By Our Reporter
Koko Networks, a bioethanol cookstove company that served 1.3m Kenyan households, entered administration on January 25th after the government failed to authorise the sale of carbon credits crucial to its business model. The collapse of the venture, which had raised $300m from investors including the Microsoft Climate Innovation Fund and Vitol Group, marks a significant setback for efforts to replace charcoal cooking in African cities.
The immediate cause was administrative: Kenya’s government did not issue letters of authorisation required for Koko to sell carbon credits in compliance markets, despite signing an investment framework agreement in June 2024 permitting such sales under Article 6 of the Paris Agreement. Without this revenue stream, the company could not sustain its model of selling stoves and fuel below cost whilst subsidising low-income consumers.
The broader context reveals deeper tensions in climate finance. Koko’s business depended on selling credits to airlines seeking to offset emissions through a scheme run by the International Civil Aviation Organisation. These compliance-market credits trade at roughly $20—ten times the price in voluntary markets—making them financially attractive. But the scientific foundation has come under scrutiny. A peer-reviewed study published in 2024 by researchers at the University of California, Berkeley concluded that clean cookstove projects save only a fraction of the carbon emissions they claim, casting doubt on credits used by Shell, British Airways and easyJet, among others.
Koko defended its methodology as robust. The company’s credits, certified by Gold Standard, a verification organisation, were calculated based on avoided deforestation from households switching from charcoal to bioethanol derived from sugarcane. Yet the Berkeley findings suggest such calculations may be systematically overstated.
The company’s demise carries human costs beyond the 700 jobs lost. The African Development Bank estimates that 600,000 people, mainly women and children, die prematurely each year across Africa from inhaling charcoal fumes. One senior Kenyan official, speaking on condition of anonymity, acknowledged that Koko had “improved the lives and health of many Kenyans” and represented “a great opportunity to tap into climate financing.”
The political ramifications may prove equally consequential. President William Ruto has cultivated a reputation as a champion of green investment in Africa. The World Bank’s Multilateral Investment Guarantee Agency insured Koko’s investment for $179.6m in March 2024—the world’s first carbon-linked political insurance coverage—explicitly covering government breach of contract. Koko may now file a claim alleging precisely that, according to people familiar with the matter.
The episode raises questions about the viability of cookstove financing models that rely on carbon credit sales rather than direct government subsidies. It also tests Kenya’s credibility as a destination for climate-related capital. Several senior government officials declined to explain why the authorisation letters were not issued, suggesting internal disagreement over the policy.
What remains clear is that 1.3m households have lost access to subsidised clean cooking fuel, and investors have learned a costly lesson about the gap between climate commitments and administrative follow-through in emerging markets.
