KenGen to trade its carbon credits on local bourse

NAIROBI: Kenya Electricity Generating Company (KenGen) is planning to start selling carbon credits on the Nairobi Securities Exchange (NSE) by March next year. The electricity generator is scouting for direct buyers for its carbon credits in the spot markets ahead of an expiry of its UN-­backed, exchange market deal next year.

“We were looking at December this year, but to provide for necessary approvals we should be selling by March next year. We are targeting local companies who wish to buy carbon credits to reduce their carbon footprint and make their products more competitive,” Director for Regulatory and Corporate Affairs Simon Ngure said at a media briefing.

The trade will be handled by the Environment and Clean Development Mechanism, a fully-fledged department within the Regulatory Affairs Division at KenGen.

The company, which is awarded credits for emitting less carbon in the market, recently received over 18,000 carbon credits from the redevelopment of Tana Hydro Power Station. Carbon is now being tracked and traded like any other commodity and any company can buy the credits from someone else to reduce their carbon emission footprint.

 EXPORT MARKET

There are several companies in Kenya, mainly in the export market such as those in the flower sector that could benefit from such a venture when their products are seen on the international market as ‘green.’ This comes at a time when the price of carbon credits has been on a downward trend internationally.

This has hurt earnings of companies such as power producer KenGen, which have invested heavily in environment-­friendly projects that have lower carbon emissions in the race to end global warming. KenGen targeted to earn Sh1.2 billion annually from trading in carbon credits.

The UN carbon credit market was designed to let richer nations make up for their emissions by paying for carbon reductions in China, India and other developing countries, where reduction is often cheaper.

Prices for carbon credits reached an all-time high in July 2008 at 36.43 euros ($50.17) per tonne under the European Union’s carbon market, the world’s biggest.

But when Europe’s industrial production stalled after the 2009 financial crisis, supply quickly dwarfed demand, driving the credits to their lowest level. Now, KenGen is looking for new markets outside Europe.

Mumias Sugar Company, East Africa Portland Cement Company and Kenya Power as well other smaller companies are among institutions participating in the carbon credit trading market.

KenGen is counting on its continued geothermal, energy-capacity expansion programme and the existing potential for emission reduction to expand its carbon credit assets by venturing into new and unregulated markets.