Kenya and Switzerland sign carbon credit trade deal

From the newsletter

Kenya and Switzerland have signed an implementing pact under the Paris Agreement to collaborate on carbon emissions reductions through carbon credit trading. This pact, signed by Kenya’s Ministry of Environment and Switzerland’s Federal Office for the Environment, will facilitate the transfer of high-integrity carbon credits and promote green investment.

• The pact is good news for conservation in Africa because it expands the carbon credit market with clearly stated rules of operation and collaboration.

• Similar agreements exist with other African nations, such as Ghana, Senegal, and Malawi, providing a legal framework for trading emission reductions with Switzerland.

More details

• The agreement emphasises Article 6 of the Paris Agreement, allowing for the international transfer of mitigation outcomes (ITMOs) between the two countries. Under the deal, mitigation outcomes, measured in metric tonnes of carbon dioxide equivalent, can be traded internationally.

• Kenya may transfer or receive these outcomes depending on the specific project. Switzerland's nationally determined contributions (NDCs)already include internationally transferred mitigation outcomes (ITMOs), while Kenya is open to transfers that do not interfere with its own NDC commitments. Authorised entities will manage these transfers, subject to strict verification, monitoring, and public authorisation processes.

• To prevent double counting of emissions reductions, both countries will apply corresponding adjustments in their carbon accounting systems. Any traded carbon credit must be registered and verified. Each project must have a detailed design document and monitoring report. All activities must comply with the transparency rules outlined in Articles 4, 6, and 13 of the Paris Agreement.

• Projects under this agreement must also support sustainable development and uphold human rights. Kenya and Switzerland are committed to transparency, environmental protection, and the promotion of development goals aligned with the UN Sustainable Development Goals. The agreement establishes a framework for long-term cooperation, with provisions for revising the pact in line with future UN climate decisions.

• Article 6 of the Paris Agreement outlines market mechanisms for carbon credit trading, including the use of ITMOs. ITMOs represent quantified greenhouse gas emission reductions achieved in one country, which can contribute to another country's emission targets. Projects in one country reduce emissions, which are verified and quantified according to international standards, converting them into tradable ITMOs.

• Issued by designated authorities or recognised registries under the Paris Agreement, ITMOs can be traded bilaterally or through authorised marketplaces. Buyer countries can include ITMOs in their emission reduction inventories for compliance, with both parties maintaining transparent records to prevent double counting. Switzerland is currently partnered with Kenya, Ghana, Senegal, and Malawi in similar ITMO agreements.

Our take

• Carbon markets in Africa are evolving through legal frameworks such as the Verified Carbon Standard and Gold Standard, which ensure the integrity of carbon offsets. Additionally, tools like Project Development Protocols are enhancing transparency. ITMOs and blockchain technology are expected to improve efficiency, credibility, and scalability across African carbon markets.

• Sub-Saharan Africa issues 65% of its carbon credits through voluntary markets, with Kenya, Zimbabwe, the DRC, Ethiopia, and Uganda in the lead. South Africa operates a compliance market that includes a national carbon tax and cap-and-trade system.

• Countries such as Madagascar, Nigeria, and Tanzania remain underrepresented due to a misalignment between local project types and viable credit generation models, limiting their participation despite significant carbon offset potential.