What you need to know about carbon trading in Kenya

Carbon trading is one of the efforts of reducing emissions in a bid to slow down the climate crisis that continues to wreck lives and livelihoods.

Carbon trading simply means the buying and selling of carbon credits. Carbon credits permit a company or organisation to emit a certain amount of carbon dioxide (CO2) or other greenhouse gases. Heavy emitters of greenhouse gases buy credits from carbon-negative partners such as farmers planting trees.

Kenya, or Africa Continent at large, is considered a carbon offset giant owing to its diverse ecosystems that store enormous amounts of carbon called carbon sinks.

Most of Kenyans, however, are yet to embrace this venture due to the opaque nature of the industry coupled with a limited regulatory framework and even the absence of specific laws.

Experts argue that, although carbon trading is a practical venture in Kenya, it still faces a myriad of challenges including lack of a requisite regulatory and compliance component to facilitate investment in carbon credits.

Some laws that Kenya has like the Climate Change Act of 2016, the Environmental Management and Coordination (Amendment) Act (EMCA), and Water Act, and the Energy, experts say don’t address specifics pertaining to carbon trading.

Experts say that unregulated carbon trading is costing Kenya billions in unrealised revenue from the globally booming sector.

How can Kenyans participate?

Kenyans who have planted trees that act as carbon sinks or moved to clean energy should have their work documented and showcased.

Smallholder farmers can as well earn from the voluntary markets by selling the carbon credits generated from various farming activities.

There are organisations that can create a link between the farmers and buyers.

In Kenya, The Rural Electrification and Renewable Energy Corporation (REREC) established under Section 43 of the Energy Act (2019), is tasked with harnessing opportunities offered under clean development mechanisms including carbon credit trading.

Section 75 of the Act further authorises the Cabinet Secretary to collaborate with the necessary stakeholders in harnessing carbon trading opportunities.

The Nairobi International Finance Centre (NIFC) recently announced plans to establish a carbon trading exchange in the country to enable small-scale trade.

In 2014, smallholder farmers in western Kenya benefited from carbon credits generated by improving farming techniques.  These were the first credits worldwide issued under the sustainable agricultural land management (SALM) carbon accounting methodology.

The project involved 60,000 farmers on 45,000 hectares to support farming that is more productive, sustainable, and climate-friendly. After years of land degradation, many farmers struggled to grow enough food for their families.

 They embraced a wide range of methods to increase the organic matter in soils. In the long term, this improved the soil’s water absorption, nutrient supply and biodiversity, and help prevent erosion.

Better soils raise farm yields, improving food security and making agriculture more resilient to climate change. 

In 2022, the Kenya Forest Service (KFS) inked a deal with BDO, a global audit and accounting firm, to enable Kenya to earn hundreds of millions of shillings in carbon credit for offsetting carbon dioxide from the atmosphere.

Trees as carbon sink

A tree is comprised of its leaves, stems, trunk and roots.  Five percent of the tree is comprised of its leaves, 15 percent of its stems, 60 percent goes into its trunk and 20 percent is devoted to its roots.

Through a process called photosynthesis, leaves pull in carbon dioxide and water and use the energy of the sun to convert this into chemical compounds such as sugars that feed the tree.

 But as a by-product of that chemical reaction oxygen is produced and released by the tree.  It is proposed that one large tree can provide a day’s supply of oxygen for up to four people.

Trees also store carbon dioxide in their fibers helping to clean the air and reduce the negative effects that this CO2 could have had on our environment.

Over one year a mature tree will take up about 22 kilograms of carbon dioxide from the atmosphere. Each year, 1.3 million trees are estimated to remove more than 2500 tons of pollutants from the air, according to European Environment Agency.

That implies that 520 trees absorb at least a ton of carbon from the atmosphere.

Each ton of carbon is one carbon credit.  One carbon credit can earn up to USD 15 (Sh1,700).