Kenya takes back seat as carbon prices nosedive

In 2013, only one Kenya Petroleum Refineries Ltd (above) project was allowed by the UN to trade in the carbon market. FILE 

By NEVILLE OTUKI

In Summary

• Country submits one project as rates drop to Sh86 from Sh4,000 a tonne.
• Officials have cited the slump in global prices of the green units to have contributed to waning interest by the government and private investors to apply for trading rights.
• Analysts are now pegging their hopes on a new round of carbon credit talks set for 2015 for the prices to bounce back.

Kenya submitted only one green project last year for issuance of rights to trade in global carbon markets whose prices have dipped sharply.

Officials have cited the slump in global prices of the green units to have contributed to waning interest by the government and private investors to apply for trading rights.

“Poor performance of carbon credit markets has largely removed shine off the sector, significantly reducing investors’ appetite,” Africa Carbon Exchange (ACX) communications manager Kevin Muriithi said.

Mr Muriithi said the price of carbon has tumbled to trade at less than a dollar or Sh86.32 globally per tonne, compared to Sh4,000 in 2008, three years after the enforcement of the Kyoto Protocol.

The accord had been agreed upon by nations in Japan in 1997 to adopt measures aimed at mitigating climate change.

READ: Crash in carbon prices hits Kenyan companies

Records at Nairobi based Africa Carbon Exchange (ACX) indicate that only Kenya Petroleum Refineries Ltd modification of heat exchanger network was allowed by the UN to trade in the carbon market in 2013.

This bucks a six-year trend in which the State has been increasing the number of green projects participating in sale of carbon credit units to nations with high levels of greenhouse gas emissions.

The project, meant to boost energy efficiency received approval certificate from the UN’s Clean Development Mechanism (CDM) in April.

The projects annually cuts 6,080 tonnes of carbon dioxide emitted into the atmosphere which is sold to the UK and Northern Ireland to offset carbon emissions. One tonne of carbon dioxide equals to one carbon credit.

Kenya has announced plans to diversify energy sources through tapping into solar, wind and geothermal wells. The projects were expected to earn billions of shillings in carbon credits but this may not be realised with interest in the Kyoto Protocol diminishing after rich nations pulled out of buying the credits in Doha, Qatar 2012.

Out of the 190 countries that were expected to strike deals in Qatar, only 37 ended up doing so.

Advocacy

Analysts are now pegging their hopes on a new round of carbon credit talks set for 2015 for the prices to bounce back.

“There is deafening advocacy globally on the need to adopt green, renewable projects ranging from energy to buildings. This underlines the growing importance of the market in coming years,” said Emerald Environmental Firm consultant Reuel Waithaka.