Energy, Environment

This is How Carbon Credits Can Innovatively Catalyze for Financing Our Energy Transition

I recent­ly took part in a Pan African Cli­mate Change Earth Sum­mit host­ed at the Kenya Wildlife Ser­vice. While observ­ing the dis­cus­sions, the press­ing need to inno­v­a­tive­ly finance tran­si­tion to clean ener­gy became evi­dent to me, hence these thoughts.

Last year in Kenya, 700,000 new cus­tomers were con­nect­ed to the elec­tric­i­ty grid, mark­ing a sig­nif­i­cant stride toward con­nect­ing every Kenyan to the grid. Unlike var­i­ous west­ern coun­tries rely­ing on unclean ener­gy sources like coal, 87 per­cent of elec­tric­i­ty gen­er­at­ed in Kenya last year came from renew­able sources such as geot­her­mal and wind. In con­trast, the US gen­er­ates about 60% of its elec­tric­i­ty from fos­sil fuels includ­ing coal, nat­ur­al gas, petro­le­um, and oth­er gases.

Kenya stands as a glob­al leader in elec­tric­i­ty gen­er­a­tion from renew­able sources. Nev­er­the­less, this accom­plish­ment could obscure the heavy reliance on non-renew­able sources like fos­sil fuels and bio­mass such as char­coal for trans­port fuel and cook­ing ener­gy, pos­ing severe eco­nom­ic and health risks.

With­out any doubt, the esca­lat­ing fuel costs pose a crit­i­cal infla­tion risk, impact­ing trans­porta­tion and man­u­fac­tur­ing expens­es. Addi­tion­al­ly, ris­ing fuel prices con­tribute to increased food prices. The reliance on fos­sil fuels in Kenya and glob­al­ly is no longer sus­tain­able, demand­ing urgent and deci­sive action to shift the trans­port sec­tor away from these fuels.

For­tu­nate­ly, Kenya has already embarked on crit­i­cal steps that need ampli­fi­ca­tion. The gov­ern­men­t’s ini­tia­tive to intro­duce elec­tric bus­es and estab­lish charg­ing sta­tions in remote regions not only enhances mobil­i­ty but also reduces emis­sions, fos­ter­ing a clean­er trans­porta­tion sys­tem. More­over, the full imple­men­ta­tion of the Finance Act effec­tive from July 1, 2023, zero-rat­ing VAT on the impor­ta­tion or sale of e‑Mobility vehi­cles and com­po­nents, such as elec­tric bicy­cles and motor­cy­cles, is imperative.

As we tran­si­tion, there is need to move with all play­ers step­ping on a rea­son­able pol­i­cy foun­da­tion that we have already laid regard­ing local­iza­tion. In Indone­sia, Min­is­te­r­i­al Reg­u­la­tion No. 21 of 2023 offers a sub­sidy of approx­i­mate­ly USD 600 to buy­ers of elec­tric motor­cy­cles, reduc­ing the orig­i­nal price. Such is the sup­port­ive approach that our Auto­mo­tive Pol­i­cy must breathe.

Regard­ing cook­ing fuel, approx­i­mate­ly 70 per­cent of Kenyan house­holds still rely on bio­mass, expos­ing them to health risks due to indoor air pol­lu­tion. Regret­tably, 23,000 Kenyans per­ish annu­al­ly due to the use of kerosene and fire­wood for cook­ing. The tran­si­tion to clean cook­ing ener­gy is a life-and-death matter.

Pres­i­dent William Ruto’s tar­get of achiev­ing 100 per­cent access to clean cook­ing by 2028 may be deemed ambi­tious by crit­ics, but I am con­vinced of its fea­si­bil­i­ty. To expe­dite this goal, I sug­gest that the Pres­i­dent accel­er­ates the imple­men­ta­tion of the ener­gy tran­si­tion pro­gram, man­dat­ing all pub­lic insti­tu­tions to shift from bio­mass cook­ing fuels to clean­er options. Addi­tion­al­ly, sub­stan­tial invest­ment in bio­gas is piv­otal for this transition.

At the house­hold lev­el, increas­ing LPG usage is cru­cial. Present­ly, only 24 per­cent of Kenyan house­holds use LPG, while 56 per­cent use kerosene. The gov­ern­men­t’s plan to pro­vide free LPG cylin­ders to 4.4 mil­lion impov­er­ished house­holds by 2025 is com­mend­able and should be exe­cut­ed. Addi­tion­al­ly, the afford­able hous­ing projects must be designed with ener­gy tran­si­tion in mind.

Tran­si­tion­ing to renew­able ener­gy through these pro­pos­als entails sig­nif­i­cant costs and here is my sug­gest­ed prac­ti­cal solution.

Car­bon off­set­ting which has mush­roomed into a glob­al multi­bil­lion-dol­lar indus­try presents a viable financ­ing mech­a­nism for this envi­sioned ener­gy tran­si­tion. It enables indi­vid­u­als or orga­ni­za­tions to off­set their car­bon emis­sions by invest­ing in car­bon reduc­tion projects. In Kenya, for instance a small project at the Chyu­lu Hills REDD+ Car­bon Project, aim­ing to sup­port com­mu­ni­ty liveli­hoods and con­serve the Chyu­lu Hills land­scape receives USD 6 per ton for the 600,000 tons of car­bon that is off­set by the for­est. This amounts to USD 3.6 M annu­al­ly. Painful­ly, very many such projects worth tril­lions exist in Kenya. Despite orga­niz­ers reap­ing bil­lions from sell­ing car­bon cred­its, only a frac­tion trick­les down to the com­mu­ni­ty. At such eco­nom­i­cal­ly chal­leng­ing times as now, isn’t this mon­ey that we can inno­v­a­tive­ly apply to dri­ve the tran­si­tion to renew­able ener­gy? Tusi­jitese. Think green, act green!


About Dr. Kalua Green

He is the Chief Stew­ard of Green Africa Group, a con­glom­er­ate that was envi­sioned in 1991 to con­nect, pro­duce and impact var­i­ous aspi­ra­tions of human­i­ty through Sus­tain­able Mobil­i­ty & Safe­ty Solu­tions, Eco­pre­neur­ship & Agribusi­ness, Ship­ping & Logis­tics, Envi­ron­men­tal Pro­tec­tion Ini­tia­tives, as well as Hos­pi­tal­i­ty & fur­nish­ings sectors

This is How We Can Use Our Brains to Transform Kenya

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