Kenya passes carbon markets law

Kenya has passed a new Climate Change Act that will provide a basis for the country's activities in international carbon markets.

The country's amended Climate Change Act has been welcomed as a prerequisite for Kenya getting involved in activities under Article 6 of the Paris climate agreement, Zurich-based carbon markets consultant Mischa Classen said.

Article 6 broadly provides for either bilateral trade of carbon credits between host and buyer countries (Article 6.2), or a global carbon credit trading mechanism, essentially a successor to the Kyoto Protocol's clean development mechanism (Article 6.4).

Under Kenya's new Climate Change Act, the environment ministry's cabinet secretary "may enter into a bilateral or multilateral agreement with another state party to trade carbon for emissions reductions and removals". The new law stipulates that the cabinet secretary may also enter an agreement with a private entity to offset carbon emissions, for which they would need cabinet approval.

The new law also tasks the secretary with a range of new responsibilities, such as advising on the carbon budget for trading "based on Kenya's international obligations" and approving international transfers of mitigation outcomes (ITMOs) and emissions reduction based on advice from the climate change directorate. The secretary will approve the measurement, reporting and verification of greenhouse gas emissions, as well as appoint the designated national authority for market mechanisms and "any other mechanisms arising out of Article 6 of the Paris agreement".

The new law also strengthens the position of Kenya's climate change directorate in oversight and decision making. And it introduces the concept of a "community development agreement", under which land-based projects such as forestry and agriculture share at least 40pc of their combined earnings with the community. In the case of non-land-based projects, the minimum contribution is 25pc.

But the law is vague on certain issues, so it is crucial that the related regulations be passed rapidly to provide more clarity, Classen said. For instance, the law makes little direct mention of Article 6 and does not unambiguously specify who should authorise ITMOs for specific uses, or who is responsible for the underlying criteria for authorising a project to go under Article 6 with a corresponding adjustment.

Classen cautioned that the strong position envisaged by the cabinet secretary and the absence of cross-ministerial decision-making bodies might cause friction with other ministries. The ministry of transport, for instance, will be affected by project authorisations pertaining to the transport sector.

By Chloe Jardine