Lessons from the Collapse of KOKO Networks for the Carbon Market

Mar 31
3 min read

By Kea Tlou,

Pan-African Carbon Markets Expert

The March CBEN monthly call, chaired by Keagile Tlou, a pan-African carbon markets professional, focused on the recent bankruptcy of KOKO Networks and what it tells us about how quickly the carbon market is shifting.

Until early 2026, KOKO was one of the largest clean cooking companies in Africa, serving an estimated 1.5 million households in Kenya, employing over 700 people, and estimated to generate 6 million CO2 tons of carbon credits annually. Its model was relatively straightforward, subsidise efficient bioethanol cookstoves to replace charcoal and firewood, using carbon credit sales to support the economics. These credits, which represent avoided emissions, were sold to companies looking to offset their carbon footprint.

***CBEA Member partcipating during the monthly call***

On paper, it worked well. In practice, a number of things started to move against them at the same time.

First, the voluntary carbon market came under pressure. A 2023 study by the University of California, Berkeley, later picked up by The Guardian, raised questions around whether cookstove projects were overstating emissions reductions. Whether fully accurate or not, the impact on the market was immediate. Voluntary carbon credit prices dropped significantly and standard bodies such as Verra and Gold Standard updated their methodologies, heavily reducing the number of credits projects could issue.

Second, local policy changes added another layer of pressure. In 2024, the Government of Kenya restricted ethanol imports to support domestic production. For KOKO, which relied on imported ethanol through partners like Vitol, this likely pushed up costs and made it harder to maintain their subsidy-driven model.

It is believed that both of these events alongside others led KOKO to grow its reliance on carbon credit revenues in order to stay afloat.

At that point, access to compliance carbon markets, driven by regulation, started to look like the only real path forward. Under Article 6 of the Paris Agreement, countries can authorise the export of carbon credits, but this requires a Letter of Authorization (LoA) from the host government. This is a critical step, as any credits exported cannot be counted toward the country’s own climate targets, known as Nationally Determined Contributions (NDCs).

KOKO had reportedly been working toward this for some time, including securing political risk insurance from the World Bank’s Multilateral Investment Guarantee Agency (MIGA). However, by late 2025, it became increasingly unlikely that the Kenyan Government would grant KOKO an LoA. While the exact reasoning is not public, discussions in the market suggest that the scale of credits under consideration may have been a concern in the context of Kenya’s own climate commitments.

Without an LoA, access to higher-value compliance markets such as CORSIA was effectively off the table. Combined with weak voluntary market demand and rising operating costs, the business model became difficult to sustain. KOKO ultimately filed for bankruptcy on 1 February 2026.

This is an ongoing situation and it is unclear how it will develop. Reports suggest that KOKO is exploring claims under its MIGA insurance coverage to challenge the Government of Kenya’s decision. However, it is unclear how MIGA will apply without KOKO having obtained an LoA.

The broader takeaway from the CBEN discussion is that this is not a single-issue story. It is a combination of market sentiment, methodology changes, policy decisions, and timing. If anything, it highlights how exposed carbon projects can be to shifts across multiple fronts, and how important alignment between project developers, standards bodies, and governments will be going forward.

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