CARBON FINANCE READINESS: A REVIEW OF INSTITUTIONAL FRAMEWORKS AND POLICIES IN KENYA
Abstract
Purpose of Study: Carbon finance is vital to global efforts to combat climate change, particularly in developing regions like Africa. It facilitates investments in climate-smart projects that are essential for reducing greenhouse gas emissions and enhancing resilience to climate impacts. As countries and corporations strive to achieve the Paris Agreement’s goal of limiting global warming to well below 2°C, adopting carbon finance mechanisms becomes increasingly critical.
Problem Statement: Africa has encountered significant challenges in accessing and utilizing carbon finance effectively. This study examines the institutional frameworks and policy environments that influence Kenya’s readiness for carbon finance.
Methodology: A comprehensive review of scholarly articles, government reports, and documents from development partners was conducted using keywords such as "Kenya," "carbon finance," "climate change," and "institutional frameworks."
Result: The findings indicate that while Kenya has made considerable progress in establishing carbon-related policies, legislation, and institutions, several gaps remain. These include challenges in data management, policy alignment, and mobilizing private-sector investments.
Recommendation: Addressing these issues is crucial to enhancing Kenya's access to carbon finance and promoting sustainable development. This review is valuable for the Kenyan government, development partners, and the private sector involved in climate finance initiatives.
Keywords: Carbon Finance, Climate Change, Institutional frameworks, Sustainable Development
References
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Bernstein, A. A. (2023). The Perfect is the Enemy of the Good: Carbon Credits and Funding for Decarbonization in Developing Countries. New England Journal of Public Policy, 35(2), 4.
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Erdoğan, E. (2023). Low Carbon Transition in Emerging Economies: Climate Policy, Carbon Pricing and the Effect on Employment. Taylor & Francis. https://doi.org/10.4324/9781003349358
Gimba, O. J., Alhassan, A., Ozdeser, H., Ghardallou, W., Seraj, M., & Usman, O. (2023). Towards low carbon and sustainable environment: does income inequality mitigate ecological footprints in Sub-Saharan Africa? Environment, Development and Sustainability, 25(9), 10425-10445. https://doi.org/10.1007/s10668-023-03580-8
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Government of Kenya. (2021). Kenya’s first green bond: Slower uptake and the need for supportive frameworks. Government of Kenya.
Government of Kenya. (2023). Kenya National Adaptation Plan 2015–2030: Enhancing Climate Resilience in Kenya. Ministry of Environment and Forestry.
Green, F., & Kuch, D. (2022). Counting carbon or counting coal? Anchoring climate governance in fossil fuel-based accountability frameworks. Global Environmental Politics, 22(4), 48-69. https://doi.org/10.1162/glep_a_00654
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Li, Y., Liu, T., Song, Y., Li, Z., & Guo, X. (2021). Could carbon emission control firms achieve an effective financing in the carbon market? A case study of China's emission trading scheme. Journal of Cleaner Production, 314, 128004. https://doi.org/10.1016/j.jclepro.2021.128004
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National Treasury. (2017). Sessional Paper No. 03 of 2017 on National Policy on Climate Finance. Nairobi: The National Treasury. Retrieved from KIPPRA Repository.
Oduro, R. A., & Taylor, P. G. (2023). Future pathways for energy networks: A review of international experiences in high-income countries. Renewable and Sustainable Energy Reviews, 171, 113002. https://doi.org/10.1016/j.rser.2022.113002
Olczak, M., Piebalgs, A., & Balcombe, P. (2022). Methane regulation in the EU: Stakeholder perspectives on MRV and emissions reductions. Environmental Science & Policy, 137, 314-322. https://doi.org/10.1016/j.envsci.2022.09.002
Ongugo, P. O., Langat, D., Oeba, V. O., Kimondo, J. M., Owuor, B., Njuguna, J., & Russell, A. J. (2014). A review of Kenya’s national policies relevant to climate change adaptation and mitigation: Insights from Mount Elgon.
Organisation for Economic Co-operation and Development (OECD). (2023). Climate Finance and Investment: Key Findings. OECD Publishing.
Purdon, M. (2024). The Political Economy of Climate Finance Effectiveness in Developing Countries: Carbon Markets, Climate Funds, and the State. Oxford University Press. https://doi.org/10.1093/oso/9780197756836.001.0001
Republic of Kenya. (2010). The Constitution of Kenya 2010. Government Printer.
Sangori, R. O. (2021). Energy Efficiency of Building Technologies and Climate Change - a Case Study of Carbon Sequestration in Migori County. (Doctoral dissertation, University of Nairobi).
Semieniuk, G., Campiglio, E., Mercure, J. F., Volz, U., & Edwards, N. R. (2021). Low‐carbon transition risks for finance. Wiley Interdisciplinary Reviews: Climate Change, 12(1), e678. https://doi.org/10.1002/wcc.678
Streck, C. (2020). Who owns REDD+? Carbon markets, carbon rights, and entitlements to REDD+ finance. Forests, 11(9), 959. https://doi.org/10.3390/f11090959
The National Treasury. (2017). National Policy on Climate Finance. The National Treasury.
The National Treasury (2017). Public Finance Management Act: Climate Change Fund Regulations. The National Treasury
The National Treasury. (2018). National Climate Change Action Plan 2018–2022. Nairobi: The National Treasury.
The National Treasury (2021). National Treasury Climate Change Report. Nairobi: The National Treasury.
The National Treasury. (2021). Kenya’s National Policy on Climate Finance. The National Treasury
Ulpiani, G., Rebolledo, E., Vetters, N., Florio, P., & Bertoldi, P. (2023). Funding and financing the zero emissions journey: urban visions from the 100 Climate-Neutral and Smart Cities Mission. Humanities and Social Sciences Communications, 10(1), 1-14. https://doi.org/10.1057/s41599-023-02055-5
United Nations Framework Convention on Climate Change (UNFCCC). (2020). Capacity-building in Developing Countries: Challenges and Opportunities.
United Nations Framework Convention on Climate Change. (2023). Annual Report on the Clean Development Mechanism and Green Climate Fund. UNFCCC Secretariat.
World Bank. (2021). Partnership for Market Readiness: Achievements and Lessons Learned. World Bank.
World Bank. (2022). State and Trends of Carbon Pricing 2022. World Bank.
World Bank. (2023). State and Trends of Carbon Pricing 2023. World Bank Group.
World Economic Forum. (2023). The Global Risks Report 2023. World Economic Forum.
Zhou, W., Cao, X., Dong, X., & Zhen, X. (2023). The effects of carbon-related news on carbon emissions and carbon transfer from a global perspective: Evidence from an extended STIRPAT model. Journal of Cleaner Production, 425, 138974. https://doi.org/10.1016/j.jclepro.2023.138974
African Development Bank. (2023). African Development Bank's climate change commitment. African Development Bank.
African Development Bank (AfDB). (2024). Africa Climate Change Fund and African Carbon Support Programme: Progress Report. AfDB Climate Finance Initiatives.
Baboukardos, D., Kopita, A., Ranegaard, C., & Demetriades, E. (2024). Carbon reporting regulation: Real effects, external pressures, and internal policies. Business Strategy and the Environment. https://doi.org/10.1002/bse.3726
Bernstein, A. A. (2023). The Perfect is the Enemy of the Good: Carbon Credits and Funding for Decarbonization in Developing Countries. New England Journal of Public Policy, 35(2), 4.
Bowman, M., & Steenmans, K. (2019). Legal readiness for climate finance: Private sector opportunities.
Chang, L., Wang, J., Xiang, Z., & Liu, H. (2021). Impact of green financing on carbon drifts to mitigate climate change: Mediating role of energy efficiency. Frontiers in Energy Research, 9, 785588. https://doi.org/10.3389/fenrg.2021.785588
Erdoğan, E. (2023). Low Carbon Transition in Emerging Economies: Climate Policy, Carbon Pricing and the Effect on Employment. Taylor & Francis. https://doi.org/10.4324/9781003349358
Gimba, O. J., Alhassan, A., Ozdeser, H., Ghardallou, W., Seraj, M., & Usman, O. (2023). Towards low carbon and sustainable environment: does income inequality mitigate ecological footprints in Sub-Saharan Africa? Environment, Development and Sustainability, 25(9), 10425-10445. https://doi.org/10.1007/s10668-023-03580-8
Government of Kenya. (2007). Kenya Vision 2030. Nairobi: Government of Kenya.
Government of Kenya. (2016). Climate Change Act, 2016. Nairobi: Government of Kenya.
Government of Kenya. (2018). National Climate Change Action Plan (NCCAP) 2018-2022. Ministry of Environment and Forestry.
Government of Kenya. (2021). Kenya’s first green bond: Slower uptake and the need for supportive frameworks. Government of Kenya.
Government of Kenya. (2023). Kenya National Adaptation Plan 2015–2030: Enhancing Climate Resilience in Kenya. Ministry of Environment and Forestry.
Green, F., & Kuch, D. (2022). Counting carbon or counting coal? Anchoring climate governance in fossil fuel-based accountability frameworks. Global Environmental Politics, 22(4), 48-69. https://doi.org/10.1162/glep_a_00654
International Carbon Action Partnership (ICAP). (2022). Emissions Trading Worldwide: Status Report 2022. International Carbon Action Partnership.
International Energy Agency. (2022). Global Energy Review: CO2 Emissions in 2021. International Energy Agency.
Kabata, F. (2024). Exploring the questionable connection between the right to development and environmental protection in Kenya. In Domestic and Regional Environmental Laws and Policies in Africa (pp. 241-259). Routledge. https://doi.org/10.4324/9781003382256-18
Kiremu, M., Scrimgeour, F., Mutegi, J., & Mumo, R. (2022). Climate finance readiness: A review of institutional frameworks and policies in Kenya. Sustainable Environment, 8(1), 2022569. https://doi.org/10.1080/27658511.2021.2022569
Li, Y., Liu, T., Song, Y., Li, Z., & Guo, X. (2021). Could carbon emission control firms achieve an effective financing in the carbon market? A case study of China's emission trading scheme. Journal of Cleaner Production, 314, 128004. https://doi.org/10.1016/j.jclepro.2021.128004
Ministry of Environment and Forestry. (2018). National Climate Change Action Plan (2018-2022). Government of Kenya.
Mungai, E. M., Ndiritu, S. W., & Da Silva, I. (2022). Unlocking climate finance potential and policy barriers - A case of renewable energy and energy efficiency in Sub-Saharan Africa. Resources, Environment and Sustainability, 7, 100043. https://doi.org/10.1016/j.resenv.2021.100043
Nairobi Securities Exchange. (2021). Green Bonds Guidelines for Kenya. Nairobi: NSE.
National Environmental Management Authority (NEMA). (2021). Annual Environmental Report 2021.
National Treasury. (2017). Sessional Paper No. 03 of 2017 on National Policy on Climate Finance. Nairobi: The National Treasury. Retrieved from KIPPRA Repository.
Oduro, R. A., & Taylor, P. G. (2023). Future pathways for energy networks: A review of international experiences in high-income countries. Renewable and Sustainable Energy Reviews, 171, 113002. https://doi.org/10.1016/j.rser.2022.113002
Olczak, M., Piebalgs, A., & Balcombe, P. (2022). Methane regulation in the EU: Stakeholder perspectives on MRV and emissions reductions. Environmental Science & Policy, 137, 314-322. https://doi.org/10.1016/j.envsci.2022.09.002
Ongugo, P. O., Langat, D., Oeba, V. O., Kimondo, J. M., Owuor, B., Njuguna, J., & Russell, A. J. (2014). A review of Kenya’s national policies relevant to climate change adaptation and mitigation: Insights from Mount Elgon.
Organisation for Economic Co-operation and Development (OECD). (2023). Climate Finance and Investment: Key Findings. OECD Publishing.
Purdon, M. (2024). The Political Economy of Climate Finance Effectiveness in Developing Countries: Carbon Markets, Climate Funds, and the State. Oxford University Press. https://doi.org/10.1093/oso/9780197756836.001.0001
Republic of Kenya. (2010). The Constitution of Kenya 2010. Government Printer.
Sangori, R. O. (2021). Energy Efficiency of Building Technologies and Climate Change - a Case Study of Carbon Sequestration in Migori County. (Doctoral dissertation, University of Nairobi).
Semieniuk, G., Campiglio, E., Mercure, J. F., Volz, U., & Edwards, N. R. (2021). Low‐carbon transition risks for finance. Wiley Interdisciplinary Reviews: Climate Change, 12(1), e678. https://doi.org/10.1002/wcc.678
Streck, C. (2020). Who owns REDD+? Carbon markets, carbon rights, and entitlements to REDD+ finance. Forests, 11(9), 959. https://doi.org/10.3390/f11090959
The National Treasury. (2017). National Policy on Climate Finance. The National Treasury.
The National Treasury (2017). Public Finance Management Act: Climate Change Fund Regulations. The National Treasury
The National Treasury. (2018). National Climate Change Action Plan 2018–2022. Nairobi: The National Treasury.
The National Treasury (2021). National Treasury Climate Change Report. Nairobi: The National Treasury.
The National Treasury. (2021). Kenya’s National Policy on Climate Finance. The National Treasury
Ulpiani, G., Rebolledo, E., Vetters, N., Florio, P., & Bertoldi, P. (2023). Funding and financing the zero emissions journey: urban visions from the 100 Climate-Neutral and Smart Cities Mission. Humanities and Social Sciences Communications, 10(1), 1-14. https://doi.org/10.1057/s41599-023-02055-5
United Nations Framework Convention on Climate Change (UNFCCC). (2020). Capacity-building in Developing Countries: Challenges and Opportunities.
United Nations Framework Convention on Climate Change. (2023). Annual Report on the Clean Development Mechanism and Green Climate Fund. UNFCCC Secretariat.
World Bank. (2021). Partnership for Market Readiness: Achievements and Lessons Learned. World Bank.
World Bank. (2022). State and Trends of Carbon Pricing 2022. World Bank.
World Bank. (2023). State and Trends of Carbon Pricing 2023. World Bank Group.
World Economic Forum. (2023). The Global Risks Report 2023. World Economic Forum.
Zhou, W., Cao, X., Dong, X., & Zhen, X. (2023). The effects of carbon-related news on carbon emissions and carbon transfer from a global perspective: Evidence from an extended STIRPAT model. Journal of Cleaner Production, 425, 138974. https://doi.org/10.1016/j.jclepro.2023.138974
Published
2024-09-27
How to Cite
Shikumo, D. H. (2024). CARBON FINANCE READINESS: A REVIEW OF INSTITUTIONAL FRAMEWORKS AND POLICIES IN KENYA. African Journal of Emerging Issues, 6(14), 64 - 81. Retrieved from https://ajoeijournals.org/sys/index.php/ajoei/article/view/668
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