Ruto’s Hot push for the African Carbon Markets Initiative to boost investments in Kenya

  • William Ruto managed to rise as a climate leader after successfully winning the 2022 elections becoming Kenya’s 5th president.
  • During the COP27 conference in November 2022, Ruto signed Kenya on as a member of the African Carbon Markets Initiative (ACMI).
  • The ACMI plays a part in reducing political opposition and the economic crisis; however, it is facing both international and domestic opposition.
Kenyan President William Ruto
Kenyan President William Ruto

Why is Ruto Hot?

Answer: In 2022, President Ruto formally enrolled Kenya as a member of the ACMI which has begun increasing voluntary carbon markets in Kenya.

President Ruto formalised Kenya’s ACMI membership at the launch of the African Carbon Markets Initiative during COP27 in November 2022. In the short period since then, Ruto has already begun to implement the policy on a domestic level. In June of this year, Kenya hosted a credit auction where Saudi Arabian companies bought over 2.2 million carbon credits. The event became the world’s largest sale of carbon credits so far. 

The ACMI project as a whole is also achieving success even though it was launched less than a year ago. During the COP27 conference, over $200 million were secured in advanced market commitments from global corporations and seven African nations signed up to develop domestic carbon activation plans. Additionally, the ACMI plans to launch several “country activation plans” by the start of the COP28 conference in November this year. 

Green Investment projects have been a focus to improve the sustainability in the operation of the Kenyan economy- further promoting the ACMI locally. As an extension of the ACMI, Kenya and the British government introduced green investment projects to spur up climate finance and largely improve the sustainability in the operation of the Kenyan economy.                              

The creation of a 35 MW geothermal plant in Menengai, a 40MW solar plant in Malindi and a dam on the Tana River among other projects have been incorporated into Kenya’s green agenda. The programs will support countries to develop guidelines based on contextual realities and projects that benefit communities. The initiative also plans on publicising its advanced market commitments to ensure that developers reveal their profit margins and percentages that will be paid to communities. The aim of the Kenya Carbon Emission Reduction Tool- by 2050 was introduced to contribute to Ruto’s vision for Kenya and to enforce a control system to trade carbon locally.

What is changing Ruto’s heat level?

Answer:  The ACMI helps Ruto tackle the economic crisis by creating employment opportunities and economic prospects. However, negative domestic and international public opinion is harming the prospects of the initiative. 

The ACMI plays a part in reducing political opposition and the economic crisis. With economic issues such as unemployment among the youth, currency depreciation (1 dollar = 142 ksh from the monthly average of 137 ksh a dollar), high food prices, and due to the new finance bill passed in June higher fuel prices, the ACMI helps in job creation and improved standards of living as a result.

Discontent among the Kenyan population still limits the effectiveness of Ruto’s policies on climate change. Nevertheless, the ACMI makes a constructive contribution to the Kenyan economy. Within this context, carbon credit markets offer prospects for income generation and developmental advancement among African communities affected by climate change. These mechanisms also create incentives for producers to achieve net zero industrialization and green prosperity.

However, the ACMI is facing both international and domestic hardships with regard to public opinion. The initiative is seen as a ‘distraction’ from the climate crisis as instead of cutting down emissions, it financialises the climate. There are also human rights concerns with regard to carbon projects, where past Kenyan projects have led to thousands of evictions of people from their indigenous lands. 

Moreover, the certification process of carbon credits is not mandated by law, meaning that the market suffers from poor liquidity. This lack of regulation also seeps into the African Carbon Markets Initiative as a whole because it focuses on voluntary carbon markets, rather than ‘compliance markets’, where carbon credits need to comply with regulations. Currently, the only African country in the ‘compliance market’ is South Africa. 

What is driving Ruto?

Answer: The ACMI and the subsequent expansion of voluntary carbon markets in Kenya provide Ruto with opportunities to increase international investment in Kenya’s climate initiatives. 

A driving factor behind Ruto’s enforcement of the ACMI is that it achieves the Kenyan leader’s primary governance goal: increasing international investment in Kenya. Through the voluntary carbon market, the ACMI allows foreign companies to invest in Kenyan climate change adaptation and mitigation initiatives that would otherwise not be able to get off the ground. 

Increased international investment through the ACMI would allow Ruto to improve the livelihoods of Kenyans and subsequently gain popularity for the next elections. The funds coming from domestic carbon projects under the ACMI initiative have already been put to use to promote clean cooking stoves in Kenya. 

Kenya is Africa’s market leader responsible for 23% of the value of carbon credit issuances in Africa. International investment has been encouraged by demand and supply side factors- carbon finance and viable markets. Ruto’s goal of ramping up clean energy and eradicating fossil fuel use is driven by his confidence that more than 90%  of Kenya’s energy is from renewable sources. Ruto’s ideal driver encompasses using tax funds to facilitate the adoption of low-carbon and sustainable industrial practices, loans to overcome investment barriers in green projects and directing government spending towards the delivery of positive environmental outcomes.

What does this mean for you?

Answer: Increased economic dependency or a political collapse from the economic crisis will severely target the larger of Kenya’s population with a spillover to other regions. 

Increased international investment from the private sector to ACMI members will lead to an increase in private-sector engagement. This, in turn, will allow African countries to tap into climate finance and carbon credit revenue, permitting countries to expand energy access, improve health through clean cooking, and create jobs. This increased international investment also fosters international trade relations between ACMI members and non-member states. 

A socio-economic impact on citizens of neighbouring countries exists from the rise and spread of carbon markets in Africa. The ACMI aims to create 30 million jobs by 2030 and 110 million jobs by 2050 to decrease unemployment and reduce the poverty rate in regions where the ACMI is implemented. An increase in jobs also means that citizens have more to spend on goods and services, which helps grow businesses and, in turn, create more jobs. The impact of Carbon Markets in East African countries: Burundi, Rwanda, Tanzania, Ethiopia, Sudan, Uganda including Kenya shows the potential- through an alliance, of shared carbon markets and climate finance to achieve their National Determined Contributions.

Authors: Chiara Cassina and Ruby Wanjikũ Gachara

Sponsorship: This article is based on a report that the authors wrote as part of a collaboration between IE University’s IE School of Politics, Economics and Global Affairs and RAIA NOW gUG. The funding for this project solely comes from the IE School of Politics, Economics and Global Affairs.


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