Carbon Credit Agreements in Kenya: Key Clauses, Legal Risks and Due Diligence Before You Sign
In 2011, the Kasigau Corridor REDD+ project in Taita Taveta County did something no other initiative in East Africa had done before: it earned certified carbon credits under the voluntary carbon market. The project generated 1.45 million verified carbon units in its first six-year crediting period. Corporate buyers; Netflix, Shell, Microsoft, UPS; lined up. The corridor became a template for what carbon trading could look like on Kenyan soil.
Fourteen years later, Kenya has issued more than 59 million voluntary carbon credits. Between 2016 and 2021, it produced more carbon credits than any other African country. Yet the market that once promised conservation funding, community development, and foreign investment now sits at a crossroads between regulatory ambition, collapsing international prices, and growing local anger over land and consent.
Kenya’s carbon market operated in a legal grey zone for years. The Climate Change Act of 2016 mentioned carbon markets in passing but offered no operational framework. That changed in 2023, when Parliament passed the Climate Change (Amendment) Act, explicitly recognizing carbon trading as a legitimate climate finance mechanism.
On 17 May 2024, the government gazetted the Climate Change (Carbon Markets) Regulations, 2024. The rules established project certification requirements, assigned oversight roles to the National Environment Management Authority (NEMA) and the National Climate Change Council, and crucially, mandated that carbon projects on public and community land contribute a defined share of revenue to local communities.
But the 2024 regulations were a foundation, not a finished building. In early 2025, NEMA published two draft frameworks: the Climate Change (Carbon Trading) Regulations, 2025, and the Climate Change (Non-Market Approaches) Regulations, 2025. Together, they attempt to govern how Kenya participates in both voluntary carbon markets and the compliance market created under Article 6 of the Paris Agreement.
Regulations mean little if the people living on project land do not understand them or do not trust the people enforcing them.
In Kajiado County, pastoral communities have rejected carbon deals, arguing that agreements were signed without free, prior, and informed consent. In the Mau Forest, Ogiek Indigenous communities have faced evictions that critics linked to carbon credit projects. A 2025 investigation by Climate Change News found that two of Kenya’s largest carbon credit projects were mired in land-rights disputes, complicating the country’s ambition to position itself as Africa’s premier carbon trading hub.
The 2024 regulations attempted to address this by mandating social contributions to communities and requiring benefit-sharing agreements. But legal frameworks do not automatically resolve structural power imbalances. Many of the roughly 400 active carbon projects in Kenya are foreign-owned or foreign-financed. Local landowners often sign long-term agreements with limited legal representation, unclear terms, and no independent verification of promised benefits.
WHAT COMMUNITIES MUST LOOK FOR-A LEGAL CHECKLIST
For communities approached by carbon project developers, the contract is often the only protection they will have. The 2024 regulations and the 2025 draft framework create obligations on paper, but those obligations only matter if communities know what to demand before signing. Below are the legal checkpoints every community should treat as non-negotiable.
1. FREE, PRIOR, AND INFORMED CONSENT
Consent must be sought before any agreement is signed, not after terms have been drafted by the developer. “Informed” means the community receives the contract in a language they understand, with independent legal translation if necessary. “Prior” means consultation happens early enough that the community has real leverage to negotiate.
Carbon credits derive their value from land use. If the developer does not have a clear legal basis to manage that land, the credits may be invalid and the community’s rights may be undermined. Communities must verify :
- Whether the land is registered as public, private, or community land under the Community Land Act, 2016?
- Whether the group signing the agreement have the legal authority to represent the community? Or
- Whether there are overlapping claims such as ancestral, pastoral, or neighboring that could surface later?
Also, it is important to that note that only the community assembly or a legally registered community land management committee has the authority to enter into agreements on community land. Individual elders or self-appointed representatives do not.
The 2024 Climate Change (Carbon Markets) Regulations require that carbon projects on public and community land contribute a defined annual social contribution to the community. But the regulations do not specify percentages or formulas. Therefore, it is important that communities negotiate and get in writing the exact mechanism for revenue distribution.
- The percentage of gross carbon credit revenue goes to the community.
- the percentage fixed and when are payments are to be remitted ?
Vague promises of “community development” should be rejected in favor of specific and measurable obligations.
The agreement should state clearly who owns the carbon credits generated from the project. In many Kenyan deals, the foreign developer holds the title to the credits and sells them on international markets. Therefore, Communities should ask:
- Who registers the project with Verra, Gold Standard, or other verification bodies?
- Who receives the serial numbers for the issued credits?
- Can the community withhold consent for future sales if prices are unfavourable?
- Are there restrictions on “double counting”—selling the same credits into multiple markets?
The 2025 draft regulations clarify that ITMOs approved for international trade cannot be used domestically. Communities should ensure similar clarity exists in their private agreements.
Many carbon agreements specify arbitration in London, Singapore, or another foreign jurisdiction. This places an impossible cost burden on communities if a dispute arises. Communities should insist on:
- Kenyan law as the governing law of the contract
- Dispute resolution through Kenyan courts or, if arbitration is unavoidable, a neutral venue within the East African region
- Cost-sharing provisions so that legal action is accessible
- A cooling-off period and mandatory mediation before litigation
The developer should be required to conduct and share an Environmental and Social Impact Assessment (ESIA) approved by NEMA. Communities have the right to review this document and submit comments. Beyond regulatory compliance, the agreement should include: binding commitments on land restoration if the project ends, protection of water sources, grazing routes, and sacred sites, grievance mechanisms accessible to individual community members, not just leadership and penalties for non-performance by the developer
Under the 2024 regulations, all carbon projects must be authorized by NEMA and registered with the national carbon registry. Communities should request for:
- copies of NEMA authorization letters,
- validation and verification reports from accredited bodies,
- proof of registration with the National Climate Change Council and
- Tax compliance certificates
Engaging with an unregistered developer exposes the community to legal risk and makes any credits generated potentially unsellable.
Perhaps the most important checkpoint: communities should never sign a carbon credit agreement without independent legal review. The cost of hiring a lawyer is trivial compared to the value of the land and carbon rights at stake. .
The 2024 regulations and 2025 draft frameworks provide a scaffolding of rights, but those rights are only enforceable if the people holding the pen understand what they are signing.