How to Buy Carbon Credits in Kenya: A Complete Legal and Compliance Guide for 2026
- Muhoro & Gitonga Associates
- Mar 11
- 5 min read
Updated: Dec 4
Table of Contents
What Carbon Credits Are in Kenyan Law
Legal Framework Governing Carbon Credits in Kenya
Who Can Buy Carbon Credits in Kenya
Step by Step Process for Buying Carbon Credits in Kenya
Contracting and Legal Documentation
Payment, Transfer and Reporting Obligations
Timelines in a Typical Carbon Credit Purchase
Key Risks and How to Mitigate Them
1. Introduction
Kenya is positioning itself as a leading African hub for carbon markets. The Climate Change Act, its 2023 amendments, and the 2024 Carbon Markets Regulations provide a structured framework for generating, verifying, trading, and retiring carbon credits. Buyers include corporates seeking compliance grade offsets and voluntary market participants.
This article provides a clear and practical overview of how to buy carbon credits in Kenya in line with current statutes, regulatory guidelines, and emerging best practices.
2. What Carbon Credits Are in Kenyan Law
A carbon credit represents a verified unit of reduced, removed, or avoided greenhouse gas emissions. In Kenya, carbon credits arise from approved carbon projects registered under the Climate Change Act and the Carbon Markets Regulations.
One credit equals one tonne of carbon dioxide equivalent.
3. Legal Framework Governing Carbon Credits in Kenya
3.1 Statutes and Regulations
The key instruments governing carbon markets in Kenya include:
• Capital Markets Act where secondary trading is structured as a regulated investment product
• CBK Act and Anti Money Laundering Guidelines for cross border or large value payments
3.2 Regulatory Oversight
• Ministry of Environment and Climate Change Policy Directorate
• National Climate Change Council
• Kenya Forest Service for forest based projects
• County Governments for land use approvals
4. Who Can Buy Carbon Credits in Kenya
Any of the following may legally purchase carbon credits:
• Kenyan companies and partnerships
• Foreign corporates registered to transact in Kenya
• Financial institutions
• Project developers retiring credits for compliance purposes
• Voluntary market buyers seeking verified offsets
Buyers must comply with reporting and payment rules if the transaction involves repatriation of funds or foreign exchange.
5. Step by Step Process for Buying Carbon Credits in Kenya
5.1 Step one: Identify a Verified Project
Begin by identifying a project registered under an approved carbon standard. These include Verra VCS, Gold Standard, ART TREES and other standards approved by the Ministry under the 2024 Regulations.
5.2 Step two: Confirm Government Approvals
Ensure:
• The project is approved by the National Climate Change Council
• County Government consents are on record
• Benefit sharing arrangements comply with the Climate Change Act
• The project proponent is licensed for carbon trading activities where required
5.3 Step three: Conduct Legal and Technical Due Diligence
Legally verify:
• Ownership and control of the project
• Land tenure documents• Offtake rights
• Compliance with the Climate Change Benefit Sharing Mechanism
• Environmental permits including ESIA licences
• Verifier and auditor credentials• Data protection compliance for community data
5.4 Step four: Negotiate the Contract
Buyers typically enter into:
• Emission Reduction Purchase Agreements
• Forward purchase contracts for future issuances
• Spot purchase agreements for already issued credits
• Brokerage or advisory mandates for intermediaries
5.5 Step five: Verification and Issuance
Credits must be validated, monitored, verified, and issued on an approved registry. Kenya allows issuance under international registries and credits must be tracked through unique serial numbers.
5.6 Step six: Payment and Transfer
Payment should comply with CBK AML rules and bank reporting thresholds. Buyers should request:
• Transfer of credits to their registry account
• Certificate of retirement if credits are being offset
• Confirmation of ownership transfer
5.7 Step seven: Reporting Obligations
Where applicable, buyers must ensure:
• Compliance with corporate ESG reporting
• Submission of project level reports to the Ministry where they hold offtake rights
• Adherence to Kenya’s carbon registry disclosure requirements when the national registry is operationalised
6. Due Diligence Requirements
Strong due diligence protects buyers from invalid or legally defective credits. Focus on:
• Project documents and methodology
• Proof of land ownership or user rights
• Community consent records
• Historical issuance and credit serial numbers
• Auditor independence
• Alignment with Kenya’s benefit sharing rules
• Financial standing of the seller
• Foreign exchange approvals for cross border payments
7. Contracting and Legal Documentation
7.1 Core Commercial Terms
• Volume of credits
• Price per credit
• Delivery schedule
• Verification responsibilities
• Remedies for under delivery
• Liability caps
7.2 Legal and Regulatory Clauses
• Compliance with Climate Change Act and Carbon Markets Regulations
• Representations regarding approvals and consents
• Data protection compliance
• Dispute resolution under Kenyan law
• Governing law and jurisdiction
• Anti corruption and anti bribery clauses
8. Payment, Transfer and Reporting Obligations
8.1 Payment
Payments must comply with:
• CBK AML Guidelines
• Bank reporting thresholds for cross border remittances
8.2 Transfer of Carbon Credits
Ensure the seller:
• Transfers serial numbered credits to the buyer’s account
• Provides documentary proof of transfer
• Retires credits where instructed
8.3 Reporting
Corporate buyers may need to file ESG disclosures and sustainability reports under emerging Kenyan reporting frameworks.
9. Timelines in a Typical Carbon Credit Purchase
A standard transaction may follow these indicative timelines:
• Initial project screening: one to two weeks
• Due diligence: two to eight weeks depending on complexity
• Contract negotiation: two to four weeks
• Verification and issuance: project dependent and usually several months
• Registry transfer: one to three days after payment
10. Key Risks and How to Mitigate Them
• Land tenure disputes managed through land registry checks
• Invalid project approvals mitigated by verifying consents
• Over issued credits managed with independent verification
• Community claim risks managed with proper benefit sharing documentation
• Foreign exchange exposure managed through hedging or fixed pricing
11. Frequently Asked Questions
1. Can foreigners buy carbon credits in Kenya
Yes. Foreign corporates and investors may buy Kenyan carbon credits subject to compliance with Kenyan laws, registry rules and CBK payment requirements.
2. What approvals are required before buying carbon credits
Buyers must ensure the underlying project has National Climate Change Council approval, county level land use consents and an approved carbon standard registration.
3. Are carbon credits regulated as securities
Carbon credits are not automatically securities. However structured carbon investment products offered to the public may fall under the Capital Markets Act.
4. How do I verify if a carbon credit is genuine
Confirm the project’s registry issuance, check serial numbers, validate third party verification and inspect approvals under the Climate Change Act.
5. Do communities have rights in carbon projects
Yes. Kenya’s Climate Change Act requires benefit sharing with host communities and compliance must be confirmed before purchase.
6. How long does it take to buy carbon credits
Simple spot purchases take a few days. Forward purchase agreements may run several months due to verification cycles.
7. Are there taxes on carbon credit transactions
Tax treatment depends on income derived from trading. Purchases for offsetting are not taxed but gains from trading may fall under corporate income tax.
8. What contracts are used when buying carbon credits
Emission Reduction Purchase Agreements, forward contracts, brokerage agreements and spot purchase agreements.
