What Kenya is doing to unlock its carbon market potential

Kenya has emerged as a key player in carbon markets, contributing significantly to voluntary carbon credits in Africa. The newly enacted Climate Change (Carbon Markets) Regulations, 2024, provide a clear framework for implementing carbon projects, regulating participation, and ensuring that benefit-sharing mechanisms are upheld.

A carbon credit represents one tonne of greenhouse gas prevented from entering the atmosphere or removed through projects like reforestation or renewable energy. It is a tradable unit used to support projects that reduce pollution. Carbon credits help attract funding, especially for projects that have insufficient financial support or access to technology. Buyers of carbon credits use them for two purposes: Compliance (to meet government or international emission targets) and voluntary (to achieve corporate environmental goals).

Global carbon markets are dynamic and evolving and are determined by project quality, integrity and market demand, but to unlock the potential of the carbon markets, local expertise and knowledge is key to develop and implement high quality carbon projects. Secondly, determination of clear land rights and ownership of carbon credit is crucial, especially for land-based projects.

Carbon projects are a critical component in climate finance mobilisation for climate action in Kenya. The country has been involved in climate finance mobilisation since 2009, with the key objective being to deliver high-quality and high-integrity carbon credits. Indeed, Kenya is reported to be the second-largest issuer of voluntary carbon market (VCM) credits issued for projects in sub–Saharan Africa in 2022. However, most of the voluntary carbon credits issued came from nature-based projects.

Kenya is banking on its growing carbon market to mitigate the devastating effects of climate change such as severe droughts and flooding, while also creating job opportunities, especially among rural communities, by putting a price on carbon emissions.

But how does a carbon market work? Over the years, it has become increasingly evident that wealthy nations and corporations are the primary polluters, producing substantial amounts of carbon dioxide that contribute to global warming and exacerbate flooding, droughts, and unpredictable weather patterns, among other environmental issues.

Carbon markets allow companies, individuals, and governments to buy and sell carbon credits (a carbon credit is like a certificate that proves that a specific amount of pollution was avoided), thereby reducing emissions and promoting sustainable development.

Buying carbon credits allows polluting countries or corporations to emit a certain amount of carbon dioxide, or other greenhouse gases, so that they can meet their pollution reduction targets. Less polluting nations like Kenya use carbon credits money to fund environmentally friendly sectors such as renewable energy, sustainable agriculture, and forest conservation.

To benefit from this new dispensation of carbon markets, Kenya, through the Ministry of Environment, Climate Change and Forestry, has put in place a robust policy, legislative, regulatory, and institutional framework for the governance of carbon markets under the Paris Agreement (famously referred to as Article 6), which sets the framework for countries to cooperate internationally to meet their climate targets by trading emissions reductions.

Kenya, considered a “continental trailblazer” in carbon markets, is making every effort to turn carbon markets into a reliable engine for job creation, business opportunities, and environmental protection.

The country, which currently hosts more than 400 carbon projects, is also working on ensuring the integrity of carbon credit projects can be verified. In June 2025, the government published draft Climate Change (Carbon Registry) Regulations for public participation, setting the stage for a secure National Carbon Registry that can track both voluntary credits and Article 6 transactions. The registry will ensure transparency, anti-fraud protection, and public access to information.

Also, Kenya amended the Climate Change Act 2016 (Cap 387A) and is in the process of delivering three key pending regulations: National Carbon Registry regulations, Carbon Trading Regulations, and the Non-Market Approaches regulations.

The need for strong regulation in Kenya’s carbon market came out strongly during the recent Kenya Carbon Market conference that brought together key actors, including counties, project developers, financiers, communities, and the youth. Participants said they needed faster, clearer Letters of Authorisation with standardised language; a published whitelist and carbon-budget guidance so that Article 6 projects are aligned with our Nationally Determined Contribution (NDC); and a tailored Environmental and Social Impact Assessment guidance for carbon projects for consistency, which the National Environment Management Authority (NEMA), as the Designated National Authority for market mechanisms and any other mechanism derived from Article 6 (of the Paris Agreement), is committed to deliver as prescribed in the Carbon Markets Regulations.

Kenya’s updated NDC has committed to reducing greenhouse gas emissions by 32 per cent by 2030. However, the realisation of such an ambitious goal hinges on the ability of Kenya’s carbon markets to mobilise international finance.

All in all, Kenya is doing everything possible to set the right foundation for a credible, inclusive carbon market. We are going to build on this foundation and ensure the country reaps from its promising carbon market.