The Climate Change (Amendment) Act, no. 9 of 2023

NA TI ONAL COUNCI L FOR L A W R E POR T I N G L I B R A R Y SPE C I A L I SSU E Kenya Gazette Supp lement No. 147 (Acts No. 9) R E PU B L I C O F K EN Y A K E N YA GA Z E T TE S U P P L E M E N T ACTS, 2023 NAI ROBI , 1st September , 2023 C O N T E N T A c t — P a g e The Climate Change (A mendment) Act , 2023 2 2 5 NATIONAL COUNCIL FOR LAW REPORTING 0t SEP20Z3^ \ L I B R A R Y A R C H I V E PR I N T E D A N D PU B L I SH E D B Y T H E G O V E R N M EN T PR IN T ER , N A I RO B I 2 25 THE CLIMATE CHANGE (AMENDMENT) ACT, 2023 N o . 9 of 2023 Date of Assent: 1st September, 2023 Date of Commencement: 15th September, 2023 AN ACT of Par l iament to amend the Climate Change Act , 2016, and for connected purposes ENACTED by the Parliament of Kenya, as follows— 1. This Act may be cited as the Climate Change (Amendment) Act , 2023. 2. The Climate Change Act, 2016, in this Act referred to as the “principal Act” , is amended in section 2 by inserting the following new definitions in proper alphabetical sequence— “aggregate earnings” means the total of all income i n a carbon project without adjustment for inflation, taxation o r types of double counting; “carbon budget” means the approved quantity of greenhouse gas emission that is acceptable over a specified time and shall be informed by the National Greenhouse G as Inventory and guide on emission reduction allocation f o r Nationally Determined Contributions or any other use consistent with the Conference of the Parties serving at the meeting of the Parties to the Paris Agreement guidance, rules, modalities and procedures; “ carbon credits” means a credit created when the equivalent of one metric tonne of carbon dioxide is prevented fr om entering the atmosphere and is equal t o o n e tonne of carbon dioxide or the equivalent amount of a different greenhouse gas reduced, sequestered, or avoided; “ carbon market” means a mechanism that enables and allows public and private entities to transfer and t r an sac t emission reduction units, mitigation outcomes or off sets generated through carbon initiatives, products, programmes and projects subject to compliance of national and international law s; “carbon projects” means interventions including programs, projects, and products designed to remove, reduce, sequester or avoid carbon emissions; Short t i t le . A m endm ent o f sect io n 2 o f N o . 11 o f 20 16 . 2 26 Climate Change (Amendment) ‘car bon o f f set” m eans a reduct ion or rem ov al o f emissions of carbon dioxide or other greenhouse gases made in order to compensate with equivalent number o f emissions for emissions made elsewhere; 20 23N o . 9 car bon standar ds’ means a complete set of established rules, procedures, and methodologies that guide on the generation and issuance of certified carbon credits; “community” means a consciously distinct and organized group of users of community land who are citizens of Kenya and share any of the following att r i butes — (a) conunon ancestry ; (b) similar culture or unique mode of livelihood; (c) socio-economic or other simi lar common interest; (d) geographical space; (e) ecological space; or (f) ethnicity, “corresponding adj ustment” means the deduction of verif ied emission reductions by the Host Party and add i t ion of the corresponding amount of verified emission reductions by the Receiving Party, whereas such reductions will not count against the Host Party’s Nationally Determined Contributions and shal l count tow ards the acquiring Party ’s Nationally Determined Contributions; “Designated National Authority” means the entity or organization granted the responsibility to authorize an d approve participation in proj ects under the Paris Agreement on Climate Change; “ Internationally Transferred Mitigation Outcomes” means real , additional and verifi ed reduction in greenhouse gas emissions or removal of greenhouse gases from the atmosphere, measured in tC0 2eq and representing one tC0 2eq per methodologies approved under the Paris Agreement Rules and generated by a specifi c mitigation activity from 2021 onwards; “ intern ationally recognized entity” means any entity that is accredi ted under an establ ished set of rules a s properly constituted to oversee a carbon market; 2 27 2023 Climate Change (Amendment) 'mitigation outcomes” means redactions in greenhouse gas emissions with global warming potential equivalent to one tonne of carbon dioxide that has been measured and verifi ed in accordance with the Standards; N o . 9 “National Carbon Registry” means the Carbon Registry established ond^ section 23G; “nature-based solutions” means actions that protect, sustainably manage, or restore natural ecosystems, that address societal challenges such as climate change, hum an health, food and water security, and disaster risk reduct io n eff ectively and ad^ vely, simultaneously providing human well-being and biodiversity benefi ts; “non-market app oaches” means approaches that aim at promoting mitigation and adaptation ambition, enhancing public and private sector participation in the implementation of nationally determined contributions; and enabling opportuni ties for coordination across instruments and relevant institutional arrangements; “Paris Agreemra it” means the Paris Agreement on Climate Change adopted by the Conference of the Parties a t i ts 2r * session in Paris in 2015; “pro j ect proponent responsible for carrying out a specifi c proj ect; “recognized credible intern ational body” means any entity that is tasked with accreditation of an internationally recognized entity ; “ R ed uced E m i ssi ons f rom D ef orestati on and F orest Degradation” means activities in the forest sector that reduce greenhouse gas emissions from deforestation and forest degradation, as well as the sustainable management of f orests and the conser v ati on and enh ancem ent o f f ore st carbon stocks at national and sub national levels; “ share of i»x)ceeds” means levies from activities under the Pari s Agreement that are used to cover administrative expenses as well as assisting developing country Parties that are vu lner abl e to the adver se ef f ects o f cl i m ate change to meet the costs of adaptation; “ stakeholder” means a person, business, community or organization that has an interest in or is affected by the activities of carbon projects and the results those act ions produce; an entity legallym e a n s 2 2 8 2023Climate Change (Amendment)N o . 9 “State Part y” means a Country that has ratified the Paris Agreement on Climate Change; “ technology” means technologies used to reduce greenhouse gases and to adapt to the adverse impacts of cl imate change; “ tonnes of carbon dioxide equivalent (tC0 2eq)” m eans an am ount o f carbon d iox ide em i ssion m easured in metric tonnes would cause the same integrated radiative forcing or temperature change, over a given time horizon, as an emitted amount of a greenhouse gas or a mi xture of greenhouse gases; “ voluntary carbon market” means a market where private investors, governments, non-governmental organizations, and businesses voluntarily buy and sell carbon credits that represent cert ified emissions removals or reductions of greenhouse gases in the atmosphere; and “whitelist” means a non-binding, non-exhaustive periodic list of activities or technologies that can del i v er mitigation outcomes as provided for in the Nationally Determined Contributions and that are preferred by the Government of Kenya for Art icle 6.2 bilateral cooperation. 3. Section 3 of the principal Act is amended in subsection (2) by — (a) insert ing the following new paragraph immediately after paragraph (g)— (ga) provide guidance in the development and implementation of carbon markets and non market approaches in compliance with international obl igations; (b) insert ing the words “ including carbon market and non-market approaches” immediately after the words “climate change responses” appearing in paragraph (h). 4. Section 6 of the principal Act is amended by insert ing the following new paragraph immediately after paragraph (f) — A m endm ent of sect ion 3 o f N o . 11 o f 20 16 . A m endm ent o f sec ti on 6 o f N o . 11 o f 20 16 . (fa) provide guidance and policy direction on carbon markets to the national and county governments, the public and other stakeholders; 2 29 2023 Climate Change (Amendment) 5. Section 7 of the pri ncipal Act is amended— N o . 9 A m endm ent o f sect io n 7 o f N o . 11 o f 20 16 . (a) in subsection (2) by— (i) deleting paragraph (c); (i i) deleting the words “ nominated by the body representing the largest number of institutions in the pri vate sector” appeari ng in paragraph (f ) ; (i i i) deleting the words “ nominated by the ipost representative registered national umbrella association of civi l societies working on climate change” appeari ng in paragraph (g); (iv) inserting the fol lowing new paragraph immediately after paragraph (g) (ga) a representative of the youth; (v) deleting the words “ nominated by the Commission for University Education” appearing in paragraph (i); (b) by deleting subsection (7); (c) in subsection (12) by deleting the words “ Except as provided in subsection (7)” . 6. Section 8 of the pri ncipal Act is amended in subsection (2) by — A m endm ent o f sect i on 8 o f N o . 11 o f 20 16 . (a) deleting the word “ biannually appean ng in paragraph (e) and substituting therefor the word “ annually” ; (b) inserting the fol lowing new paragraphs immediately after paragraph (e)— (f) advise the Council on the carbon budget for trading, based on Kenya’s international obligations; (g) approve international transfers of mitigation outcom es and em i ssion reduct ion b ased on advice from the Cl imate Change Directorate; (h) approve measurement, reporting and veri fication of greenhouse gas emissions; (i ) authori ze the establishment of the Reduced E m i ssions f rom D ef orestat ion and Forest 2 30 Climate Change (Amendment) Degradation Registry and other secto r registries to feed into the National Carbon Registry; (c) insert ing inunediately aft er subsection <2)— (2A) The Cabinet Secretary shall appoint die Designated National A uthority for mark et mechanisms and any other mechanisms deriving fr om Art icle 6 of the Paris Agreement. (2B) The Designated National Authority appointed under subsection (2A) shall , in addition to international obligations, maintain to e National Carbon Registry established under section 23G. 7. Section 9 of to e principal Act is amended 2023N o . 9 to e fol lowing new subsections A m endm ent o f sec ti on 9 o f N o . 11 o f 20 16 . (a) in subsection (2) by deleting the words “and shall report to the Cabinet Secretary (b) in subsection (3) by deleting the word “Director” and substituting therefor the word “ Secretary” ; (c) in subsection (4) by deleting the word “Director” and substituting therefor the word “Secretary” ; (d) in subsection (5) by deleting the word “Director” and substituting therefor the word “Secretary” ; (e) in subsection (6) by deleting the word “Director” and substituting therefor the word “ Secretary” . 8. Section 10 of the principal Act is amended (a) in subsection (1) by deleting the word “Director” and substituting therefor the word “ Secretary” ; (b) in subsection (2) by deleting the word “Director” and substituting therefor the word “Secretary” . 9. Section 13 of the principal Act is amended— (a) in subsection (3) by— (i) deleting the word “county” appearing in paragraph (a) and substituting therefor the word “country” ; (ii) inserting the following new paragraphs immediately after paragraph (n) > » > A m endm ent o f sect i on 10 o f N o . 11 o f 20 16 . A m endm ent o f sect i on 13 o f N o . I I o f 20 16 . 2 3 1 20 23 Climate Change (Amendment) (o) to guide on the description of annual carbon budget for each of the years that make up the fi ve-year cycle; (p) to identify past, current and proj ected sector-based greenhouse gases emission profi le; (q) to set out proposed carbon credit proj ect pipeline based on the white l ist ; (r) to review and reconunend the level of compl iM ce with international cl imate commi tments; l(;s) to specifi cally identify , where appropriate, priority actions to explore carbon trading; (b) in subsection (5) by deleting paragraph (f) and substituting therefor the following new paragraph (f) national and international laws and policies relating to cl imate change and carbon markets. 10. Section 15 of the principal Act is amended in subsection (3) by deleting the word “ Council” and substituting therefor the words “Cabinet Secretary” . 11. Section 16 of the principal Act is amended in subsection (2) by deleting the word “ Council” and substituting therefor the words “Cabinet Secretary” . 12. The principal Act is amended by inserting the following new Part immediately aft er Part IV— P A R T I V A - R E G U L A T I O N O F C A R B O N M A R K E T S 23A . The policy direction on carbon markets provided pursuant to section 6(fa) , shall apply to all carbon markets and prescribe— (a) carbon reduction credits that aim to reduce em i ssions f rom cur rent sources through proj ects; (b) removal or sequestration credits that tak e carbon d iox i de out o f the atmosphere and either use or store it via af forestation , refore station . N o . 9 A m endm ent o f sect i on 15 o f N o . I I o f 20 16 . A m end m ent o f secti o n 16 o f N o . 11 o f 20 16 . Inser t io n o f new Part to N o . 11 o f 20 16 . C arb o n m ar k ets . 2 3 2 20 23Climate Change (Amendment) nature-based technology-based removal ; and (c) technologies and projects on the w hitel ist ; (d) emission credits not taken into account , including— (i) previously used emission credi ts; (i i) emission reductions that have been ach iev ed i n v io l at ion of human rights and without free prior informed consent; (i i i) emission reductions that have had signif icant negative social or environmental impact; (iv)emission reductions that were achieved before the T' January, 20 13; and (v) emission reductions that were registered before the 1st January , 20 13. (2) The Cabinet Secretary shall prescribe additional requirements on the regulation of carbon markets. 23B . T he trade in carbon m ark et shal l en su r e t h at (a) transactions in carbon trading as car r ied out under thi s A ct ai m towards a reduction of greenhouse gas emissions as per the prescribed carbon standards; (b) mitigation outcomes reported under the requirements of this Act shall be accounted f or in tonnes of carbon dioxide equivalent; (c) carbon offset proj ects emissions are kept out of the atmosphere for a reasonable length of time in N o . 9 sol ut ions o r T r ade i n c ar t>o n m arkets. 2 3 3 Climate Change (Amendment) accordance w ith the relevant carbon standards; and (d) emission reductions are carefully recorded and documented for every offset scheme, utilizing appropriate accounting terms, corresponding adjustments, and location of offset as required by the United Nations Framew ork Convention on C l imate Change and other standard bodies. 23C. (1) The participation in an initiative authorizing trade in carbon credits shal l be 2023 N o . 9 Parti cipation i n carbo n m ark ets . (a) as a result of a bilateral or multi lateral trading agreement; (b) as a result of trading with a private entity ; or (c) in a voluntary carbon market . (2) The Cabinet Secretary may fa) enter into a bilateral or multilateral agreement with another State Party to trade carbon for emission reductions and removal s; (b) with the approval of the Cabinet, enter into an agreement with a private entity to of fset carbon emi ssions; (c) with the approval of the Cabinet, enter into any agreement to trade in a carbon market establ ished or overseen by an internationally recognized entity that is approved by a recognized credible international body . (3) An agreement entered into under th i s Par t shal l aim to — (a) promote the mitigation of greenhouse gas emissions while fostering sustainable development; and 2 34 Climate Change (Amendment) 20 23N o . 9 f aci l i tate participation in the mitigation of greenhouse gas emissions by authorized public and private ent i t i es . (4) The Cabinet Secretary shall , in the national reporting mechanism to the United N ations Framew ork Convention on Cl imate Change, include any emission reduction resulting f rom agreements entered into under th i s sect ion . 23D. (1) Every carbon trading proj ect authorized under this Act shall be required to undergo an environmental and social impact assessment in accordance with the Env ir onm ental Coordination Act , 1999. (2) Notwithstanding subsection (1), reducing emissions from deforestation and forest degradation and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries proj ects shall be required to undergo a Reduced Emissions fr om Deforestation and Forest Degradation safeguard standards assessment . 23E^ (1) A project undertaken pursuant to this Act shd l specify the anticipated environmental , economic or social benefi ts of the proj ect. (2) For purposes of subsection (1), the benefi t s shal l i nc l ude — (a) removal of greenhouse gases fr om the atmosphere and avoidance of emission of greenhouse gases in order to meet Kenya’s international obligations; (b) incentives that promote offset projects; (c) increase of carbon abatement in a m anner that i s consi stent w i th (b) incentivise and Env i ronm ental impact asse ss m e m . N o . 8 of 1999 . M anagement and Pr ov i si on o f soci al and env ir onm ental benef i ts . 2 35 20 23 Climate Change (Amendment) protection of Kenya’s natural environment; (d) improved resil ience to the effects of climate change; or (e) achievement greenhouse gases emissions targets. (3) Every land-based proj ect undertaken pursuant to this Act shall be implemented through a community development agreement which shall outline the relationships and obligations of the proponents of the project in public and community land where the project is under development . (4) The National Government and the respective county government where the proj ect is situated shall oversee and monitor the negotiation of the community development agreement with proj ect proponents and the stakeholders. (5) A community development agreement shall include provisions on the fol lowing— N o . 9 of Kenya’s (a) the stakeholders of the project including the project proponents, the impacted communities, the N ati onal G overnm en t and the county government where the project is being undertaken; (b) the annual social contribution of the aggregate earnings of the previous year to the community, to be managed and disbursed for the benefit of the community; Prov i ded that — (i) in land-based projects, the contr i but ion shal l be at least forty per centum of the aggregate earnings; and 2 36 2023Climate Change (Amendment)N o . 9 (i i) in non-land-based proj ects, the contr ibut ion shal l be at least twenty-fi ve per centum of the aggregate earn ings; (c) the manner of engagement with local stakeholders, especially the impacted communities; (d) the sharing of the benefi ts from the carbon m ark ets and carbon cred i ts between the proj ect proponents and the impacted conununities; (e) the proposed socio-economic development around community priorities; and (f) the manner of the review or amendment of the agreement , which shall be at least every fi ve years . (6) A community development agreement entered into pursuant to this sect ion shal l be recorded i n the N ati onal Carbon Registry . (7) Every carbon project undertaken pursuant to this Act shall take into consideration and aim to improve the environmental , economic, social and cultural wellbeing of the community around the proj ect . (8) The national government and the respective county government where the proj ect is situated shall enforce the community rights negotiated under a conununity development agreement negotiated under section 23E. (9) The Cabinet Secretary may prescribe additional requirements relating to the formulation of the community development agreement . 2 37 2023 Climate Change (Amendment) 23F . The national and county govern ments shall , in compliance with intern ational obligation, undertake best practices regarding the share of proceeds and cancellation rates for overall global mitigation. 23G. (1) There is established a registry to be k now n as the N ational C arbon Registry . N o . 9 Share of proceeds and c ancel l at i on r a te s . Carbon Registry . (2) The Designated National Authority appointed under section 8(2A ) shal l be the custodian of the Registry . (3) The Registry established under this section shall include registers on the following— (a) the carbon credit proj ects and programmes implemented to reduce greenhouse gas emissions in Kenya; (b) the Reduced Emissions from D ef orestat ion and Forest Degradation Carbon; (c) authorisations granted for participation in any initiative, proj ect or programme under this A ct ; (d) the carbon budget and the greenhouse gas reduction units; (e) the amount of carbon credits issued or transferred by Kenya; (f) the amount of carbon credits issued to emission reduction projects and programs recognized by Kenya f rom a national greenhouse gas registry account; (g) the transfer of carbon credits and any carbon credits issued or recognized by Kenya from a national greenhouse gas registry account ; 2 3 8 2023Cl imate Change (Amendment)N o . 9 (h) a re cord of corresponding adjustments where applicable, with respect to carbon cres ts; (i) the cancellation of carbon credits and any other carbon credits issued or recognized by Kenya fr om a national greenhouse gases registry account ; and (j) any other carbon cre dits issued or recognized by the Kenya fr om a national greenhouse gases registry a c c o u n t . (4) The National Carbon Registry shall be accessible to the public. 23H. (1) Any dispute arising under a land-based project shall be subjected to the dispute resolution mechanism set out in the Community Development Agre ement in the f irst instance and be resolved within thirty days from the date the dispute is lodged. (2) Any dispute that is not land based and is not subjected to a community development agreement shall be resolved through Alternative Dispute Resolution in the f i r st i n stance . (3) Where the dispute under subsections (1) and (2) is not resolved within thirty days of submission, the dispute shal l be ref er red to the N at i onal E nv i ronm ental T r ibunal . 231. The Designated National Authority shall charge such fees as may be prescribed by the Cabinet Secretary in regulations for the proper administration of the A ct . 13. Section 24 of the principal Act is amended by deleting subsection (3). 14. Section 33 of the principal Act is amended by inserting the following new subsection inunediately af ter subsection (1)— Dispute reso lu t i on . F ees. A m endm ent o f sect i on 24 of N o . 11 of 20 16 . A m endm ent o f secti on 33 of N o . 11 of 20 16 . (1 A) A person who— 2 39 2023 Climate Change (Amendment) (a) willingly conducts unauthori zed trade in carbon credit ; (b) knowingly gives false or misleading information with respect to environmental or financial gains from the carbon market investment; (c) manipulates carbon credit measurements in order to claim addition measurements; (d) engages in money laundering through carbon trading; (e) knowingly sells carbon credits to unauthori zed entities; or (f) fails to maintain carbon records, commits an offence and is liable, on conviction, to a fine not exceeding fi ve hundred million shillings or t o impri sonment for a peri od not exceeding ten years or t o bo th . N o . 9 15. Section 35 of the pri ncipal Act is amended by— (a) renumberi ng the existing provision as subsection ( 1); and (b) inserting the following new subsection immediately after subsection (1)— (2) Sections 2, 3, 5 7, 10 and 15 of this Act, shall n o t apply, to entities that have existing carbon projects f or a peri od of one year. 16. Section 36 of the pri ncipal Act is amended in subsection (2) by inserting Ae following new paragraphs immediately after paragraph (b)— (ba) the regulation of carbon markets; (bb) the regulation of carbon trading; (be) the regulation of carbon registri es; and (bd) the regulation of non-market approaches; 17. The Schedule to the pri ncipal Act is amended by deleting the word “sixty” appeari ng in paragraph 1 (2) (e) and substituting therefor the words “ twenty-eight” . A m endm ent o f secti on 35 o f N o . 11 o f 20 16 . A m endm ent o f sect i on 36 o f N o . 11 o f 20 16 . A m endm ent o f Sc hedu le to N o . 1 1 o f 20 16 .