Understanding carbon credits

BY ZEYNAB WANDATI 

Have you ever heard of a carbon credit? It's a permission slip that allows someone to emit a certain amount of carbon dioxide (CO2) into the atmosphere. The goal is to reduce greenhouse gas emissions that contribute to climate change. Individuals or companies can purchase carbon credits to offset their own emissions. This could involve supporting projects that remove CO2 from the air such as planting trees or investing in renewable energy to prevent emissions in the first place.

 How much is a carbon credit worth?
Although each credit is equal to one metric tonne of carbon dioxide, the value of a carbon credit is not fixed and it depends on various factors:
Supply and demand: When demand for credits is high and supply is low, the price goes up, and when there is an abundance of credits with few buyers, the price falls.

Type of project: Credits for projects that remove CO2 from the atmosphere such as tree planting are more valuable than those for avoiding future emissions, such as building a wind or solar farm.

Location and verification: Credits from projects in well-regulated markets with independent verification are usually more trustworthy and, therefore, often more expensive.

Permanence: Projects that permanently remove CO2 like planting forests are more valuable than those with temporary benefits, like capturing methane from landfills.

Who sets the price?
Carbon credit prices are set by voluntary and compliance markets as there is no central authority:

Voluntary markets: Companies and individuals can purchase or sell credits directly or through brokers. Prices are more flexible and influenced by the factors above.

Compliance markets: Some countries or regions have regulations that require companies to reduce emissions or buy credits to offset them. These markets have a set price or a trading system determining the price.

So, how much does a carbon credit cost?
This ranges widely:
Low-end: Less than $1 (Sh131) per tonne of CO2 (some avoided emission projects such as solar and wind farms)

High-end: Over $100 (Sh13,125) per tonne of CO2 (high-quality removal projects such as reforestation)

Examples of carbon projects in Kenya:

Kenya is a leader in Africa's carbon market, with a long history of involvement and a significant share of voluntary carbon credits. Below are some successful carbon projects in the country:
1. Kenya Agricultural Carbon Project: Launched in 2000 by the World Bank, the project manages 45,000 hectares of land to improve soil organic carbon through sustainable land management. It is one of the first to earn credits by capturing carbon in agricultural soils and has benefits at least 60,000 farmers. 

2. Mikoko Pamoja: Blue Carbon Conservation: This project on the Kenyan coast became the world's first blue carbon initiative to sell carbon credits from mangrove conservation activities. 

It demonstrates the potential of coastal ecosystems in mitigating climate change. Mangroves store large amounts of carbon dioxide and protect coastlines from erosion.

3. Geothermal energy projects: Kenya's geothermal energy sector is robust, with some projects benefiting from carbon finance. These projects demonstrate how clean energy development can be profitable while combating climate change.

4. Improved cookstoves initiatives: Several projects promote the adoption of cleaner cookstoves, contributing to both climate change mitigation and public health benefits. 

By replacing traditional stoves with more efficient models, the projects reduce reliance on firewood for cooking, decreasing deforestation and improving indoor air quality.

5. Afforestation and reforestation projects: Kenya has numerous tree-planting initiatives to combat deforestation and promote carbon storage. 

The government is currently going big with the ambitious project to plant 15 billion trees to capture carbon dioxide from the atmosphere and increase carbon sequestration. 
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