KEPSA in collaboration with The Ministry of Environment, Climate Change and Forestry on 17^th May 2023 organized an awareness session on the dynamics and impacts of carbon trading on the private sector in Kenya.  The session aimed to explore the potential opportunities in the carbon trading space and its implications for businesses in Kenya's private sector.

Ms Emily Waita, the chair of the environment, water and natural resources sector board at KEPSA, while welcoming the participants to the call, highlighted the need for practical knowledge of carbon trading for businesses noting its potential to positively impact businesses, enhance brand reputation, and attract environmentally-conscious investors. The private sector can benefit from carbon trading mechanisms by reducing emissions, generating revenue from carbon credits, and improving environmental sustainability.

A carbon market specialist from the Kenya Forest Service under the Ministry of Environment Climate Change and Forestry, Mr George Tarus, shared   on the dynamics of carbon markets. He highlighted the international frameworks of carbon markets stating that it was born out of a global clarion call of the UNFCCC (Paris Agreement).  He explained that Carbon credits are tradable permits that incentivize and fund projects for quantified reduction or removal of greenhouse gas emissions, enabling businesses and individuals to support initiatives that clean the environment and mitigate global climate change. He then provided insights into Kenya's policy framework and regulatory landscape related to carbon trading.

Mr. Tarus highlighted, alongside the challenges, the various financial mechanisms and resources available to assist the private sector in adopting low-carbon practices and participating in carbon trading initiatives. He concluded by noting the need for collaboration between the government and the private sector, capacity-building, technology improvement and innovation before emphasizing the government's commitment to supporting and incentivizing businesses to participate in carbon markets.

Mr. UstavM Mulay, a Sustainability Specialist at Intellecap, shared on perspectives of carbon market under Article 6 framework with a focus on East Africa and Kenya.  Article 6 of the Paris Agreement creates a framework for global collaboration on carbon markets to achieve emission reduction targets using market mechanisms while ensuring environmental integrity, transparency, and avoidance of double counting, and supporting sustainable development, finance, and technology transfer to enhance climate goals. He then highlighted the status of voluntary carbon markets in East Africa noting that Kenya was ahead in the region and further shared the challenges that need to be overcome in order to scale carbon trading in Africa including a limited number of project developers and the high capital intensity. He also shared the components of a carbon market activation plan covering both the compliance and the voluntary markets. He concluded by giving insights on the basics of trading mentioning how it is done, what the investors are looking for and why it is important.

Ms. Molly Brown, from BURN Manufacturing - a KEPSA member -, provided an overview of the proposed amendments of the Kenya’s Climate Change Amendment   bill 2023 initiated by the Ministry of Environment, Climate Change and Forestry while giving practical example of carbon trading at BURN manufacturing. The amendments sought to domesticate carbon trading in Kenya and was providing an avenue to fast track the process of established Kenyan projects to reassure investors. It also provided for preference for local manufactures and projects that create Kenyan jobs and a clarification that buyers can be named after registration.   She emphasized the need for collaboration among businesses in this regard.  The amendments would also facilitate implementation by ensuring all business have access to the New National Carbon Registry.

Mr. Jose Reinhoudt, shared the findings of his research on Carbon Markets in Kenya undertaken in collaboration with Sustainable Inclusive Business – Kenya. The findings were from both the supply and demand perspective. He mentioned that the Kenyan Carbon Market is mainly export-based and that many players are producing carbon credits including start-ups, however, bureaucracy, long procedures and challenges in accessing the markets and selling the carbon credits due to delayed verification affect the sector players. He further shared that major carbon emitters on the demand side have portrayed a sense of eager ness to pour resources into re-afforestation projects rather use carbon credits to offset emissions. Nonetheless, the gap between emission and sequestration is still a challenge due to the uncertainty of actual growth and management of the trees planted for carbon sequestration.

The meeting provided valuable insights into the potential benefits and challenges of engaging in carbon trading and highlighted the opportunities for businesses to drive sustainability, enhance profitability, and contribute to global climate goals through carbon trading. The discussions underscored the need for continued collaboration between the private sector, government, and experts to leverage carbon trading as a tool for sustainable development.