Kenya’s Carbon Market Just Got Its Digital Backbone
Launch of the Carbon Registry
On 17 February 2026, Kenya officially unveiled the Kenya National Carbon Registry (KNCR), a centralised digital platform established under Section 23G of Kenya’s Climate Change Act and the Climate Change (Carbon Markets) Regulations, 2024. This puts in place the much-needed institutional framework to operationalise the legal and regulatory frameworks already put in place by the Government of Kenya to enhance its response to climate change and to achieve low carbon development in Kenya. The KNCR will include registers on carbon credit projects aimed at reducing GHG emissions in Kenya, REDD+ carbon projects, authorisations granted under the Climate Change Act, issuance and transfer of carbon credits and international transfers of mitigation outcomes (ITMOs), recording corresponding adjustments and cancellation of carbon credits from the relevant national greenhouse gases registry account.
The KNCR launch is juxtaposed against recent claims of “low carbon credit integrity” in African carbon markets with indications that carbon credits generated in Africa do not represent real reductions in carbon emissions, inequitable distribution of income from carbon project to local host communities, displacement of indigenous communities, reduced food security and cultural disruption.
The launch of the KNCR signals Kenya’s determination to strengthen the integrity, transparency and accountability of its carbon market. The registry launch positions Kenya as a credible participant in international markets under Article 6 of the Paris Agreement, ensuring that every tonne of reduction in carbon emissions can be verified, traced, and traded with integrity whilst delivering tangible socio-economic benefits to local communities. This registry forms the backbone of an efficient trustworthy carbon market crucial for boosting investor confidence. This is further bolstered by the registry’s interoperability with existing international standards such as the Gold Standard and VERRA. This launch will position Kenya as one of the Africa Carbon Market pioneers with proposals of scaling up the Kenyan registry model for the establishment of the African Registry for Carbon.
A Market That Has Been Demanding Institutional Frameworks
Kenya’s carbon and clean energy landscape has for years been shaped by the ambitions and controversies of private sector actors operating in a market where regulatory frameworks have lagged behind emerging opportunities.
The recent collapse of a Nairobi based clean cooking startup-KOKO Networks after failure to attain a Letter of Authorisation for the sale of carbon credits the Paris Agreement and access CORSIA is instructive. KOKO Network’s inability to secure a Letter of Authorisation from the Government of Kenya curtailed a vital revenue stream for the company. For a company that has been in operation in Kenya since 2013, this case study highlights the uncertain legal and regulatory environment within which carbon project proponents operate in Kenya. It is hoped that the KNCR will bring some order to the “wild wild west” that has been Kenya’s carbon market.
KOKO’S experience underscores the legal and regulatory fragility arising from the absence of a robust, government-backed registry. In particular, it highlighted material concerns around carbon accounting, carbon credit integrity, additionality, double-counting risk, and the absence of state oversight for investors and counterparties alike.
The KNCR launch heralds a turning point, with ongoing carbon projects now requiring registration and verification under the KNCR by the National Environmental Management Authority (as the Designated National Authority under the Paris Agreement). The effectiveness with which the team and the KNCR will oversee and execute the registration and verification of over 1,000 carbon projects in Kenya without undue backlogs and delays remains uncertain. Investors now face greater legal and regulatory non-compliance risk.
The Climate Change (Non- Market Approaches) Regulations
In addition to the KNCR launch, on 12 February 2026 the Ministry of Environment, Climate Change and Forestry gazetted the Climate Change (Non-Market Approaches) Regulations, 2026 (the Non – Market Regulations).
Whilst the KNCR handles the market side i.e. carbon credits, trading, and ITMO; the Non- Market Regulations govern the non-market approaches. These Non- Market Regulations aim at aligning Kenyan Law with article 6.8 of the Paris Agreement which caters for voluntary co-operation amongst party states to achieve their climate action goals without carbon transactions or quid pro quo arrangements.
The Non-Market Regulations provide a framework for: i) the implementation and co-ordination of non-market approaches as set out in Article 6.8 of the Paris Agreement, ii) the implementation and co-ordination of non-market approaches and iii) enhancing participation of the public sector, private sector, civil society and local communities in the implementation of Kenya’s Nationally Determined Contributions.
Non-market approaches are voluntary, collaborative climate actions taking many forms such as capacity building programs, technology transfer (e.g. transfer of clean energy initiatives), grants and concessional loans to support climate resilient initiatives.
Kenya’s Non- Market Regulations:
- Establish an online National Non-Market Approaches Platform (the Platform) designed to record and exchange information of non-market approaches aligned with Article 6.8 of the Paris Agreement;
- Lists Kenya’s 37 priority non- market approach intervention areas, categorised as: i) adaptation, resilience and sustainable development measures, ii) mitigation measures and iii) development of clean energy sources; and
- Sets out the criteria to be employed by the Climate Change Directorate in approval of non-market approached before publishing on the Platform (including mandatory public participation and FPIC (free, prior and informed consent) for projects on public or community land)
Under these regulations, project proponents are required to provide annual progress reports on approved non-market approaches to form part of the cabinet secretary’s annual report to Parliament on the status of implementation of international and national obligations to respond to climate change, and progress towards attainment of low carbon climate resilient development.
Navigating the New Landscape: Implications for Stakeholders
These legal and institutional developments carry significant implications across Kenya’s carbon and climate finance ecosystem.
Carbon Project Proponents must ensure carbon projects align with national priorities, meet environmental and social safeguards, and comply with regulatory meet the legal and regulatory registration, verification, reporting and monitoring requirements. Ongoing carbon projects will be required to transition to the KNCR framework, whilst new carbon projects must be registered, verified, implemented and monitored under the KNCR. With a regulatory environment that demands greater transparency, stakeholder engagement, regulatory monitoring and good governance, this will reflect in increased compliance costs and efforts for project proponents.
The KNCR and Non- Market Approaches Platform will be beneficial in the verification of a carbon project’s validity and integrity for investors as well as local host communities. These carbon infrastructure frameworks will help to bridge the information gaps related to Kenya’s carbon action efforts, both in voluntary markets and ITMOs. These legal and institutional frameworks now ensure that county governments and community stakeholders are now formal participants in carbon governance, which is vital in protecting community rights, clarifying community obligations, and improving community’s negotiating power.
Registration, verification and project monitoring under the KNCR will be a key consideration for lenders and financiers undertaking due diligence and credit risk analysis in understanding the bankability of Kenyan carbon projects.
From a practical perspective, we expect the KNCR to face teething problems as a wide raft of project proponents scramble to get their projects registered under the KNCR in order to attain letters of authorisation from the Government of Kenya. We also expect to see an influx of players in the voluntary carbon market apply to have their projects registered and verified under the KNCR in order to boost investor confidence in their carbon credits, enhance their credibility and transparency. We expect the new regulatory environment will be hostile to so-called “carbon cowboys.”
Our team at Spencer West would be happy to guide you and your firm through the practical implications of these legal developments to your project. We provide end-to end project legal advisory services including carbon project registration and approval, project implementation and monitoring, regulatory due diligence, credit issuance as well as contract review.
Contact our Nairobi team (Haanee Khan, Nkatha Omondi and Kellen Maganjo) to discuss how these developments affect your climate investments and how we can help you navigate them.
