KOKO's closure fuels debate on Kenya's carbon credit gamble

Koko's model depended heavily on carbon finance. By selling cookstove credits abroad, the company subsidised bioethanol fuel at home, making it cheaper than charcoal and kerosene. [Koko Networks] When the clean-cooking company Koko Netw orks shut down i ts Kenyan operations this week, the announcement landed like a spark in dry grass. Cabinet officials defended the broader car b on-market strategy. Economists questioned the numbers. Civil-society groups seized on the moment to reopen an old argument: whether carbon credits bring genuine climate benefits o r simply shift profits abroad. For many Kenyans, the episode confirmed what they already susp ected. Carbon markets promise much. T hey deliver une venly. And they remain poorly understood. Carbon credits are meant to transform avoided pollution into r evenue. Projects calculate how much carbon dioxide th ey prevent from entering the atmosphere by pro tecting forests, restoring grasslands or replacing smoky s toves, then sell verified credits to companies abroad trying to meet climate pledges. Globally, voluntary carbon markets ballooned to about $2 billion in 2022 before invest igations and lawsuits punctured confidence and demand began to fall. Scientists have raised structural concerns. Different scientific review s notes that "today, just five percent of offset projects fall under the carbon removal/negati ve emissions category", meaning most do not actually pull carbon from the air. Prices averaged roughly two dollars a to nne in 2022, far below regulated systems in Euro pe. Those structural weaknesses form th e backdrop to Kenya's debate. Koko's pitch sounded elegant. Households would cook on ethanol stoves instead of charcoal. Urban air would clear. Carbo n credits sold overseas would subsidise fuel price s at home. Koko's model depended heavily on carbon finance. By selling cookstove credits abroad, the company subsidised bioethanol fuel at home, making it cheaper than charcoal and kerosene. Management described it as a " non-government energy subsidy, " a way to cut deforestation and indoor air pollution while keeping cooking affordable. But the business required carbon prices well above prevailing market levels, which had fallen below five dollars a tonne. Kok o therefore ta rgeted the aviation of f setting sch eme Corsia, wher e credits have traded at $14-$23 per tonne in recent years, according to an industry analy sis. That strategy hinged on Kenyan au thorities g ranting a form al "letter of authorisation " allowing emissions reductions to be exported under the Paris Agreement. None came. By Janu ary 2026, Koko shut its doors after eleven years in operation, leaving about 700 staff without work and 1.3 million households scramblin g fo r alternatives. In a statement, Kenya's climate envoy termed the c losure "deeply concerning" for familie s who relied on the technology. Behind the scenes, regulators were uneasy about the project's accounting assumptions, particularly the fraction of non-renewable biomass a key parameter for calc ulating deforestatio n avoided which the National Environment Management Authority reporte d ly judged too high. President William Ruto's economic adviser, David Ndii, later wrote that the collapse reflected a ta ngle of factors: " the Paris Agreement itself, the veracity of cookstove carbon credits, our investor-unfriendly NDC regime and carbon market regulatio ns, transparency of Koko's business model, diplomatic meddlin g..." Koko h ad secured a $180-million political-risk guarantee from the World Bank's Multilateral Investment Guarantee Agency in 2025, but witho ut authorisation to export credits, the deal never unlocked new finance. Market sources told analysts the government was unwilling to bend ru les for a project so large it could distort Keny a 's national em issions balance. Long before Koko, carbon trading had already transformed landscapes in southeastern Ke nya and the northern rangelands. In Taita Taveta, early forest-carbon sc hemes brokered by A merican firms channelled roug hly Sh14 billion into seventeen conservancies betwe en 2010 and 2011, according to Paul Mwawasi, manager, M bale Transfrontier Conse rvancy Taita Taveta county . The funds paid ranger salar ies, bui lt classrooms and sup ported patrol vehicles. But Mwa wasi said r esentment grew as commun ities tried to track the money. Only about a third, he claimed, reached local institutions, with the remainder absorbed by d evelopers, auditors a nd intermediaries. "People started asking hard questions," he said. "If billions passed through here, why does life still loo k the same?" When international buyers retreated around 2022 amid global reputational scandals, several projects stalled, re inforcing a perception that communi ties carried the risk wh ile others captured most of the upside. In Samburu County, where Northern Rangeland Trust-linked conservancies run some of the co untry's most prominent carbon projects, sce pticism remains acute. Fred Longonyek, a community leader in Nkaroni village, said funding uncertainty and shrinking donor su pport have left locals doubtful about the market's future. He sai d while money for the current year had reached the project proponent, "we really don't know quite whether car bon will proceed... credibility iss ues are still there" He described benefit-sharing through c onservancies as thin. "The communities have not really b ene fited much," he said, adding that most funds now pay staff salaries rather than transform livelihoods. "The community gets peanuts, very little ind eed" Longonyek traced the problem to the early years, when communities lacked informat ion about contracts or revenue flows. "Things were totally in da rkness," he said, crediting adv ocacy groups for later pushing for transparency. Even with new national regulations comi ng into fo rce, he warned villagers to prepare for a future without carbon income. After a recent commi ttee mee ting, he said he told residents that "th ings are not real ly bright in the future on carbon... we must prepare ourselves ser iously to move forward without it" Th e Kenya n government insists it is learni ng from these controversies. New carbon-market rules require project registration, county appro val, disclo sure of benefit-sharing agreemen ts and documented free, prior and in formed consent from com mu nities. Regulators say the measures aim to curb opaque brokerage deals and restore conf idence after years of murky accounting. Some county governments now wan t to bypass foreign intermediaries entire ly and se ll credits directly to buyers in the G ulf, ho ping shorter chains will leave more revenue on the ground. Yet civ il-society groups argue that offsets still dominate policy d isc ussions at the expense of more predictab le clim ate finance, such as grant s and co ncessional loans for adaptation. Globally, critics point out that even high-quality offsets could cover only a small fraction of emissions growth this decade, while mor e than 750 million tonnes of unsold credits now clog registries worl dwide, depress ing prices and inve stor appetite. Koko's collapse accelerated a reckoning already under way. County officials now scrutinise contracts line by line. Community leaders demand proof of benefits before signing away land for decades. Regulators promise tougher ove rsight. Whether those changes can sta bilise a mark et buffeted by scientific debate and global price swings remains uncertain. Fo r villagers like Longonyek, the lesson is simpler. Carbon money, he says, cannot be treated as a guaranteed in come stream. Communities must plan for life without it. David Arac h Namati's Senior Program Manager who is involved in negotiations stated that if carbon markets are t o surv ive in Kenya, people must see results on the ground rather than consultants flying in and out . He added that Kenya still hopes to monet ise forest s and rangelands as the world hunts for cli mate finance. Yet after a decade of deals and the abrupt exit of a flagship company the question lingering across vi llage meetings and Cabinet corridors alike is stark. "Who truly gains when ca rbon is sold, a nd how can anyone be sure the climate does too?" Arach questioned.

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