Kenya Embracing Green Energy

Jul 28, 2023 | Law, Our Highlights

The Energy Act No. 1 of 2019 (Energy Act) defines energy as any source of electrical, mechanical, hydraulic, pneumatic, chemical, nuclear, or thermal power for any use; and includes electrical, petroleum, coal, geothermal, biomass, municipal waste, solar, wind, and tidal wave power.

Green energy is energy that is produced from natural resources such as the sun, wind, water, geothermal, and biofuel – these resources may further be classified as green, clean, or renewable energy. The Republic of Kenya (Kenya) is showing commitment to embracing the use of green energy at the national, regional, and international levels. Kenya recognizes its reliance on green energy at the moment; though not fully explored, green energy has significantly contributed to the energy used in the country. Therefore, Kenya is committed to promoting and advocating for the use of green energy by joining climate change initiatives that encourage states to embrace the use of green and renewable energy and reduce the use of energy that causes the emission of carbon and other greenhouse gases.

Kenya has ratified the United Nations Framework Convention on Climate Change, Paris Agreement, and the Kyoto Protocol. The two frameworks have been keen on promoting the reduction of carbon and other greenhouse gas emissions, and they advocate for a clean climate system that can be achieved by the use of green and renewable energy. Furthermore, Kenya actively participates in climate change workshops, forums, and conferences on the international scene.

Kenya, within the regional space, has participated in conferences that promote climate change and advocate for green energy, like the Development of East African Climate Change policy which sets the measures that should be adopted by countries to promote a sustainable environment by use of green and renewable energy.

In a bid for Kenya to put to practice the various interests touching on climate change and other factors like reducing carbon footprint, there are various ratifications done, legislations passed, and some being amended to enhance the possible opportunities that will act as an incentive for also the public and private sector in Kenya to harness the arising opportunities that promote the reduction of carbon footprint or use of renewable energy. Some of the key legislations and policies are:

Energy Act No. 1 of 2019

The Legislation is the main substantive law that regulates energy generation in Kenya. The Energy Act establishes the Energy and Petroleum Regulation Authority (EPRA), which is mandated to regulate the production, conversion, and distribution of renewable energy, among other functions. It is also empowered to ensure energy production suitable to the environment and the subjects of Kenya.

Further, the Energy Act mandates the Cabinet Secretary for Energy to promote using and developing renewable and green energy techniques such as solar, wind, biogas, and hydropower.

The Energy Act empowers the National and County governments to develop National Energy Policy. The policy should promote, among other things use of green energy. While implementing the policy, the county government is tasked with acquiring land that will help implement the policy. The land may be used for the generation of energy either through use of green energy sources or other renewable energy sources.

In the spirit of embracing green energy, Garissa County set aside 85 hectares of land that has been used as a solar power plant. The power plant has helped generate energy that is being used in different parts of Kenya. It is also important to note that the solar power plant is the largest in East and Central Africa.

The Northern Part of Kenya has also set aside farms to be used as wind farms and have wind turbines set in them. The wind farm generates about 17% of the energy that is used in Kenya.

Climate Change Act, 2016

The Climate Change Act (CCA) provides that when coming up with the National Climate Action Plan, that measures that promote the use of green and renewable energy should be embraced. CCA advocates for the reduction of greenhouse gases such as carbon, methane, which negatively impact the climate. The CCA mandates the Cabinet secretary to ensure the use of clean and green energy by coming up with measures and regulations that promote green energy.

Further, the CCA mandates the national and county governments to promote low-carbon strategies and green energy. Kenya recognizes that green energy is the future and is taking necessary steps to promote a sustainable way of relying on green energy.

There is a proposed amendment to the CCA through the CCA (Amendment Bill) 2023 that will enhance the regulatory framework on matters carbon credits and carbon trading in Kenya. This was as per the Cabinet meeting held on July 18, 2023, and was chaired by the President of Kenya. It was stated that “The Bills seeks to foster inter-generational equity in conservation of our natural heritage and splendour by providing a framework for Kenya’s participation in carbon markets.”

The Income Tax Act

The Income Tax Act provides for various benefits on matters allowable deductions when initiating projects in Kenya and further benefits when certain projects meeting certain qualifications are initiated at the Special Economic Zones and those outside Nairobi and Mombasa County.

Furthermore, a person investing in items falling under the Green Bonds as per the guidelines in place and such a person receives and income from that Green Bond, their respective income is exempted from tax. The income can be one that is derived from or received in Kenya.

National Energy Policy, 2018

The National Energy Policy, 2018 (NEP, 2018) provides a visualization that there is a need for affordable quality energy and that the policy is in place to enhance the possibilities of having a clean, sustainable, affordable, competitive, reliable and secure energy while factoring in the need to protect the environment.

NEP, 2018, acknowledges the relevance of policy development by the government of Kenya to provide a better plan to allow both consumers and investors to have a better experience while exploring utilizing energy related products. The progressive, though slow, improvement of various national policies has shown the government’s interest in advancing better regulatory framework to open doors for various investors.

For instance, NEP, 2018, raised concerns such lack of clarity on feed-in-tariff policies, and it is evident that through the Energy Act, 2019, the new energy regulatory framework promotes the need to establish renewable energy feed-in-system and development of regulations for feed-in-system in Kenya.