Key Provisions and Objectives

As Kenya positions itself as a major player in the global carbon market, the Ministry of Environment, Climate Change and Forestry has published the Draft Climate Change (Carbon Registry) Regulations, 2025. The proposed regulations, made under the Climate Change Act (Cap. 387A), are designed to operationalize a robust, transparent, and accountable carbon registry system. They seek to enhance Kenya’s ability to manage and track mitigation outcomes, particularly Internationally Transferred Mitigation Outcomes (ITMOs), in line with Article 6 of the Paris Agreement.

The draft regulations are structured to:

• Establish and operationalize a National Carbon Registry and Sector Registries.
• Provide access to carbon project information to enhance market integrity and transparency.
• Enable tracking, authorization, and accounting of ITMOs.
• Ensure interoperability with international carbon registries.
• Implement robust Know Your Customer (KYC), data security, and anti-fraud protocols.

The registry will be an electronic platform composed of two portals—a management portal with restricted access and a public portal for transparency. It will capture a wide array of project and transaction data, including project types, carbon credit issuance, transfers, ownership, and compliance with NDCs.

Positive Aspects of the Draft Regulations

1. Alignment with International Standards
   The regulations are consistent with global requirements under the Paris Agreement, particularly around ITMOs and Article 6 reporting. Key elements such as the use of unique identifiers, double-entry accounting, and corresponding adjustments are addressed.
2. Transparency and Public Access
   The framework provides for a comprehensive public portal, ensuring stakeholders can access non-confidential project information and transaction data—critical for market confidence and public trust.
3. Strong Governance and Oversight
   Clear roles are defined for the National Registrar, Sector Registrars, and the Designated National Authority (DNA). The requirement for periodic reporting and oversight mechanisms supports accountability.
4. Sector-Specific Integration
   By allowing each sector (energy, forestry, agriculture, waste, etc.) to have its own registry interoperable with the national system, the regulations enable better project tracking and data management.
5. Security and Data Protection
   The draft embeds strong cybersecurity and data protection requirements in line with Kenya’s Data Protection Act, including multi-factor authentication, encryption, and periodic audits.
6. Anti-Money Laundering Provisions
   The KYC and AML checks mirror best practices in financial regulation and help safeguard carbon markets from fraud and illicit activity.

Limitations and Areas for Improvement Compared to Global Best Practices

1. Limited Integration with Voluntary Carbon Markets (VCMs)
   While the regulations mention voluntary transactions, there is limited detail on how the registry will interact with international voluntary registries (like Verra, Gold Standard) beyond general interoperability. Countries like Singapore have more advanced frameworks for dual compliance-voluntary system harmonization.
2. Unclear Fee and Cost Structure
   The regulation mentions application fees for accessing non-public data but lacks clarity on account maintenance or transaction fees. A detailed fee schedule and cost transparency could improve investor certainty.
3. Enforcement and Dispute Resolution
   While there is a general penalty clause (a fine or up to six months’ imprisonment), enforcement mechanisms are weak compared to systems like the EU ETS, which have tiered penalties based on the severity of non-compliance.
4. Limited Stakeholder Participation Requirements
   The regulation could better embed provisions for meaningful stakeholder engagement, including requirements for consultation with affected communities beyond recording Community Development Agreements.
5. No Provisions for Carbon Credit Quality Assurance
   Unlike global registries that integrate third-party verification platforms or standards, these regulations do not prescribe minimum quality benchmarks or registries with automatic verification integration. More detailed guidance on methodologies and acceptable standards would help align with best practices.
6. Registry Architecture Not Fully Explained
   Although the draft mentions the use of secure web applications, it doesn’t detail the governance of IT infrastructure, contingency plans, or system ownership and sustainability—key elements seen in jurisdictions like Canada and California.

Conclusion

The draft Climate Change (Carbon Registry) Regulations, 2025 represent a major step in institutionalizing Kenya’s participation in global carbon markets. Their strength lies in their alignment with Article 6 of the Paris Agreement, strong governance structure, and data integrity systems.

However, to enhance effectiveness and competitiveness, Kenya should:

• Expand technical provisions for voluntary markets.
• Clarify its fee and penalty structure.
• Provide guidance on credit quality and third-party validation.
• Deepen public participation requirements.
• Strengthen enforcement and compliance measures.

With these refinements, Kenya could establish itself as a model jurisdiction for carbon market governance in Africa and beyond.

By Bill Omondi