Kenya's Stricter Carbon Rules Bring Down KOKO Networks After Inflated Credit Claims

KOKO Networks, a bioethanol fuel provider serving over 1.3 million Kenyan low-income households for 11 years, collapsed after Kenya's government denied it a Letter of Authorization to sell carbon credits internationally under Article 6 of the Paris Agreement. Analysis indicates the company used a 93 per cent Fraction of Non-Renewable Biomass rate when the actual rate in cities like Nairobi was 38 per cent, overcrediting its emissions reductions by more than 2.4 times.

KOKO Networks subsidised its bioethanol fuel by 25-40 per cent and stoves by 85 per cent, with carbon credit revenue as the core business model rather than an add-on. A rating by independent agency BeZero gave the credits a 'B' grade — indicating a low likelihood of achieving one tonne of CO2 removal — and a 'D' sub-grade for carbon accounting. Kenya's denial stemmed from a dispute over the volume of credits KOKO intended to sell internationally, which the government believed would monopolise the country's carbon market quota. The company has entered administration and is reportedly on the brink of bankruptcy, with implications for operations in Rwanda and India.

Kenya's Climate Change Carbon Markets Regulations 2024 require at least 40 per cent of land-based carbon project revenues to be channelled to local communities and 25 per cent from technology-based projects. Key projects must obtain Letters of Authorization before selling credits internationally. A new National Climate Change Council chaired by President William Ruto now determines tradable credit volumes per nationally determined contribution cycle. Beyond KOKO, Northern Rangelands Trust's Northern Kenya Rangelands Carbon Project — described as the world's largest soil carbon removal project — was declared illegal after courts found conservancies were established without proper community consultation.

Kenya's National Carbon Registry, launched in February 2026, provides a central digital platform to track and verify all carbon credit transactions. Cabinet Secretary for Environment Deborah Mlongo Barasa stated the registry aims to ensure transparency and guarantee that local communities benefit from climate finance. The Soils for the Future Africa Kajiado Rangeland Carbon Project has also been halted following allegations of exploitative 40-year lease agreements lacking community consent. Carbon credit specialists warn that inflated baselines, distorted activity data and inadequate monitoring surveys represent systemic vulnerabilities that tighter Article 6 regulation and independent rating agencies are now beginning to expose.

Key figure — 93 per cent Fraction of Non-Renewable Biomass rate used by KOKO Networks against an actual Nairobi rate of 38 per cent