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A Kenyan start-up has tapped international carbon markets to roll out clean cooking fuel to more than 1mn households in a novel approach to overhauling energy provision in developing countries.
Koko Networks, launched in 2019, has raised more than $100mn in carbon finance over the past four years to subsidise clean energy cooking in Kenya, helping families switch from cheaper but more dangerous charcoal.
In the same way that governments have subsidised household energy in wealthier countries, carbon markets are supporting a new energy system in Kenya, Koko chief executive and co-founder Greg Murray said.
“We founded this company with carbon as the thesis, basically knowing that we had a non-government economic subsidy to solve the role that governments have historically played,” he told the Financial Times.
The model could be applied in any of the world’s 60 tropical forest nations where the bulk of the population relies on charcoal for cooking, he added.
Rather than burn charcoal, Koko’s customers use ethanol, made from corn or sugarcane, on the company’s twin-hob stoves, which have an airlock to limit fumes.
The ethanol is purchased from Koko vending machines stationed in local corner stores, where customers can fill up reusable bottles.
By cutting charcoal use, which contributes to deforestation, Koko is able to issue audited carbon credits on international markets. But rather than treating funds as extra revenue, it returns the value to customers in subsidies.
This reduces the cost of a stove by 85 per cent and fuel by 25 per cent to 40 per cent, making it affordable for far more households.
“We’ve moved over $100mn worth of carbon value into the wallets of Kenyans,” Murray said. “It is where the carbon belongs. It is a targeted subsidy.”
If the price of carbon on international markets increases, the additional revenue that Koko earns from its credits will enable the company to reduce the cost to customers further.
Central to Koko’s success in accessing carbon finance has been its ability to sell credits into so-called compliance markets, where government-backed schemes oblige companies to offset the carbon they produce, Murray said.
Koko already sells carbon credits into a compliance market in South Korea and will start selling into a similar scheme in Singapore next year.
This month it established a partnership with Mizuho Bank to develop carbon credits for sale in Japan from 2026.
The energy start-up, which has been backed by investors including the Microsoft Climate Innovation Fund, serves a third of households in Nairobi and has expanded to nine other Kenyan towns. It passed 1mn customers on Friday and will launch in Rwanda this year.
In addition to causing deforestation, charcoal gives off fumes and soot when burnt, which contribute to the estimated 3mn premature deaths per year because of household air pollution.
The problem is particularly acute in Africa where almost 1bn people lacked access to clean cooking in 2020, according to the World Health Organisation.
