Carbon offset projects are controversial, but they can play an important role in mitigating climate change by reducing greenhouse gas (GHG) emissions or enhancing carbon sequestration through various environmental practices, particularly when dealing with residual emissions or hard to abate sectors. They are particularly relevant for jurisdictions with an emissions first approach to climate change but do provide tangible benefits as regards adaptation and resilience initiatives. These projects can range from renewable energy initiatives to land-based solutions such as afforestation, reforestation, and sustainable land management. For Kenya, these projects not only contribute to global efforts to combat climate change but modelled correctly, can also provide significant opportunities for local communities and ecosystems.

The Role of the Climate Change Act in Kenya

Kenya has taken significant strides in addressing climate change through its Climate Change Act, 2016, which provides a comprehensive framework for climate change mitigation and adaptation. This law has been cascaded to countries all of whom have enacted County Climate Change laws to manage programs associated with it at local levels. The Act aims to:

1. Set Targets for Greenhouse Gas Emissions: Kenya has committed to reducing its GHG emissions by 30% by 2030, based on a business-as-usual scenario. This includes a range of actions, many of which align with carbon offset initiatives, particularly those that involve forest restoration, sustainable agriculture, and land use management.
2. Promote Low-Carbon Development: The Act encourages the transition to a low-carbon economy, supporting renewable energy, energy efficiency, and land-based carbon projects. These are important sectors where Kenya can generate carbon credits, contributing to global carbon markets and supporting national and community development.
3. Establish a Carbon Market: The Climate Change Act facilitates the creation of a carbon market, enabling Kenya to trade carbon credits and generate income for sustainable projects. This market allows Kenyan carbon offset projects - such as forest conservation and improved agricultural practices - to be verified and certified, making them attractive to international buyers.
4. Emphasize Adaptation and Community Involvement: The Act emphasizes the importance of community participation in climate change projects, ensuring that local communities benefit from carbon offset initiatives, such as agroforestry, sustainable agriculture, and forest conservation.

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The Basics of Carbon Projects Development in Kenya | Development and Regulation of Carbon Projects in Kenya

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Types of Land and Forest-Based Carbon Projects in Kenya

Kenya has numerous opportunities for land and forest-based carbon projects, which can align with the goals set out in the Climate Change Act. Here are some examples of these projects:

1. Afforestation and Reforestation (A/R): Kenya has ambitious reforestation goals, especially through initiatives like the Kenya Forest Strategic Plan, which seeks to restore forests and protect natural ecosystems. Projects like the Great Green Wall in the Sahel also extend into northern Kenya, promoting afforestation to fight desertification.
2. Avoided Deforestation and Degradation (REDD/REDD+): Kenya’s Maasai Mau Forest REDD+ Project is an example of avoided deforestation, where communities are engaged in sustainable forest management to prevent the destruction of vital forest ecosystems.
3. Agroforestry: A leading global example of an agroforestry carbon project is Scolel’te in Chiapas and Oaxaca, Mexico. This initiative, coordinated by the non-profit cooperative AMBIO, integrates agroforestry with afforestation and improved land management to generate verifiable carbon credits while delivering substantial social and biodiversity co-benefits. Scolel’te is Plan Vivo - certified, has issued over 1 million Plan Vivo Certificates (PVCs), and has directly benefited nearly 1,500 smallholder families since its inception in 1997.
4. Soil Carbon Projects: Projects such as the Kajiado Rangelands Carbon Projects, Northern Kenya Rangelands Carbon Project focus on improving agricultural practices to enhance soil carbon storage through methods like rangeland restoration, no-till farming and cover cropping.
5. Wetlands and Grassland Restoration: Projects like the Jozani-Chwaka Bay Mangrove Project and Northern Kenya Rangelands Carbon Project in Kenya's savannah regions restore vital ecosystems that store carbon and provide co-benefits such as flood mitigation and biodiversity conservation.

The Role of the Central Bank of Kenya (CBK) Green Finance Taxonomy Guidelines

Developing land- and forest-based carbon projects requires substantial upfront investment and ongoing expenditures before any carbon credits are generated. High capital costs for site preparation, tree planting or conservation measures, and infrastructure; significant transaction expenses for project design, legal agreements, and stakeholder engagement; and persistent monitoring, reporting, and verification (MRV) costs all contribute to making these projects expensive to launch and sustain. Initiatives that finance such projects and frameworks that confirm their ”greenness” are therefore a critical part of the ecosystem.

The Central Bank of Kenya (CBK) plays a crucial role in shaping the financial landscape for climate-related projects in the country by greening the financial system. Through the issuance of the KGTF framework supported by green bond guidelines by the Nairobi Securities Exchange as approved by the Capital Markets Authority, the CBK has opened up opportunities for businesses and investors to finance carbon offset and climate resilience projects in a globally credible and sustainable way. Green bonds are a critical tool for funding large-scale carbon projects, such as afforestation, renewable energy, and sustainable infrastructure and the NSEs guidelines are apt. By setting clear guidelines in this regard, the government through initiatives like the KGFT, ensures that financial resources are channeled into “green” projects that align with Kenya’s climate goals. The CBK guidelines offer a much needed globally recognised framework and taxonomy, for use by financial institutions involved in the sector.

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Guides & PlayBooks | GUIDE | How to Design Projects to Access Green Financing in Kenya Using the Kenya Green Finance Taxonomy (KGFT)

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View of Land and Forest-Based Carbon Projects