Kenya has introduced a cap on the volume of carbon credits that can be exported to ensure the country meets its domestic climate commitments. The State Department for Environment and Climate Change has set the limit at 10 million tonnes of carbon dioxide equivalent (CO2e) for the period ending in 2030.

Carbon credits represent permits that allow companies to emit a certain amount of greenhouse gases, which can be traded by entities that reduce or avoid emissions through environmental projects. This mechanism enables manufacturers and other firms investing in renewable energy and conservation efforts to offset their emissions by selling credits.

Protecting National Climate Commitments

The export ceiling aims to prevent excessive selling of carbon credits to international buyers, which could undermine Kenya's ability to meet its Nationally Determined Contributions (NDCs) under the Paris Agreement. These NDCs outline the country's climate action plans, including both conditional and unconditional targets for 2030.

The government’s guide on strategic investment in carbon markets defines a national carbon budget that transparently tracks the allowable volume of credits for international transfer, aligned with Kenya's long-term climate goals.

Priority Sectors and Investment Areas

The 10 million tonnes cap covers four key sectors: energy, transport, industrial processes and product use (IPPU), and waste management. Additionally, the government has established a whitelist of priority activities to guide green investments, including:

  • Electric mobility
  • Renewable power generation
  • Energy access
  • Industry
  • Waste management

This whitelist acts as a policy tool to prioritize projects that align with Kenya’s climate strategy, while other proposals will undergo stricter scrutiny and require justification for their strategic fit.

Regional Context and Future Plans

Kenya joins South Africa and Nigeria, which have also implemented export limits through recent climate legislation to protect their NDCs. The move follows Kenya’s announcement of plans to establish a local carbon exchange by March 2027, a collaboration involving the Nairobi International Financial Centre (NIFC), Capital Markets Authority (CMA), and Nairobi Securities Exchange (NSE).

NIFC CEO Daniel Mainda highlighted the centre’s role in attracting investment for innovative markets such as carbon trading. Meanwhile, National Treasury Cabinet Secretary John Mbadi confirmed ongoing efforts to develop carbon credit regulations that will provide a legal framework for trading activities in Kenya.

Kenya’s strategic approach builds on the recent launch of the National Carbon Registry, a centralized system for tracking and verifying carbon credits across sectors, reinforcing transparency and ownership in the carbon market.