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FEATURE STORYJune 13, 2023

Action Against Climate Change: Seizing opportunities in a decarbonizing world


  • The new Kenya Economic Update shows that maintaining a low-carbon development path can help Kenya benefit from new and green markets.
  • The report notes that climate investments and policies can contribute to economic growth, create jobs, improve the country’s trade balance, and lower exposure to fuel price shocks and supply chain disruptions.
  • Recommendations from the report include expanding renewable energy, greening the transport sector, and expanding engagement in carbon markets.

Kenya can tap into opportunities in the new and green markets created by the global trend to reduce green-house gas (GHG) emissions if it maintains its low-carbon growth, according to the latest World Bank economic analysis.

The Kenya Economic Update - Edition 27 says climate-positive investments and policies can spur growth, reduce operating costs, increase revenue for the private sector, create domestic green jobs, improve the country’s trade balance and foreign exchange stability, and lower the exposure to fuel price shocks and supply chain disruptions.

Countries’ efforts to lower GHG emissions and meet NDC commitments are resulting in reconfiguration of global supply chains, creating opportunities in new and ‘green’ markets, and generating a growing appetite for carbon credits. If Kenya maintains a low-carbon development path as it grows, it could seize opportunities created by the global trend to decarbonize economies.
Diji Chandrasekharan Behr
World Bank Lead Environmental Economist

The report shows that Kenya’s carbon intensity is lower than that of many other countries in Sub-Saharan Africa, but GHG emissions in the country have been growing. Agriculture was found to be the leading source of emissions at 40%, followed by land use,  land use change, and forests (33%), transport (11%), energy (excluding transport) (7 percent), industrial processes (4%), waste (3%) and electricity (1%).

At 0.1% of global emissions annually, emissions are currently not a concern for Kenya’s economy. The report highlights how maintaining low emissions could create opportunities for Kenya as the European Union (EU) and the United States strengthen ongoing efforts to reduce the carbon footprint of supply chains and introduce new ones with consequences for exports to these countries.

The European Commission (EC), for instance, has proposed, in addition to their existing Carbon Border Adjustment Mechanism, ambitious new regulation, which once approved will require importers and exporters of commodities like coffee and timber to confirm their products are not contributing to deforestation.

To maintain the low-carbon growth path, the report recommends key interventions to scale up renewable energy, green the transport sector, and expand engagement in carbon markets, including:

Sustain clean energy generation

Kenya has achieved remarkable success in developing a well-diversified power generation mix and could achieve a fully green grid by 2030. The report shows that the country has a unique opportunity to stay on a low-carbon growth path while meeting its on-grid electricity needs entirely from green energy sources.

Reduce the energy intensity of vehicles and shift freight to lower-carbon transport modes 

The report highlights the emission reduction and productivity benefits of measures outlined under the National Climate Change Action Plan (NCCAP), including shifting containerized freight from road to rail, electrifying the Mombasa-Nairobi Standard Gauge Railway (SGR), adopting low-carbon technologies in aviation and maritime sectors, implementing the Bus Rapid Transit system in the Nairobi metropolitan area, and conducting pilot projects on electric vehicles that can help reduce emissions.

Replace fossil fuels with alternative, sustainable energy sources

Fully eliminating GHG emissions from transport and logistics in Kenya, the report notes, would require large-scale conversions to green fuels. The country should also explore various alternatives (including green hydrogen) for reducing fossil fuel consumption.

Increase the energy efficiency of vehicles and logistics

Kenya could establish national standards to limit fuel consumption in new heavy-duty vehicles with diesel and gasoline engines. Fuel efficiency standards could be set during truck licensing, accompanied by a voluntary program to retire and replace the least fuel-efficient vehicles. The quality of the road infrastructure should also be addressed given its impact on average fuel consumption per distance traveled.

Optimize logistics through digital platforms

The report says that implementation of Smart Logistics concepts can optimize resource consumption, enhance efficiency, and contribute to sustainability and climate protection. Additionally, measures could be taken to regulate the use of digital platforms in the passenger segment, which includes ride-hailing and combined passenger transportation and delivery services.

Change supply chain strategy and management

The analysis observes that there are significant opportunities to improve environmental sustainability further by developing footprint models and revisiting the location of production, warehouses, and distribution centers as well as transportation routes/modes. This may involve establishing private sector-led Inland Container Depots or dry ports along transportation routes, facilitating connections between industries with bulk transport needs and specialized terminals.

Shift to greener and reliable urban mobility solutions

The report sees the development of mass rapid transit system as a game changer for Kenya. Low-carbon urban mobility solutions should prioritize developing an integrated and reliable multi-modal public transport system with adequate non-motorized transport facilities (such as sidewalks, bike lanes) for first/last mile connectivity, and shifting from a car-centric to people-centric approach.  This will help boost the productivity of working women and men. Complementary efforts to promote e-mobility could augment the benefits from the proposed shifts.

Improve engagement in carbon markets

Capitalizing on carbon markets will require the Kenyan government to finalize the formulation of a robust legal framework to provide the necessary legal basis for carbon markets and to operationalize the legislation. The country should align with this legal framework, its strategy for determining the conditions under which it would opt to participate in compliance carbon markets and the operational issues. Kenya should also put in place a comprehensive and robust measurement, reporting, and verification system. Kenya has the potential to restore 5.2M ha through forest landscape restoration, which could generate a notable amount of carbon credits and attract buyers if the quality and environmental integrity of the credits can be demonstrated. Expansion to renewable energy can also be a source of carbon credits. Kenya could also explore carbon credit opportunities in nascent sectors, including construction and e-mobility.