Kenya’s Climate Change (Carbon Markets) Regulations 2024 as a Tool for Climate Change Litigation

On 7 June 2024, Kenya gazetted the Climate Change (Carbon Markets) Regulations 2024 under the Climate Change Act 2016. Kenya is one of only eight African countries that have enacted carbon market regulations. These regulations are intended to bring order to a previously unregulated carbon crediting programme. The regulatory hiatus exposed vulnerable communities to negative social and environmental impacts arising from carbon projects (See Simon Counsell "Blood Carbon: How A Carbon Offset Scheme Makes Millions from Indigenous Land in Northern Kenya", Survival International, 2023). In other cases, questions arose on the credibility of carbon credits generated from projects. Worse still, the lack of substantive carbon market regulations deprived potential litigants of a secure legal footing on which to approach courts. The 2024 Carbon Market Regulations provide aggrieved parties with several possibilities to pursue litigation against errant corporations that participate in Kenya's Voluntary Carbon Market (VCM).

The Carbon Market Regulations 2024 codify the Core Carbon Principles (CCPs) in several ways. This blog post analyses the Carbon Market Regulations 2024 against five relevant CCPs codified by the Regulations to assess potential bases for corporate climate litigation in Kenya. Notable provisions of the Regulations hinge on independent third-party validation and verification, additionality, permanence, avoidance of double counting, and sustainable development benefits.

Independent Third-Party Validation and Verification

The 2024 Carbon Market Regulations provide for independent third-party validation and verification in several respects. First, each carbon project authorised under the Act must be certified and validated by an independent auditor before the project starts (Section 16(c)). Second, the project results from each carbon project must be verified by an independent auditor (Section 16(d)). Third, each carbon project must undergo an environmental and social impact assessment (Section 19(1)). Notwithstanding the requirement for an impact assessment, ongoing projects shall also be subject to an environmental audit (Section 19(2)(a)). Fourth, each carbon project must, before commencement, be certified in line with international standards by a recognised international body and validated by an independent auditor, and the project results must be verified for compliance with the Climate Change Act and the 2024 Regulations (Section 20). A carbon project that fails to meet these criteria can be flagged for non-compliance and its legality challenged.

Additionality

The 2024 Regulations incorporate additionality as one of the core carbon principles (Section 5). The principle of additionality requires that trading in carbon credits in a carbon project must result in the removal or reduction of GHG emissions. Such removals must be additional to business-as-usual scenarios. Whereas the Regulations neither make further provisions on the assessment of additionality nor its scope for specific carbon projects, a party may be able to challenge a carbon project by demonstrating that the project does not satisfy this requirement.

Permanence

The 2024 Regulations provide that the implementation of carbon markets shall ensure "emissions from carbon projects are kept out of the atmosphere for a reasonable length of time in accordance with the relevant carbon standards" (Section 5(c)). Mitigation activities contemplated under carbon projects should, therefore, result in the permanent removal or reduction of sequestered carbon. The requirement for permanence varies depending on specific carbon projects. However, on average, sequestered GHG emissions should be stored for over 100 years for removal or reduction to be considered permanent. Where there is the possibility of reversal, provisions should be made to compensate for the reversals. The National Carbon Registry (NCR) will enforce permanence depending on the applicable carbon standards. Projects may be challenged for failing to conform to this requirement of permanence.

No Double-Counting

Double counting occurs when a project proponent registers a single project under two or more international carbon mechanisms or where multiple entities stake claims on the same credits. The 2024 Regulations explicitly prohibit double counting of mitigation outcomes (Section 6). In the request form for authorisation of a carbon project, a project proponent undertakes to refrain from double counting and agrees to the cancellation of credits so counted in addition to other sanctions that may ensue (Sixth Schedule, Regulation (23(1)). The Regulations do not incorporate provisions on the identification of double counting and how to flag potential overlapping claims. However, this requirement provides a basis for challenging non-compliant carbon projects.

Sustainable Development Benefits and Safeguards

A key carbon market requirement under the Regulations is that a proposed carbon project must indicate "how the project will contribute to sustainable development and alleviation of poverty" (Section 16(o)). Additionally, Community Development Agreements (CDAs) must be guided by the principle of sustainability (Fourth Schedule paragraph 6). Consequently, project proponents must, in their application for authorisation, specify how the proposed carbon project is aligned with Kenya's sustainable development principles (Sixth Schedule).

Upon issuance of a letter of authorisation for a carbon project, the project proponent is further obligated to contribute towards sustainable development in Kenya (Idem). Finally, in implementing carbon projects on community land, a proponent must provide documentation of free prior informed consent for all community land-based carbon projects (Section 16(j)). Similarly, in concluding CDAs, the proponent must demonstrate that they have undertaken consultation with the community in conformity with the laws of Kenya and the requirements of the applicable standards (Seventh Schedule paragraph 8(e)). The Regulations lack detailed procedures on how different carbon projects are to satisfy the requirement for sustainability. Notwithstanding this lacuna, a non-compliant carbon project risks invalidation.

Conclusion

As discussed, the 2024 Carbon Market Regulations codify the CCPs in several ways. The Regulations stipulate specific requirements that carbon projects in Kenya must meet. By so doing, the Regulations provide a pedestal for the invalidation of carbon projects that offend the set requirements. The five CCPs discussed above allow litigants to fashion causes of action against non-compliant carbon project proponents. The Regulations will be tested as the implementation of carbon projects gains traction in Kenya. Interpretation of the Regulations by the National Environment Tribunal (23(H)(3) and the Environment and Land Court (ELC) will establish jurisprudence to guide the implementation of carbon projects in Kenya.

Section 23(3) of the Climate Change Act 2016 dispenses with the requirement for locus standi, and any public-spirited individual can approach the ELC for enforcement of a cause of action under the Act. However, demonstrating the non-compliance of a carbon project with any of the five-pronged criteria discussed above will require technical and scientific evidence that may pose a hurdle to successful litigation for most litigants. In the long run, it remains to be seen how the 2024 Carbon Market Regulations will facilitate carbon trading in Kenya.

Author:

Dr Omondi Owino leads the Environment, Energy and Climate Change Law department at Acorn Law Advocates-LLP, Nairobi and is a Senior Lecturer at JKUAT School of Law, Nairobi. He is a member of the IUCN World Commission on Environmental Law and is the climate change rapporteur for Kenya at the Sabin Center for Climate Change Law. Dr Owino is the national rapporteur for Kenya at the British Institute of International and Comparative Law (BIICL) in the Global Toolbox Project on Corporate Climate Litigation.