NAIROBI, Kenya, Nov 8 – The Ministries of Finance and Environment are working to develop a national carbon emission trading scheme strategy.
The strategy aims at mitigating risks associated with climate change while ensuring the country is able to trade off carbon emissions in the global carbon market.
Ministry of Finance Economic Secretary Dr Geoffery Mwau said on Monday that there is a rapidly growing market for carbon credits, which can be offset against emissions in countries that have limits.
“Through a carbon trading scheme we have the potential of addressing the challenge of climate change which can put pressure on an economy,” Dr Mwau said during the opening of the Carbon Financing, Investment and Trading Opportunities workshop.
Carbon trading started in 1996 as one way for organisations, mostly manufacturers in the West and Asia to offset excess carbon dioxide emissions and is estimated to be worth $1.2 trillion.
In the 2010/11 budget, Finance Minister Uhuru Kenyatta allocated Sh51.5 billion under Environment, Water and Sanitation, and another Sh2 billion to implement high impact environmental conservation programs with plans to develop a carbon credit investment framework.
The framework will outline modalities of carbon credit registration, revenue sharing, accountability as well as conservation and identify areas to be funded.
Dr Mwau said Kenya had the potential to become a regional carbon emission trading hub and adding that a carbon Emission Trading Scheme (ETS) was be established in Nairobi to pioneer the carbon market.
He challenged private sector in the industrial and manufacturing industry to develop projects to take advantage of the scheme.
Projects are tied to the carbon market window regulated under Kyoto Protocol, and the emerging one known as voluntary offset market. Payment is based on a unit called certified emission reductions (CERs) while voluntary emission reductions (VERs) works for the voluntary market.
The prevailing price for CER is about Sh900 per ton while voluntary emission reductions are selling at Sh580, according to New Carbon Finance consulting company.