CLIMATE MITIGATION

KenGen to cash in on global carbon trading

It has received the green light to sell 4.6 million tonnes of emissions.

In Summary

•In July, CEO Rebecca Miano had said the electricity generator would earn about Sh119 million from 550,981 carbon credits.

•KenGen has so far developed and registered six Clean Development Mechanism (CDM) projects.

Olkaria 2 power plant/HANDOUT
Olkaria 2 power plant/HANDOUT

Kenya Electricity Generating Company (KenGen) has initiated the ambitious carbon-trading programme that will see it tap into the Sh4.94 trillion global market.

On Tuesday, it received a nod to sell 4.6 million tonnes of carbon emissions earned over the last 18 months.

With carbon pricing ranging from $10 (Sh1,000) up to $80 (Sh8,000), KenGen has the potential to make up to Sh4.6 billion.

Carbon trade is the buying and selling of credits that permit a company  or any other entity to emit a certain amount of carbon dioxide between nations. This is part of an international agreement aimed at gradually reducing total emissions.

Auction prices can however go as low as $3 (Sh300) per tonne depending on demand, meaning the power generator could equally earn less.

The process to offer the credits to the market has begun, a manager at the firm told the Star yesterday, with bids expected in the next three to six months.

In July, CEO Rebecca Miano had said the electricity generator would earn about Sh119 million from 550,981 carbon credits.

KenGen however yesterday announced a final verification and issuance of a cumulative 4,617,309 tonnes of Carbon Emissions (CO2e) to six of its projects by the United Nations Framework Convention on Climate Change (UNFCCC).

The latest was 2,025,813 tonnes of Carbon Emission Reductions (CO2e) issued to the 150MW Olkaria IV Geothermal Project, which was the last of the six KenGen applied for verification.

2,040,515 tonnes of CO2e had earlier been issued to KenGen’s Olkaria I, Units 4 and 5 Geothermal Power plant by the UNFCCC, on August 17, 2021.

In a statement to newsrooms, KenGen CEO Rebecca Miano termed the UNFCC’s issuance of the carbon credits to KenGen as a boost to the company’s lead in climate action not only in Africa but in the world.

KenGen has so far developed and registered six Clean Development Mechanism (CDM) projects comprising of Olkaria II geothermal expansion project, redevelopment of tana hydropower station project, and optimisation of Kiambere hydropower project.

Also optimised are Olkaria IV geothermal project, Olkaria I units four and five, and Ngong wind.”

The first KenGen project to be issued with carbon credits under the CDM initiative was the Tana hydroelectric power project which received 57,458 carbon credits, on March 13, 2020.

“As a way of enhancing our portfolio of climate change mitigation projects, KenGen intends to incorporate additional geothermal, wind, and solar projects which will reduce between 100,000 to 600,000 tonnes of carbon dioxide emissions every year," Miano said.

This, she notes will play a role in reducing the impact of climate change on the environment.

In 2019, governments raised more than $45 billion (Sh4.94 trillion) from carbon pricing, according to a World Bank report.

Almost half of the revenues were dedicated to environmental or broader development projects, and more than 40 per cent went to the general budget.

The remaining share was dedicated to tax cuts and direct transfers.

Carbon prices however remain substantially lower than those needed to be consistent with the Paris Agreement, the global lender notes, despite increasing in many jurisdictions. 

Olkaria 2 power plant/HANDOUT
Olkaria 2 power plant/HANDOUT