10Mt Cap for Bilateral Agreements, Not for Voluntary Carbon Market Sales

CBEA Members during the monthly call

Kenya’s evolving carbon market framework has introduced important rules for project developers, investors, and organizations seeking to participate in international carbon trading. However, one issue requiring careful clarification is the country’s 10-million-tonne carbon trading limit. The limit should not be interpreted as a blanket restriction on all voluntary carbon market sales. Rather, it applies to the volume of carbon credits that Kenya can authorize for international transfer under Article 6 of the Paris Agreement within the current carbon budget. Understanding this distinction is particularly important for organizations working in biochar, composting, anaerobic digestion, black soldier fly (BSF) systems, and other circular bionutrient economy solutions.

This was at the centre of discussions during the CBEA’s  October Monthly Call where Charles Waweru,  Director of Carbon Project Development at Verst Carbon[EO1]   and Governing Council Member of the Carbon Market Association of Kenya (CAMAK) presented on Kenya’s National Carbon Registry: Formalizing International Carbon Market Policy at National Scale. The presentation examined Kenya’s national carbon market framework, the operation of the Kenya National Carbon Registry, and the implications of the country’s carbon budget for project developers seeking to access international carbon markets.

Understanding Kenya’s 10Mt Carbon Trading Limit

Kenya’s carbon market is governed by a legal and policy framework that includes the Constitution of Kenya, the Climate Change Act, Cap. 387A, as amended in 2023, and the Climate Change (Carbon Markets) Regulations, 2024. The framework is further informed by the Kenya Guide for Strategic Engagement in Carbon Markets, published in July 2026. Together, these instruments provide the foundation for regulating carbon projects, authorising carbon credit transfers, and ensuring that carbon market activities contribute to Kenya’s climate commitments.

According to the presentation, Kenya has established a cumulative Article 6 trading budget of 10 million tonnes of carbon dioxide equivalent (MtCO₂e) for the 2025–2030 vintage period. This translates to an indicative annual allocation of approximately 1.67 million tonnes. The budget covers the energy, transport, industrial processes and product use (IPPU), and waste sectors. Agriculture and forestry or land-use activities fall outside the current Article 6 trading budget as presented.

The central point is that the 10Mt limit concerns Kenya’s carbon trading budget for international transfers under Article 6. It should not automatically be understood to mean that all carbon projects in Kenya are prohibited from selling credits through the voluntary carbon market. The distinction lies in whether a project is seeking to sell credits voluntarily under the applicable market arrangements or obtain Kenyan authorisation for international transfer under Article 6.

For projects seeking Article 6 authorisation, additional conditions apply. These include the existence of a relevant bilateral arrangement, compliance with applicable approval requirements, verification and issuance of eligible carbon credits from 2025 onwards, use of an applicable methodology, payment of the required fee, and availability of space within Kenya’s carbon trading budget. Therefore, a project’s eligibility for international authorisation depends on more than its ability to generate verified emission reductions or removals.

The presentation also emphasised that voluntary carbon market projects operating outside a bilateral arrangement cannot automatically obtain Article 6 authorisation. Where credits are not authorised for international transfer, the associated emission reductions or removals count towards Kenya’s Nationally Determined Contribution (NDC), subject to the applicable rules. This distinction is important because voluntary market participation and the authorisation of internationally transferred mitigation outcomes are not the same process.

The Kenya National Carbon Registry and Its Role

The Kenya National Carbon Registry (KNCR) was launched in Nairobi on 17 February 2026. According to the presentation, it was developed by Verst Carbon with support from the German development cooperation agency GIZ and the European Union. The registry provides a national system for recording carbon market activities, including project approvals, authorizations, credit issuances, international transfers of mitigation outcomes, Community Development Agreements, and relevant sector registries.

The registry plays an important role in strengthening national oversight and improving the tracking of carbon market activities. However, it is important to distinguish the KNCR’s function from that of international carbon crediting standards. Standards such as Verra and Gold Standard continue to operate their own crediting systems and issue credits under their respective methodologies. The KNCR serves a different but complementary function by recording recognized projects and their relevant approvals or authorisations within Kenya’s national framework.

For project developers, this means that obtaining credits under an international standard does not, by itself, amount to receiving Kenyan authorisation for international transfer under Article 6. Developers must establish which national requirements apply to their projects and determine whether they intend to pursue voluntary market sales, Article 6 authorisation, or another applicable route.

What the Framework Means for Circular Bionutrient Economy Projects

The implications of Kenya’s carbon market framework are particularly relevant to the circular bionutrient economy, where projects may generate climate benefits through organic waste management, nutrient recovery, renewable energy, biochar production, and soil regeneration. Although these activities can contribute to emissions reduction or carbon removal, their treatment under the national carbon market framework depends on the activity, the methodology applied, the relevant sector classification, and the market route being pursued.

The presentation identified composting and anaerobic digestion with energy recovery within the waste-sector whitelist. This creates a relevant pathway for certain waste-management projects seeking to participate in Kenya’s carbon market framework. However, composting without energy recovery was not explicitly resolved in the presentation. Project developers working on such activities should therefore seek written clarification from the National Environment Management Authority (NEMA) rather than assume that their projects are automatically included or excluded.

Black soldier fly projects also require careful consideration. The presentation did not explicitly identify BSF systems in the whitelist. It indicated that methodologies may be relevant to avoided landfill methane emissions, while benefits associated with feed or protein displacement were not identified as creditable under the framework discussed. Consequently, BSF project developers should establish which specific activities and emission-reduction pathways are recognized before making investment or carbon revenue assumptions.

Biochar and soil carbon projects face a different challenge. The presentation placed biochar removals and soil carbon within agriculture and land use, sectors that are outside the current Article 6 trading budget and whitelist as presented. This does not, on its own, establish that biochar or soil carbon projects are prohibited from participating in voluntary carbon markets. Instead, developers need to distinguish between the generation and sale of voluntary carbon credits under applicable standards and the additional requirements for obtaining Kenyan authorisation for international transfer under Article 6.

For CBEA members, and stakeholders within the CBE, this distinction is essential. A project may deliver important climate and soil-regeneration benefits while facing restrictions or additional conditions on its eligibility for particular forms of international carbon trading. Understanding the applicable market route at the planning stage can help developers avoid uncertainty, manage expectations, and make more informed decisions about project design and financing.

Understanding the National Approval Process

The presentation highlighted three distinct instruments within Kenya’s carbon project approval and authorisation process: the Letter of No-Objection (LoNO), the Letter of Approval, and the Letter of Authorisation (LoA). These instruments serve different purposes and should not be treated as interchangeable.

The Letter of No-Objection is an early step in the process and should not be interpreted as final approval of a project. Similarly, a Letter of Approval is not the same as a Letter of Authorisation. The latter is particularly relevant where a project seeks authorisation for the transfer of carbon credits or mitigation outcomes abroad under the applicable framework. Project developers should therefore confirm the requirements for each stage and avoid assuming that progress at one stage automatically guarantees approval or authorisation at the next.

The discussion went further to outline the need for developers to classify their activities and land arrangements in accordance with Regulation 2, prepare project concept notes using the relevant requirements in Annex 2, and obtain the necessary national approvals. For land-based projects involving public or community land, a Community Development Agreement should be addressed before preparation of the Project Design Document, as indicated in the presentation. Developers were also encouraged to establish digital measurement, reporting and verification systems from the first batch of project activity, supporting the quality and traceability of the data required to demonstrate project performance.

Carbon Market Opportunities and Outstanding Questions

The presentation provided an overview of Kenya’s carbon project pipeline, reporting that 51 of 115 concept notes had received Letters of No-Objection, while 16 of 23 approval requests had received Letters of Approval. Two authorisation requests were also reported. These figures illustrate the different stages through which projects move as they engage with the national carbon market framework. They also reinforce the need to distinguish between early-stage project consideration, formal approval, and authorisation for international transfers.

For the circular bionutrient economy sector, several policy questions remain important. One is whether composting projects without energy recovery can qualify under the relevant waste-sector provisions. Another concerns how biochar, soil carbon, and other carbon removal activities could be considered in future revisions of the national whitelist and carbon trading budget. Clarification is also needed on how the substantial mitigation potential identified for agriculture can be developed when the sector falls outside the current Article 6 trading budget.

The costs associated with project development and regulatory compliance also warrant further attention. Project developers need clarity on applicable fees, the financial implications of the approval and authorisation process, and the requirements for registering programmes that involve many small project sites. Such clarification would help organisations assess the commercial feasibility of projects and determine how best to structure programmes involving smallholder farmers, community groups, and distributed waste-management systems.

These questions are particularly relevant to CBEA because many circular bionutrient economy initiatives operate across interconnected sectors. A single programme may involve organic waste management, compost production, biochar, agricultural soil improvement, or renewable energy. Clear guidance on sector classification, eligible methodologies, approval requirements, and carbon market pathways would help developers design projects that comply with national rules while making effective use of available market opportunities.

CBEA’s Role in Advancing Clarity and Engagement

As a network connecting researchers, project developers, businesses, policymakers, and other stakeholders, CBEA has an important role in supporting constructive engagement on the implementation of Kenya’s carbon market framework. The discussion during the monthly call highlighted the value of seeking formal clarification from the relevant authorities rather than relying on assumptions about which technologies or activities qualify under the current rules.

For composting developers, CBEA can support engagement with NEMA to clarify whether composting without energy recovery is covered by the current whitelist. For biochar and other carbon removal stakeholders, the association can advocate for these activities to be considered during future reviews of the whitelist and carbon trading budget. CBEA can also facilitate dialogue on how agricultural mitigation potential can be developed, how programmes involving multiple small sites should be registered, and how project developers can better understand the costs of complying with the national framework.

Such engagement should be supported by clear technical evidence, practical project examples, and coordinated input from stakeholders across the sector. A shared understanding of the regulatory environment would help project developers identify suitable carbon market pathways, strengthen compliance, and reduce the risk of investing in projects based on incorrect assumptions about authorisation or eligibility.

The Importance of Distinguishing Market Access from Authorisation

To conclude with, Kenya’s 10Mt carbon trading budget is an important element of its approach to managing international carbon transfers under Article 6 of the Paris Agreement. However, it should not be confused with a blanket cap on all voluntary carbon market sales. The distinction between voluntary market participation and Article 6 authorisation is fundamental to understanding the opportunities and limitations facing carbon project developers in Kenya.

For the circular bionutrient economy sector, the practical implications are significant. Composting, anaerobic digestion, BSF systems, biochar, and soil carbon initiatives should each be assessed according to their specific activities, methodologies, sector classification, and intended market route. Developers should seek written regulatory guidance where eligibility is unclear, address approval and community requirements early, and establish robust measurement, reporting and verification systems from the outset.

The CBEA Monthly Call provided an important opportunity to examine these issues and identify areas requiring further clarification. Continued engagement among government agencies, project developers, researchers, carbon market actors, and sector networks will be essential to ensuring that Kenya’s carbon market framework is understood and implemented in ways that support environmental integrity, credible climate action, and the development of Africa’s circular bionutrient economy.

By Erick Opiyo Abala

Head of Communications- CBEA