The Kenya Private Sector Alliance (KEPSA) has intensified its call for the establishment of a predictable regulatory framework for carbon trading, asserting that such a framework would foster transparency in the carbon trading sector and contribute to a level playing field that benefits all stakeholders.
In a significant move, a delegation from KEPSA presented a memorandum on the Climate Change Amendment Bill 2023 to the National Assembly Departmental Committee on Environment, Forestry, and Mining. The presentation, held at the Parliament Buildings, shed light on the potential for carbon trading to revolutionize the business landscape. The alliance emphasized that Kenya’s private sector possesses the capacity to meet the nation’s determined contribution targets and bridge the gap to achieve net-zero emissions, thereby supporting the global push towards a 1.5°C scenario.
The KEPSA delegation, comprising prominent figures such as 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), highlighted the opportunity presented by carbon trading to commercialize emissions reduction efforts.
The memorandum underscored that Kenya contributes a mere 0.15% to global greenhouse gas emissions. However, the proposed zero emission targets for individual companies and various international and local regulations focusing on low-carbon climate-resilient development, including cross-border adjustment mechanisms (CBAM), could adversely affect key Kenyan sectors such as horticulture and potentially impede the competitiveness of Kenyan exports.
KEPSA’s memorandum emphasized that this trend could lead to the isolation of Kenyan products in specific regional trading blocs and markets. The alliance argued that the implementation of carbon adjustment measures by trading partners could erect tariff and non-tariff barriers to trade, hindering Kenya’s ability to compete on the global stage.
The memorandum also spotlighted challenges that businesses face in adhering to emissions requirements. These challenges include a lack of information linking climate considerations to business, limited awareness about carbon trading and markets, and insufficient technical capabilities in areas such as emissions mapping and renewable energy sources. Additionally, the document highlighted the limited access to climate change finance.
The memorandum further noted that the carbon market is presently skewed towards exports, with local companies in Kenya scarcely involved in carbon offsets. Notably, the high capital intensity required for carbon interventions and the concentration of project developers pose barriers to wider participation, particularly by Small and Micro Enterprises (SMEs). The reliance on brokers and traders to facilitate market access exacerbates trading costs, making participation challenging for local investors.
Kenya has gained international recognition for its proactive stance in combatting climate change. The nation’s pursuit of a thriving carbon credits market has set it apart in this global effort. Capitalizing on this momentum, President William Ruto articulated an ambitious vision during COP27 in Egypt, aiming to position Kenya as a preeminent carbon credit exporter within Africa.
Current data highlights Kenya’s leading share of the African carbon credits market, surpassing 24%. As KEPSA’s call for a predictable regulatory framework gains traction, stakeholders across various sectors eagerly await the potential transformation of Kenya’s carbon trading landscape.
Photo Source: Google
22nd August 2023
Delino Gayweh
Serrari Financial Analyst
