KOKO's closure fuels debate on Kenya's carbon credit gamble
National
By
Mactilda Mbenywe
| Feb 04, 2026
When the clean-cooking company Koko Networks shut down its Kenyan operations this week, the announcement landed like a spark in dry grass.
Cabinet officials defended the broader carbon-market strategy. Economists questioned the numbers.
Civil-society groups seized on the moment to reopen an old argument: whether carbon credits bring genuine climate benefits or simply shift profits abroad.
For many Kenyans, the episode confirmed what they already suspected. Carbon markets promise much. They deliver unevenly. And they remain poorly understood.
READ MORE
Government plans stricter laws to clean up tea sector
Tourism earnings hit record Sh500 billion as arrivals near 8m
Kakamega youth, women eye avocado export cash after skills training
Portable kitchen: Designer taps into space-saving trend
Kenya urged to pilot AI regulatory Sandbox in bid to lead Africa's digital future
MPs pledge site visist as KTDA gives progress on hydro power project
Why Gen Zs are not sending money to parents
The true impact of Iran-US war on the Kenyan economy
KPA steps up plans for expansion of Kisumu Port
Infrastructure, trust key to cities success as Nairobi, Rome stagnate
Carbon credits are meant to transform avoided pollution into revenue. Projects calculate how much carbon dioxide they prevent from entering the atmosphere by protecting forests, restoring grasslands or replacing smoky stoves, then sell verified credits to companies abroad trying to meet climate pledges.
Globally, voluntary carbon markets ballooned to about $2 billion in 2022 before investigations and lawsuits punctured confidence and demand began to fall.
Scientists have raised structural concerns. Different scientific reviews notes that “today, just five percent of offset projects fall under the carbon removal/negative emissions category”, meaning most do not actually pull carbon from the air.
Prices averaged roughly two dollars a tonne in 2022, far below regulated systems in Europe.
Those structural weaknesses form the backdrop to Kenya’s debate.
Koko’s pitch sounded elegant. Households would cook on ethanol stoves instead of charcoal.
Urban air would clear. Carbon credits sold overseas would subsidise fuel prices at home.
Koko’s model depended heavily on carbon finance. By selling cookstove credits abroad, the company subsidised bioethanol fuel at home, making it cheaper than charcoal and kerosene. Management described it as a “ non-government energy subsidy,” a way to cut deforestation and indoor air pollution while keeping cooking affordable.
But the business required carbon prices well above prevailing market levels, which had fallen below five dollars a tonne. Koko therefore targeted the aviation off setting scheme Corsia, where credits have traded at $14–$23 per tonne in recent years, according to an industry analysis.
That strategy hinged on Kenyan authorities granting a formal “letter of authorisation” allowing emissions reductions to be exported under the Paris Agreement. None came.
By January 2026, Koko shut its doors after eleven years in operation, leaving about 700 staff without work and 1.3 million households scrambling for alternatives.
In a statement, Kenya’s climate envoy termed the closure “deeply concerning” for families who relied on the technology.
Behind the scenes, regulators were uneasy about the project’s accounting assumptions, particularly the fraction of non-renewable biomass a key parameter for calculating deforestation avoided which the National Environment Management Authority reportedly judged too high.
President William Ruto’s economic adviser, David Ndii, later wrote that the collapse reflected a tangle of factors: “the Paris Agreement itself, the veracity of cookstove carbon credits, our investor-unfriendly NDC regime and carbon market regulations, transparency of Koko’s business model, diplomatic meddling…”
Koko had secured a $180-million political-risk guarantee from the World Bank’s Multilateral Investment Guarantee Agency in 2025, but without authorisation to export credits, the deal never unlocked new finance.
Market sources told analysts the government was unwilling to bend rules for a project so large it could distort Kenya’s national emissions balance.
Long before Koko, carbon trading had already transformed landscapes in southeastern Kenya and the northern rangelands.
In Taita Taveta, early forest-carbon schemes brokered by American firms channelled roughly Sh14 billion into seventeen conservancies between 2010 and 2011, according to Paul Mwawasi, manager, Mbale Transfrontier Conservancy Taita Taveta county . The funds paid ranger salaries, built classrooms and supported patrol vehicles.
But Mwawasi said resentment grew as communities tried to track the money. Only about a third, he claimed, reached local institutions, with the remainder absorbed by developers, auditors and intermediaries.
“People started asking hard questions,” he said. “If billions passed through here, why does life still look the same?”
When international buyers retreated around 2022 amid global reputational scandals, several projects stalled, reinforcing a perception that communities carried the risk while others captured most of the upside.
In Samburu County, where Northern Rangeland Trust-linked conservancies run some of the country’s most prominent carbon projects, scepticism remains acute.
Fred Longonyek, a community leader in Nkaroni village, said funding uncertainty and shrinking donor support have left locals doubtful about the market’s future. He said while money for the current year had reached the project proponent, “we really don’t know quite whether carbon will proceed… credibility issues are still there”
He described benefit-sharing through conservancies as thin. “The communities have not really benefited much,” he said, adding that most funds now pay staff salaries rather than transform livelihoods. “The community gets peanuts, very little indeed”
Longonyek traced the problem to the early years, when communities lacked information about contracts or revenue flows. “Things were totally in darkness,” he said, crediting advocacy groups for later pushing for transparency.
Even with new national regulations coming into force, he warned villagers to prepare for a future without carbon income. After a recent committee meeting, he said he told residents that “things are not really bright in the future on carbon… we must prepare ourselves seriously to move forward without it”
The Kenyan government insists it is learning from these controversies.
New carbon-market rules require project registration, county approval, disclosure of benefit-sharing agreements and documented free, prior and informed consent from communities. Regulators say the measures aim to curb opaque brokerage deals and restore confidence after years of murky accounting.
Some county governments now want to bypass foreign intermediaries entirely and sell credits directly to buyers in the Gulf, hoping shorter chains will leave more revenue on the ground.
Yet civil-society groups argue that offsets still dominate policy discussions at the expense of more predictable climate finance, such as grants and concessional loans for adaptation.
Globally, critics point out that even high-quality offsets could cover only a small fraction of emissions growth this decade, while more than 750 million tonnes of unsold credits now clog registries worldwide, depressing prices and investor appetite.
Koko’s collapse accelerated a reckoning already under way. County officials now scrutinise contracts line by line. Community leaders demand proof of benefits before signing away land for decades. Regulators promise tougher oversight.
Whether those changes can stabilise a market buffeted by scientific debate and global price swings remains uncertain.
For villagers like Longonyek, the lesson is simpler. Carbon money, he says, cannot be treated as a guaranteed income stream. Communities must plan for life without it.
David Arach Namati's Senior Program Manager who is involved in negotiations stated that if carbon markets are to survive in Kenya, people must see results on the ground rather than consultants flying in and out.
He added that Kenya still hopes to monetise forests and rangelands as the world hunts for climate finance. Yet after a decade of deals and the abrupt exit of a flagship company the question lingering across village meetings and Cabinet corridors alike is stark.
“Who truly gains when carbon is sold, and how can anyone be sure the climate does too?” Arach questioned.