ruto articulated an ambitious vision during COP27 in Egypt, envisioning Kenya as a leading carbon credits exporter in Africa.
Current data underscores Kenya’s prominent position in Africa’s carbon credits market, with a market share exceeding 24 percent.
