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This blog will spotlight Kenya’s NDC, and the role of carbon markets in contributing towards its mitigation efforts, as well as scope for engagement under Article 6 of the Paris Agreement.
Overview of Kenya’s NDC and the role of carbon markets in climate action
As of April 2025, Kenya has not yet submitted its third Nationally Determined Contribution (NDC 3.0) to the UNFCCC. However, the country is actively preparing its submission, building upon its previous climate commitments and aligning with the objectives of the Paris Agreement.
Kenya's current NDC, submitted in December 2020, commits to reducing greenhouse gas emissions by 32% by 2030 relative to the business-as-usual scenario. This target is partially unconditional, with Kenya intending to finance 21% of the required mitigation efforts domestically, while the remaining 79% is contingent upon international support.
To facilitate the implementation of its climate goals, Kenya has developed the National Climate Change Action Plan (NCCAP) 2023–2027, which serves as a roadmap for integrating climate actions into national development plans. Additionally, the country has enacted the Climate Change Act (Amendment) 2023 to strengthen its legal framework for climate action, as well as the Climate Change (Carbon Markets) Regulations, 2024, which came into effect from the 17th of May 2024 and provides a legal framework for carbon market activities.
Kenya's carbon market regulations: implementing Article 6 of the Paris Agreement
The recently published carbon trading new regulations establish a guideline for carbon market activity across both voluntary and compliance markets. It outlines guidelines for project developers to generate verified carbon credits and emission reductions under Article 6 of the Paris Agreement, establishes a National Carbon Registry, as well as appoints the National Environment Management Authority (NEMA) as the Designated National Authority (DNA).
The role of NEMA
NEMA is tasked with overseeing carbon market transactions, maintaining a list of recognised carbon standards and providing guidance on accurate carbon accounting and reporting relating to corresponding adjustments. The head of the DNA, also the National Registrar of the National Carbon Registry, will make sure project registers remain up to date, have confidential data protected and have quarterly register reports submitted.
Diving into the NDC
Kenya’s NDC target: Within it, Kenya’s target was to reduce greenhouse gas emissions (GHG) by 32% by 2030, relative to the business-as-usual (BAU) scenario of 143 MtCO2e. This target corresponds to a 2030 emissions cap of 97 MtCO₂e, inclusive of LULUCF. According to Climate Action Tracker, the country’s current policies are outperforming its unconditional emission reductions target as its objectives are in line with the country’s fair share of limited responsibility and capability.
Source: Climate Action Tracker
The updated NDC introduces an unconditional commitment to mobilise domestic resources for 13% of the required budget, with the remaining 87% contingent upon international support.
NDC cost of implementation: When quantified, Kenya’s NDC 2.0 is estimated to cost between $62 billion USD for the period of 2020-2030, split between mitigation ($17.7 billion USD), and adaptation ($43.9 billion USD) finance needs.
Emission Reduction Potential: According to Kenya’s “Financing Strategy for Nationally Determined Contribution” emission reductions from key sectors will drive Kenya’s path towards achieving its NDC target. When combined, the total emission reduction potential of these key sectors amounts to 86 million tons of carbon dioxide equivalent (86 MtCO2e). Out of this potential, Kenya has committed 46MtCO2e to the NDC target (32% of the 143MtCO2e BAU target), leaving a remaining 40 MtCO2e for carbon trading.
The prospective role of carbon market mechanisms
Of Kenya’s total emission reduction potential (86.5 MtCO2e) under its current NDC, subtracting emission reductions reserved to meet the NDC target (43MtCO2e) leaves 40MtCO2e which Kenya reserves for carbon credits or trading.
AlliedOffsets NDC analysis
Kenya has projected national emissions with LULUCF of ~130 MtCO₂e by 2030. Based on actual and forecasted credit issuance, Kenya will have ~24 MtCO₂e in reductions. This covers ~52% of the 46 MtCO₂e reduction needed to reach its NDC target of 97 MtCO₂e. However, if these credits are authorized as ITMOs, Kenya may fall short and require additional mitigation measures.
The first claim which must be made is that the Voluntary Carbon Market (VCM) has historically been a limited contributor to Kenya’s external finance flows. According to 2023 ODA financial flow figures, and transaction data from AlliedOffsets, the VCM contributed 3% of external financial flows (~$136 million USD) in carbon credit transactions, compared to remittances (78%), foreign direct investment (13%) and bilateral official development assistance (ODA) flows (6%). VCM credit price volatility has constrained financial contributions, however the development of high-integrity projects with participation under Article 6 of the Paris Agreement.
The sharp decline in donor financing which will be available to countries in 2025, estimated drops of up to 20% in overseas development assistance, carbon market mechanisms may play a larger role in catalysing climate finance.
Potential to raise up to $170 million USD through leveraging Article 6
While the VCM has contributed ~3% of external climate finance in 2023, leveraging Article 6 provides a pathway to structured, performance-linked revenue - especially as ODA declines. Kenya has yet to set a floor price for how much it will sell its ITMOs. However, if it were to meet its target and exported (correspondingly adjusted, and discounted from its national greenhouse gas inventory) 40MtCO2e, at price of $30 USD per ton, the country could generate up to:
- $160 million USD in Corresponding Adjustment fees
- $8 million USD in ITMO fees upon issuance (50% of which is remitted to the Climate Change Fund)
- $2 million USD in contributions towards domestic benefit sharing arrangements
According to the Climate Change (Carbon Markets) Regulation, Article 6 Authorised projects listed on the National Carbon Registry will be subject to application fees, project design document fees, and administrative fees:
- Upon DNA approval of the project design document: KES 150,000 - KES 300,000 (~$1,140 USD – $2,280 USD).
- Upon issuance: 0.1 USD - $0.2 USD per ton.
- Corresponding Adjustment Fee: The Kenya Shilling equivalent of $ 4 USD per unit of Internationally Transferred Mitigation Outcome (ITMO).
*Not specified within The Climate Change (Carbon Markets) Regulations, 2024, but taken from a regional average percentage of published Article 6 framework documents.
Kenya’s emissions trajectory without mitigation reaches just under the BAU level
Kenya’s national greenhouse gas (GHG) emissions are expected to increase steadily through 2030, driven by economic growth, energy demand, and land use pressures. Emissions include Land Use, Land-Use Change and Forestry (LULUCF), aligning with how Kenya reports its Nationally Determined Contribution (NDC). Projections were built using a linear regression based on historical data (1990-2022) as seen in Kenya’s latest Biennial Transparency Report. While this forecast suggests that Kenya’s net emissions may reach 130 MtCO2e in 2030 (based on historical trends), Kenya in this scenario would need to reduce by close to 34 MtCO2e to meet its 2030 NDC target of 97 MtCO2e.
The mitigation gap
The mitigation gap is the difference between where a country is headed in terms of emissions (based on current trends or policies) and where it needs to be to meet its climate targets, such as those outlined in its Nationally Determined Contribution (NDC).
In Kenya’s case, the mitigation gap tells us how many tons of CO₂e Kenya still needs to reduce by 2030 to meet its NDC target, even after accounting for current or forecasted emission reductions from carbon market activities.
As projected emissions with a linear regression place national greenhouse gas emissions at 130.8 MtCO2e by 2030, it allows us to estimate that Kenya will likely be able to authorise between 13 MtCO₂e and 46 MtCO₂e as mitigation outcomes, towards Article 6.
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Tracking NDC implementation against Market Activity
NDC aligned projects are already on track to be counted by Kenya towards its sectoral mitigation targets. Across its NDC period, the VCM is expected to contribute up to 202 MtCO2e from active and existing VCM projects. Of these mitigation outcomes, 75 MtCO2e in emission reductions and removals have historically been achieved through credit issuances until 2025, and 141 MtCO2e in reductions expected between 2025 and the end of the decade, according to our adjusted forecast of credit issuances.
Kenya’s voluntary carbon market projects are projected to generate ~20 MtCO₂e in reductions annually between 2021 and 2030, resulting in a cumulative mitigation potential of approximately 200 MtCO₂e over the NDC period. Within this analysis, the mapping of what activities which are within and outside the scope of a country’s NDC, as well as addressing the overhang of lower-integrity credits will be critical in determining which credits Kenya will seek to count within the country’s NDC, and will impact demand of emission reductions and removals towards compliance demand sources.
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When analysing VCM contributions towards these sectoral mitigation targets, some sectors overachieve the targets, whereas some sectors have a delivery shortfall.
Once we map both historic and projected emission reductions and removals from voluntary carbon market projects to the sectors outlined in the NDC, we are able to determine how well they will perform against Kenya’s sectoral mitigation targets. For the following sectors (Transport, Industrial Processing and Waste) for example, the VCM has shown promising signs of meeting sectoral mitigation targets.
How can sector-level VCM performance guide Article 6 planning, project pipelines, and policy actions?
Leverage the AlliedOffsets Forecast Model for policy-making insights:
- Assess the potential for VCM-driven job creation and its broader economic impacts
- Identify countries with significant VCM potential
- Support policymakers in drafting effective regulations and revenue generation strategies for carbon projects
- Gain insights into Article 6 implementation
Potential use case for Article 6 scenario planning
1. Customise the Forecasting Model to prioritise Article 6 project Pipelines
Use the AlliedOffsets forecast model (with your own sector / country adjustments) to:
- Segment existing project types
- Estimate future mitigation potential
- Overlay Article 6 policy readiness (e.g., CA frameworks, sectoral limits)
2. Address Sectoral Gaps with Targeted Article 6 Project Development
- Transport - Prioritize new mobility, rail, or modal shift projects
- IPPU - Incentivize industrial actors, outline methodologies related to CDR
- Waste - outline project whitelists to support scaling of composting, methane capture
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Link Forecasted Projects to Economic Co-benefits (Jobs, Adaptation Finance, SDGs)
- Identify project activity impact on job creation
- Assess potential private sector finance mobilised towards domestic adaptation measures
- Prioritise project activities aligned to the promotion of specific SDGs based on project methodologies