Overview

Since Kenyan President William Ruto announced at COP27 in Egypt that carbon credits would become the country’s “next significant export,” carbon markets have taken off in Kenya both at the level of land used for carbon projects and that of policy. Engagement in the Voluntary Carbon Market (VCM) has been a critical element here as Kenya is already among the most prominent carbon credit exporters in Africa, building on its large portfolio of Clean Development Mechanism (CDM) projects. ^[25] One driver is Kenya's ongoing need for climate finance: despite the country's leadership in climate action, Kenya still needs roughly $40 billion in investment over the coming decade to meet its climate goals. ^[1] Another driver is the prospect of revenues from carbon projects: supporters see the potential for carbon projects to generate upwards of US$6 billion across the African continent by 2030. ^[6]

In response, Kenya has developed a relatively comprehensive policy framework that market participants have praised for its provisions around social contributions and the development of a national registry. ^[2] The primary instruments here are the Climate Change (Amendment) Bill of 2023 which integrates carbon market considerations into Kenya’s climate approach and the Climate Change (Carbon Markets) Regulations of 2024 which elaborate safeguards and implementation procedures for Kenya’s carbon markets.

Viewed positively, Kenya’s carbon regulations are a step in the right direction, improving on the previous framework that left many gaps, and are widely seen as an example to be followed by other African countries interested in participating in carbon markets. Collectively, the regulations codify the National Environmental Management Authority (NEMA) as Kenya’s designated national authority (DNA), define the procedures for project approval and Article 6 authorization, mandate corresponding adjustments, create a national carbon registry, and set up a framework for community benefit-sharing. These provisions align themselves with integrity standards set by the Integrity Council for the Voluntary Carbon Market (ICVCM) and Voluntary Carbon Market Integrity Initiative (VCMI), and target many historical weaknesses in carbon markets: opaque benefit-sharing, weak host-country accounting, and limited public oversight. ^[21]

Nevertheless, these laws contain their own problems: there remain gaps in the regulations, and critics point to the rushed regulatory process and the motivations and actors behind them as evidence that the landscape is built to tap carbon revenues while leaving communities behind. The launch of the Kenya National Carbon Registry in February 2026 addresses some of these concerns, but core gaps in the framework persist.

Key Takeaways

Legal and Institutional Framework

In July 2026, the Ministry of Environment issued the Kenya Guide for Strategic Engagement in Carbon Markets. The Guide is a policy instrument, not a regulation. Its key measures include: Carbon budget for trading, whitelist, authorization rules, and community safeguards at the approval stage. Exclusion from the whitelist does not bar land-based projects from the voluntary markets. ^[18]

The remaining uncertainties in Kenya’s framework entail the nature of carbon rights, benefit sharing, and how these interact with Kenya’s contentious land tenure circumstances. Carbon projects may trigger multiple regulatory regimes (Forest Act, Land Act, Climate Act, EMCA) and agencies (KFS, NEMA, National Land Commission (NLC), etc), and clarity on whether a carbon project is a “forest exchange” or separate development is lacking. There are not clear precedents from other countries either. In part, these uncertainties stem from the lack of clarity around what carbon credit generating activities are and, in turn, what the legal nature of carbon assets themselves are. This is an issue that extends well beyond Kenya, but various civil society groups have already drawn attention to the fact that Kenya’s lack of attention to the issue of carbon rights is a particular weak point in its otherwise fairly comprehensive carbon legal framework. Given the way Kenya’s carbon framework builds community benefit-sharing out of its Community Development Agreement (CDA) framework, there is concern that the lack of established carbon rights undermines community participation in project agreement negotiations and exacerbates land tenure disputes.

Carbon Rights

One of the most glaring omissions from Kenya’s carbon market framework is the lack of specificity around who holds rights to the emissions reductions and removals resulting from land- and nature-based carbon sequestration.

In practice, the Kenyan state appears to have treated carbon value as a public good overseen by public authority, but the 2023 amendment and 2024 regulations do not resolve the matter. Civil society critiques have argued that this omission undermines community property rights and weakens the position of communities whose tenure rights are otherwise recognized in law. In that reading, carbon rights should flow from legitimate tenure rights, especially where the Community Land Act places community tenure on par with private ownership.

Neither the Forest Act nor Community Lands Act offers a clear starting point to define who owns carbon rights from forest land. Is carbon a public asset, a community resource, or private commodity? Because carbon is not clearly defined as a form of property or “forest product” under the Forest Act, different interpretations are possible, leaving uncertainty as to whether carbon value is held by the state, private developers, or communities. In practice, it seems the Kenyan government has treated these rights as public goods overseen by the state. The 2023 Amendment and 2024 Regulations are no help either. The 2026 registry launch reinforced the State;s position that kenya;s carbon credits are sovereign assets and the registry is a “title deed” to the country’s emissions reduction. The registry records who holds the credits once issued, but it does not settle who owned the underlying carbon rights in the first place.

Namati argues that this omission infringes community property rights under Kenyan law. They contend that the omission of carbon rights from existing legislation in Kenya "deprives communities of their legal property rights over carbon credits, limiting their ability to trade in the carbon markets." ^[5] In this manner, carbon rights ought to flow from tenure rights and, under the CLA, community tenure rights are recognized on par with private ownership. In this manner, the treatment of carbon credits as a public good may infringe on constitutionally-protected rights.

This issue extends beyond the legal specificities of carbon: without a clear definition that vests these rights in communities on whose lands projects are undertaken, communities may be relegated to the background as passive recipients of benefits rather than as active participants in carbon projects. Community participation has been the stated goal of many recent integrity initiatives and updates to standards, including those of ICVCM and Verra. This ambiguity could undermine community negotiating power alongside their long-term stake in the success of carbon projects which raises further risks to the integrity and sustainability of the project itself. ^[20] Disputes over this (lack of) definition are ongoing; it is possible that the ELC may need to decide if a carbon credit sale infringes on land tenure or trust rights.

Without solid ownership claims, significant negotiating power asymmetries persist which are reinforced by Kenya’s approach to mandated benefit-sharing in carbon projects through the CDA framework.

Benefit Sharing and Community Development Agreements

In one sense, Kenya’s legal requirement for community benefit-sharing arrangements and stipulated percentage floors for the “annual social contribution” within these agreements is a marked improvement compared to the history of voluntary benefit-sharing arrangements that have defined carbon markets and the paltry standards that have structured existing agreements. In response, various commentators have praised Kenya’s regulations. The key issues in Kenya’s benefit-sharing provisions however lie in the language of the annual social contributions, the lack of development of provisions for operationalizing community benefits beyond the minimum, and the application of the CDA framework. Collectively, there is serious risk that the present arrangement, despite its relative strengths, may undermine real community negotiating power.

According to the 2023 Amendment, the CDA will include all relevant stakeholders (including the government) and it will provide an annual social contribution to the communities from the project of at least 40% of aggregate earnings in land-based projects and 25% aggregate earnings in non-land-based projects, alongside stipulating the “manner of engagement” with local communities, proposed socio-economic development, and the manner of review or amendment of the agreement (Amendment, Section 23E(3-5)). According to the 2024 Regulations however, Kenya requires an annual social contribution from carbon projects on public and community land of 40% of “aggregate earnings of the previous year less cost of doing business” (Article 29(1)(a), emphasis added). The discrepancy in language between the two carbon laws has created confusion and, assuming the 2024 Regulations take precedence here, this effectively means that the social contribution will be based on profits from the project rather than gross revenue, greatly weakening the provisions. Profit-based benefits raise a variety of risks that project proponents will overstate expenses, understate profits, and that communities may not even see these reduced benefits for years given the revenue structure of most nature-based carbon projects.

Given these problems, the transparency of how projects calculate aggregate earnings is a further issue. The ability for third parties to audit these calculations may be limited by a lack of clear audit protocols within Kenya’s carbon regulations, though there is precedent for such oversight in specific projects. ^[21] The new national registry could help, but only if it publishes CDAs, earnings calculations, and payment records. As of mid-2026, it was not yet possible to trace a credit from authorization to revenue to community payment. ^[17] Moreover, even when paid in full, mandated minimum social contribution requirements, are unlikely to even be sufficient, let alone representative of community participation in any development benefits accrued from carbon projects.

The 2026 whitelist adds a new pressure on land-based projects. Because forestry and other land-use activities are excluded from authorization for international transfer until at least 2030, these projects are confined to the voluntary market, where prices are typically lower and more volatile. Lower earnings mean lower social contributions under a profit-based formula.

A 2025 study focused on integrating carbon revenues into rural livelihoods found that official figures on the economic weight of forest resource exploitation in Kenya are understated because they do not account for informal woodfuel and subsistence value chains. The study concludes that contributions to productive rural livelihoods in addition to cash transfers will be necessary to even sufficiently offset the opportunity costs of giving up forest resource exploitation in favor of carbon activities. ^[21] A part of the problem is carbon price volatility. The author proposes including provision of “productive assets” and “market linkages” (i.e. support for rural livelihoods, solar panels, carpentry hubs, eco-tourism linkages, water utilities, etc.) as part of benefit-sharing as one way to ensure price volatility does not nullify benefits. ^[21] Mandated payments that begin at the beginning of the project activities which are fixed and not subject to project profitability–an arrangement common in other extractive industries–is another way to handle this. As yet, there is no incentive to go beyond one-off annual transfers that meet the minimum requirement.

Experience from other extractive industries indicate that a lack of clarity around implementation or guardrails for operationalizing the transfer of benefits can be conducive to elite capture or the mismanagement of such funds if community governance structures are weak. ^[20] Elite capture and lack of oversight in revenue transfers has already plagued certain projects. What is important is not just the percentage allocated but the power communities have in negotiating the terms of these agreements. This includes communities having the agency to define how benefits are utilized and ensure transparent and effective management of these resources. ^[20] Kenyan law emphasizes community consent (Constitution, Section 32; CLA, Section 28) and sharing benefits. For instance, Article 3(1) of the Constitution guarantees the people’s sovereignty over natural resources, suggesting communities should be involved in carbon projects on their lands. In the short term, model budgets and auditing guides, as well as a public CDA repository to combat the opacity of these agreements could deal with some of these problems upfront, provide guidance for implementation that exceeds the simple percentage baseline, and support real community involvement. There are larger questions remaining however as it relates to the CDA framework in general.

The 2023 Amendment established the CDA framework as the method by which project developers and communities will establish their respective obligations (Section 23E(3)). In Kenya, the CDA's purpose is to support the exploitation of resources in the public interest; Namati asserts that the assumption then is that the government views carbon credits as an issue of public interest which, on top of potentially infringing on their tenure rights as outlined above, raises the risk that communities will be sidelined in project design and implementation as passive recipients of benefits rather than active participants in the project. ^[20] The management and disbursement of benefits as decided in the CDA will be overseen by a CDA Committee which includes government representatives.

This arrangement contrasts with Section 36 of the CLA which provides its own framework for community agreements with third party investors and the benefits due to communities from these agreements. It requires “stakeholder consultations and involvement of the community” (Section 36(1)(b)), “payment of compensation and royalties [to the community]” (Section 36(1)(d)), and “measures to be put in place to mitigate any negative effects of the investment” (Section 36(1)(f)). Notably, this framework provides for community autonomy to contract with outside investors on their own terms, rubbing against the role of government oversight and participation in CDAs.