In a groundbreaking move to bolster Kenya’s efforts in combating climate change and improving air quality, the United States Agency for International Development (USAID) has announced a substantial investment of $1.4 million. The funds will support the Government of Kenya in formulating a comprehensive carbon market activation plan and reinforcing the regulatory and legal framework governing carbon, with the aim of ensuring market integrity, transparency, and equitable participation.
Additionally, USAID has expanded its renowned Clean Air Catalyst initiative to Nairobi, affirming its commitment to reducing air pollution on a global scale. The initiative, already active in Jakarta, Indonesia, and Indore, India, has allocated $2.9 million to empower local government leaders in these three cities to combat air pollution at its core, targeting major sources such as transportation and waste burning.
Through the Development Innovation Ventures program, USAID is set to invest $1.5 million in the ambitious expansion plans of Kenya’s BasiGo electric bus transport company, allowing it to extend its services to Rwanda. This investment aligns with the goal of providing cleaner, greener public transportation options in the region.
During the Africa Climate Summit held in Nairobi from September 4 to 6, 2023, USAID unveiled a suite of investments and initiatives aimed at driving climate action across Africa. Among these commitments, the Enterprises for Development, Growth, and Empowerment Fund will contribute $2.5 million to Acorn’s Cooperative Carbon Finance Fund, acting as a first loss tranche. This strategic move will facilitate smallholder farmers’ access to the voluntary carbon market, enabling them to benefit from the fund’s objective of mobilizing $110 million for climate-smart and resilient agriculture. Remarkably, 80% of the funds generated from carbon credit sales will directly support smallholder farmers.
In a recent milestone for Kenya’s carbon market, the June auction achieved remarkable success, selling an impressive 2.2 million tonnes of carbon credits at the Nairobi Auction. These credits were snapped up by prominent entities, including Saudi Airlines, Saudi Electric, Dubai Islamic Bank, and Saudi Aramco, yielding an impressive revenue of $25 million.
Kenya’s carbon credits market is experiencing sustained growth and aims to become Africa’s leading exporter of carbon credits. The Capital Markets Authority is actively collaborating on developing regulatory frameworks to foster this burgeoning market. Currently, Kenya boasts the largest share of the African carbon credits market, commanding over 24%. Each carbon credit represents one ton of climate-warming carbon dioxide or its equivalent, either removed from the atmosphere or prevented from entering it. These credits are highly sought after by greenhouse gas emitters looking to offset their carbon emissions. According to Bloomberg forecasts, the global carbon credits trade, currently valued at $2 billion annually, has the potential to skyrocket to an astonishing $1 trillion within the next 15 years.
USAID’s strategic investments and partnerships in Kenya are set to play a pivotal role in advancing environmental sustainability, fostering economic growth, and mitigating climate change impacts in the region. Stay tuned for more updates on this critical development.
Photo Source: Google
September 6, 2023
By: Delino Gayweh
Serrari Financial Analyst
