The Climate Change (Amendment) Act, 2024, is a direct amendment of the Climate Change Act of 2016 and defines Kenya's participation in both compliance and voluntary carbon markets, as well as the principles that would govern its trading activities. The Act provides a framework for the implementation of carbon market projects. The objective of the regulation is to create incentives and implement initiatives to support emissions reductions and removals activities, and provide guidance on social contributions, understood as monetary benefits accrued from carbon market projects developed on community and public land, which are disbursed to the relevant communities. The Cabinet Secretary may, with the approval of the Cabinet, enter into any agreement to trade in a carbon market established or overseen by an internationally recognised entity that is approved by a recognised credible international body.
Governance and Institutional Framework
The Act establishes the governance and institutional framework necessary for participation in carbon markets. It assigns a Cabinet Secretary the responsibility of overseeing carbon market policies and other related crediting mechanisms, and is responsible for the following sectors: energy; transport; agriculture; forestry and land use; industrial processes and product use; and waste.
The Cabinet Secretary is responsible for coordinating international processes and negotiating bilateral or multilateral agreements for the international trade of emission reductions and removals. Supporting institutions include a Designated National Authority (DNA), a Climate Change Directorate, a multi-sectoral technical committee and an ad-hoc committee. A National Carbon Registry will also be set up under this regulation in order to keep, maintain, and update registers of carbon market projects.
Their respective responsibilities include the following:
The DNA shall:
(a) provide key information to carbon project proponents;
(b) evaluate carbon project concept notes and issue letters of no objection;
(c) issue approval letters to project proponents;
(d) submit project design documents to the ad hoc committee;
(e) monitor compliance of registered carbon projects;
(f) guide on operationalizing Article 6.2 of the Paris Agreement;
(g) guide on Article 6.4 of the Paris Agreement, including activity approval and authorization;
(h) guide on corresponding adjustments and project eligibility;
(i) maintain a list of recognised carbon standards;
(j) appoint ad hoc committees for reviewing project documents.
The Climate Change Directorate shall:
(a) advise the government on regulating carbon market activities for compliance;
(b) coordinate and mobilise sectoral stakeholders for effective carbon market management;
(c) coordinate public participation and awareness on carbon markets;
(d) facilitate research on carbon markets.
The Multi-Sectoral Technical Committee:
(a) will be composed of members from ministries, counties, departments, and agencies representing all sectors of the Intergovernmental Panel on Climate Change (IPCC). These members will be nominated by the respective sector Cabinet Secretaries and the Council of Governors;
(b) Nominated members must have expertise in energy, transport, agriculture, forestry and land use, industrial processes and product use, or the waste sector;
The Designated National Authority will also appoint ad hoc committees, with up to five members from the multi-sectoral technical committee, to:
(a) review project design documents and provide recommendations;
(b) offer technical advice on carbon projects.
A National Carbon Registry shall:
(a) maintain and update the registers as per section 23G(3) of the Act;
(b) ensure the confidentiality of collected information;
(c) submit quarterly reports to the Cabinet Secretary on the information in the register under section 23G(3) of the Act.
Key Requirements
The framework also notably establishes the requirement to obtain an environmental impact assessment for all carbon credit projects and to enter into community development agreements that establish terms on the distribution of benefits between the Project Developers and impacted communities. A contribution of aggregate earnings for all land-based projects ist set at 40%, and annual social contribution to the community in projects developed on public land is set at 25%.
Process of Approval and Authorisation
The Act designates the DNA to provide guidance on the rules, modalities, and procedures of Article 6.4 of the Paris Agreement, including approval and authorisation of activities and the project proponents.
Other Considerations
- Carbon market projects on private land by private entities are not required to disburse annual social contributions.
- At least 25% of aggregate earnings of the previous year for non-land based projects, and at least 15% for land-based projects, shall be paid into a consolidated fund, to be used for sustainable development.
- It is now an offence to conduct unauthorised trade in carbon credits.
