Kenya stock market to launch carbon trading platform

Published 17:18 on February 4, 2016  /  Last updated at 18:19 on February 4, 2016  /  Africa, EMEA, International, Kyoto Mechanisms, New Market Mechanisms  /  No Comments

Kenya’s stock market will launch an emissions trading platform that it hopes will help local companies sell their carbon credits to foreign buyers, local media reported.

Kenya’s stock market will launch an emissions trading platform that it hopes will help local companies sell their carbon credits to foreign buyers, local media reported.

The Nairobi Securities Exchange (NSE) said it wants to help publically-listed Kenyan firms such as the country’s largest utility KenGen, Mumias Sugar, East Africa Portland Cement and grid operator Kenya Power, to sell their CERs, Business Daily Africa (BDAfrica) reported on Tuesday.

No firm date was given for the launch and Carbon Pulse’s attempts to obtain more information from the bourse was unsuccessful.

“We are 65% done with taking a carbon market live in Kenya, and are now looking to draft rules and the legal framework,” said Rogito Nyangeri, the NSE’s head of strategy and research, according to the news outlet.

“We are dealing with our listed institutions who have amassed a war chest of carbon credits, trying to create a board much like is in existence in [South] Korea where we get the big industries and industrialised nations to come to Kenya and buy the credits from our companies. We view it as tied up cash,” he added, referring to companies holding CERs that have paid for their verification and issuance.

The Korea Exchange, the country’s sole securities exchange operator, also hosts an emissions trading platform for trading by companies regulated under the national ETS.

NEW MARKETS

The NSE said it hopes that a formal trading platform within the exchange will prove to be an easier way for companies to sell their credits to foreign buyers than to sign emission reduction purchase agreements (ERPAs), which it said are harder to negotiate deals for smaller batches.

The bourse’s initiative appears to target trade in CERs initially, the price of which has collapsed alongside global demand and trading volumes as rich nations have all but stopped buying the units from the developing world due to reduced appetite for outsourcing CO2 cuts abroad.

In theory, the NSE platform could also be used to trade the new type of carbon units to be generated by the future international market-based mechanism, which will take over from the CDM after 2020 and which was enshrined under the Paris Agreement signed late last year.

However, few large emitting nations have indicated that they will seek to purchase international carbon units after 2020, meaning the NSE’s platform could struggle to find buyers even under a new global emissions trading regime.

By Mike Szabo – mike@carbon-pulse.com

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