Kenyan firms to tap new IFC carbon fund
Kenyan companies investing in carbon trading projects are set to benefit from a new fund set up by IFC to cover a financing gap arising from the European Union’s decision to stop buying carbon credits from developing countries beginning next year.
The 150 million euros or Sh18.3 billion International Finance Corporation (IFC) fund is a major win for Kenyan companies, most of which are planning to start income-earning carbon trading projects that help reduce emission of carbon dioxide and provide cheaper, renewable energy.
The EU, which is currently sponsoring up to 80 per cent of environmental conservation projects started by Kenyan companies, has said it will stop buying carbon credits from non-least developed countries beginning 2012.
Kenya is not classified as a Least Developed Country and will therefore not qualify to sell to the EU unless through bilateral agreements.
The deadline coincides with expiry of the Kyoto Protocol, a United Nations agreement on climate change that started the carbon credit trading scheme.
“During a period of regulatory uncertainty, (this fund) is helping to maintain demand for post-2012 carbon credits,” said Joëlle Chassard, Manager of the World Bank’s Carbon Finance Unit.
KenGen, Mumias, Kenya Airways, KPLC and the Green Belt Movement are some of the local companies with carbon trading projects sponsored by EU countries or corporations.
Ongoing projects supported by the EU will not be affected, but those that will not have been validated by the UN by 2012 will not qualify for funding under the Kyoto Protocol.
Trade in carbon credits earns money for companies that invest in renewable energy and environmental conservation projects like wind power, biogas and afforestation.
IFC said it will together with its partners purchase 25 million carbon credits generated between 2011 and 2020.
“The carbon market is key to meeting the world’s goals to combat climate change. The fund will facilitate implementation of carbon credits-eligible private sector projects,” said head of the fund Lasse Ringius.
Mr Ringius visited Kenya last month to train companies on how to start carbon credit projects.