Kenya is on the brink of a revolutionary change in carbon trading as the National Assembly’s Budget and Appropriations Committee (BAC) has given its resounding approval to the Carbon Credit and Benefit Sharing Bill, 2023. Spearheaded by Laisamis MP Joseph Lekuton, this groundbreaking legislation aims to establish a legal framework for carbon markets, ensuring fair and equitable sharing of benefits among stakeholders while promoting the development of the carbon credit trading sector in the country.
Under the proposed bill, the sharing of carbon credit billions is set to benefit various key players. The project owner will claim 40 percent of the proceeds, followed by the community at 33 percent, the county government at 10 percent, the managing authority at 5 percent, and the national research fund at 2 percent. For private lands, the local community will receive 20 percent, with the county government, national government, and the project owner each taking 10 percent. Community forests will see the community obtaining the lion’s share with 55 percent, the national government at 25 percent, the county government at 15 percent, and the national managing authority at 5 percent.
The potential windfall from carbon credits is nothing short of remarkable. According to MP Joseph Lekuton, it is estimated that Kenya stands to earn a staggering Sh100 billion annually from selling carbon credits, with the country currently controlling 20 percent of the carbon credits market. This economic opportunity is attracting interest from international players, as evidenced by Saudi Arabian companies recently purchasing 2.2 million tonnes of carbon credits from Kenya.
With the proposed bill, the establishment of the Carbon Credit Trading and Benefit Sharing Authority is on the horizon. This authoritative body will provide policy direction and guidance to both levels of the government on carbon credit trading business. Additionally, the authority will issue carbon trading permits to individuals and companies intending to venture into carbon trading in Kenya.
This legislative move comes at a crucial time, as Kenya currently lacks a comprehensive regulatory framework for carbon trading, making the process nearly opaque. The Kenya Private Sector Alliance (KEPSA) projects that with proper regulation, Kenya can achieve 30 metric tons of carbon dioxide equivalent (30 MtCO2e) by 2030, resulting in a staggering annual revenue of Sh85 billion.
As Kenya leads the charge in carbon credit generation within Africa, the proposed Carbon Credit and Benefit Sharing Bill, 2023 promises to set the stage for a thriving carbon trading business in the country. The regulatory framework it establishes will bring transparency, accountability, and fairness to the carbon credit market, empowering communities and individuals to actively participate in this emerging sector.
While the Bill is poised to undergo formal introduction to Parliament, its potential implications for environmental conservation, economic growth, and social development have already garnered widespread support and anticipation from various stakeholders.
In the race to harness the immense potential of carbon trading, Kenya is set to secure its position as a global leader in this transformative field, offering hope for a sustainable and prosperous future.
By: Montel Kamau Serrari Financial Analyst 24th July, 2023
photo source Google
