Kenya's Carbon Market Framework: What the 2023 Amendment Act and 2024 Regulations Mean for Investors and Project Developers

Why this framework matters

For most of Kenya's history in carbon markets, project activity proceeded under international standards alone, with limited national oversight and unresolved questions about community safeguards and climate accounting. The Climate Change (Amendment) Act 2023 and the Carbon Markets Regulations 2024, gazetted on 17 May 2024, changed that. Kenya now has a binding national framework that places NEMA at the centre of every project authorisation decision and aligns domestic carbon market activity with Kenya's obligations under Article 6 of the Paris Agreement.

For investors, DFIs, and project developers, understanding this framework is a compliance baseline, not background reading.

NEMA as Designated National Authority

The National Environment Management Authority was formally gazetted as Kenya's Designated National Authority via Gazette Notice No. 7621 of 2024, effective 12 June 2024. NEMA is not new to this role: it has served as Kenya's DNA for Clean Development Mechanism projects under the UNFCCC for over 15 years. Under the 2024 Regulations, its responsibilities are substantially expanded to cover the full lifecycle of carbon project oversight, from concept note assessment through to annual compliance monitoring and international transfer authorisation.

The project authorisation pathway

The Regulations establish a structured, multi-stage process. All three approval instruments below are distinct and serve different purposes.

Step 1: Application submitted to NEMA using prescribed Form PCN, with supporting documents and fees.

Step 2: Letter of No Objection (LNO) issued by NEMA — preliminary approval to develop the Project Design Document. The proponent has 12 months from this point to submit a full PDD.

Step 3: Multi-sectoral technical committee reviews the Project Design Document and advises NEMA.

Step 4: Cabinet Secretary approves the PDD; NEMA issues a Letter of Approval — project must commence within 12 months.

Step 5: ESIA completed; annual progress reports and carbon issuance notifications submitted to NEMA on an ongoing basis.

Step 6: Letter of Authorisation (LoA) issued by NEMA with Cabinet Secretary approval — required separately for any international credit transfer under Article 6. This is not the same as the Letter of Approval and cannot substitute for it.

Projects operating before 17 May 2024 have a two-year window to comply with the Regulations and must complete an environmental audit within six months of commencement. For investors in pre-existing projects, confirming compliance status within this window is a material due diligence requirement.

Community benefit-sharing obligations

Every land-based carbon project on public or community land requires a Community Development Agreement before project approval is granted. The financial thresholds are significant and must be built into project financial models from the outset.

Under Legal Notice 84 of 2024:

• Land-based projects: minimum annual social contribution of 40% of aggregate earnings (net of cost of doing business), paid to the community via the CDA.
• Non-land-based projects: minimum annual social contribution of 25% of aggregate earnings (net of cost of doing business), remitted to the Climate Change Fund via NEMA.
• Private projects on private land are exempt from mandatory social contribution requirements.

3 critical questions for investors and project developers

1. Has the project received a Letter of Approval from NEMA and is it listed on the National Carbon Registry?

2. Is there a fully executed Community Development Agreement in place, with CDA contribution obligations reflected in the financial model?

3. For credits sold internationally, has a Letter of Authorisation been obtained from the Cabinet Secretary, with corresponding adjustments confirmed?

*Contact Ardena Consulting to assess your carbon credit regulatory compliance and Article 6 readiness.*