CMA revs up c*rbon credits law

Kenya is yet to tap the full potential of the carbon credit market valued an estimated $2 billion (Sh284 billion) despite being on the forefront as a potential hub for the multi-billion trade.

The Capital Markets Authority (CMA) which is overseeing a framework to facilitate carbon credit trade and enable the country to tap the by 2050, agrees that Kenya has barely scratched the surface.

According to CMA director of policy and markets development Luke Ombara, the authority is however set to establish rules and regulations for the carbon credit value chain to work under a free, fair, transparent and efficient regime.

At the Conference of Parties to the United Nation’s Framework Convention on Climate Change (COP27) in Egypt last year, President William Ruto pledged to make the Carbon Market the next significant export product for Kenya in terms of revenue earnings.

With the goodwill, Kenya managed to sell 2.2 million tonnes of the commodity in June this year to 16 Saudi companies at $12 per tonne, which is deemed to be the largest in the world.
According to Ombara, this helped Kenya register the highest volume of carbon credit in Africa, estimated at 24 per cent in terms of revenue earnings.

“We need to utilise this opportunity as a country and be able to find out the right infrastructure, institutional framework and possibly the regulatory framework,” Ombara said.

Ombara was speaking yesterday at the CMA offices during a media engagement, where CMA presented its second quarter 2023 Capital Markets soundness report.
Need for specifications
According to Ombara, the framework will have mechanism in place to ensure that there is proper pricing on the product. “Because again when you look at some jurisdiction, they bought credit up to a low of $5 (Sh711). So such infrastructure that will be in place should have specifications to be able to address on effective pricing,” he said.

CMA Chief Executive Wyckliffe Shamia said the CMA will support the ongoing national discussion on the appropriate and facilitative regulatory framework for the fair and efficient trading of carbon credits.
Kenya has made significant strides in building the Carbon Credit trading infrastructure. As part of the process to spearhead the process, the Nairobi Securities Exchange partnered entered into a Memorandum of Understanding with  the AirCarbon Exchange Group and Nairobi International Financial Centre in July last year.