Netflix, Apple, Shell among top global firms buying Kenya's carbon credits

American video streaming company Netflix, technology giant Apple and British oil multinational Shell are among the top global companies capitalising on Kenya’s voluntary carbon market (VCM), a new report by the World Bank shows.

The 'Carbon Market Guidebook for Kenyan Enterprises' indicates that in 2022, Kenya was the second largest issuer of VCM carbon credits in Africa after the Democratic Republic of the Congo.

It shows that over 59 metric tons of carbon credits have been issued to projects in Kenya since 2011, 83 per cent of which was in voluntary markets.

“Most voluntary carbon credits issued in Kenya come from nature-based projects. Tech-based projects are nascent but emerging in the market,” the report says.

A carbon credit market deals in carbon credits generated through voluntarily implemented emission reduction projects that are sold to organisations and individuals wishing to reduce their carbon footprint to offset their emissions.

In this case, companies whose business and production processes are polluting the environment pay millions of shillings to people working on removing or absorbing that carbon dioxide from the air.

Each credit equals reducing or removing one tonne of CO2 from the atmosphere, often in developing countries by projects focusing on things like fighting deforestation.

The World Bank says the primary buyers of VCM credits generated in Kenya have been corporations such as Netflix, Apple, Shell, the French Air France-KLM, Australian multinational mining company BHP, the American airline Delta and the French luxury fashion house Kering.

Other top companies already in Kenya’s young carbon credits market are South Africa’s Nedbank, the Swiss coffee company Nespresso and Zenlen Inc.

FOUR DEVELOPERS

According to the report, most credits generated from Kenya in voluntary markets have been issued for forestry and land use projects.

“These credits have been issued to four developers, three of which are based in Kenya: Wildlife Works Carbon, Chyulu Hills Conservation Trust, and Northern Rangelands Trust. They have generated carbon credits through reducing emissions from deforestation and forest degradation (REDD+) and sustainable grassland management projects to support local environment conservation efforts,” says the World Bank.

Household and community-based credits, specifically cookstoves, are another significant type of credit generated in the country, the report adds.

It is not clear how much these top companies have been paying for the credits.

While the World Bank has previously estimated the cost paid for eliminating a ton of carbon dioxide between $40 and $80 (around Ksh.5,250 to Ksh.10,500) based on the Paris Climate Agreement, the report says there is limited transparency on the prices paid for these credits.

“They have been sold over the counter with bilateral negotiations. A small portion of credits generated in Kenya have also been sold in compliance markets, issued through the Clean Development Mechanism,” says the World Bank.

Carbon credits are generally sold in US dollars and the report shows that 24 million VCM credits were issued to DRC in 2022, followed by Kenya with 11 million credits.

Zambia, Uganda and Malawi accounted for four, three and three million credits respectively.

In 2021, Delta bought a combined 1,164 kilotons of Carbon equivalent (KtCO₂e) from Kenya and Uganda while Netflix and BHP took 699 and 200 KtCO₂e from Kenya alone.

CARBON MARKET REGULATIONS

Fossil fuels, agriculture, fashion and transport are among the top polluting industries in the world and President William Ruto has been advocating for carbon credits as a key revenue for Kenya.

During the 28th United Nations Climate Summit (COP28) in Dubai in December last year, Kenya was among the countries calling for carbon markets to be "complementary" to efforts to reduce emissions.

The countries said that there must be "transparency" and "high-integrity standards" for these markets to reach their potential.

The Ministry of Environment last year published draft regulations proposing that 25 per cent of the revenue generated by private companies from the sale of carbon credits would go to the government.

Under the proposal, the ministry will introduce a national carbon registry with a database of all carbon credits issued or recognised where companies would pay to be registered to begin accumulating carbon credits.

($1 = Ksh.131.25)