MethodologyContact usSupportLogin
Koko’s Kenya operations were placed into an insolvency process in the country on Sunday February 1, while Koko Networks UK was placed into administration on Thursday February 19.
The LoA was the last step required for credits from the project to be eligible for CORSIA Phase 1 (CP1). Eligible spot credits for CP1 reached a high of $23.10 per tonne of CO2 equivalent (tCO2e) in October 2025 but have since steadily fallen as increased and diversified supply has come to market, dropping to $15.90 per tCO2e in the week to Wednesday March 4.
Koko had been in discussions with the Kenyan government throughout 2025 after signing an Investment Framework Agreement (IFA) in 2024, with some initial market expectations that the project could have received an LoA early in 2025. Continual delays started to dampen market optimism as 2025 progressed, however. By September, sources noted that the LoA was going through internal processes with government officials and “could be concluded in the fourth quarter.” But by late September and early October, expectations of eligible supply from the project in 2025 had all but dissipated.
This uncertainty and delay led to some who held credits looking to lower their exposure as the year went on, while others continued to hold their positions.
Spot credits from the project had been offered at $16 per tCO2e at the start of 2025 before dropping to $11.50-13.50 per tCO2e during the second quarter, with trades heard toward the lower end of that range.
Forward offers were reported at $18-20 per tCO2e in the second half of the year, for delivery upon CORSIA Phase 1 tagging, and through a conditional offtake. By December, however, offers for credits from the project with “no conditions” were reported at $5 per tCO2e, with offers at $10 per tCO2e for the same credits but with “best efforts” at gaining CORSIA Phase 1 tags.
Other cookstove developers with Kenya operations pivoted away from attempting to secure LoAs and CORSIA eligibility, with some instead looking toward achieving the Integrity Council of the Voluntary Carbon Market’s (ICVCM) Core Carbon Principles (CCPs) accreditation. Cookstove developer Burn stated last year that they believed it was unlikely the Kenyan government would support biomass cookstoves for authorizations, so decided to go down the CCP route rather than CORSIA.
CCP-tagged credits traded at around $15-18 per tCO2e in the fourth quarter of 2025, and a significant premium to the sub-$3 per tCO2e that was seen for some older cookstove credits issued under older methodologies not aligned with the ICVCM’s CCPs.
The situation came to a head in the last few days of January as it became clear the government was not going to grant the LoA to Koko, forcing the developer to halt operations and enter administration.
In the following days, there was much finger-pointing and blame assigned as the market attempted to digest the developments and what they mean for CORSIA, Article 6 trading and the wider carbon markets.
The Kenyan President’s economic adviser David Ndii said in a post on X on February 2 that “Koko’s case is uniquely multidimensional. The Paris Agreement itself, the veracity of cookstove carbon credits, our investor-unfriendly NDC regime and carbon market regulations, transparency of Koko’s business model, diplomatic meddling…”, assigning blame across the board.
Lee Kinyanjui, Kenya’s cabinet secretary for investments, trade and industry, then said on Wednesday February 4 that part of the reason for Koko not receiving an LoA was down to the volume of credits they were attempting to claim and what that would mean for Kenya’s carbon inventory and other companies wanting to access the Article 6 markets.
Kinyanjui stated that if Koko had been granted LoAs for all the volumes it was asking for “no other company in Kenya would have been able to claim” and emphasized that any decision should not be looked at in terms of just one company as “what would you tell the 10, 20 other companies that are also eligible?”.
Other market participants have described the situation as “lose, lose” with no winners on any side with the project developer, investors, credit holders losing out on potential credit sales into CORSIA, while the protracted process raised questions over the ability to get authorizations through the Kenyan government.
Holders of the credits have so far mostly resisted looking to panic sell into the market, instead holding on to them as they look for further clarity. Most market participants expect current credits from Koko to fetch “legacy cookstove” price levels of a few dollars.
There were also questions around buyer appetite for such credits where the developer had gone into administration, despite the carbon emission reductions having already happened and been verified and not been reversed.
Looming behind Kenya’s hesitation in granting an LoA was its Nationally Determined Contribution (NDC). Any authorizations and subsequent corresponding adjustments would have to be deducted from its national carbon inventory and could have potentially affected its ability to meet its NDC.
NDC targets run in five-year increments, with the current set covering to 2030.
Many countries are still wrestling with legislating their own carbon market frameworks and accounting and are wary about promising volumes for export that could make them miss their 2030 targets.
Market sources last year had indicated that Kenya could potentially have a headroom of around 30 million tCO2e during the current NDC period, for which it could have granted LoAs to credits for export. However, they noted that there was currently a lot of uncertainty attached to any figure.
In a case where a country overpromises on its authorizations and corresponding adjustments, it could potentially lead to a government either having to revoke the authorization – which would cause market uncertainty and caution over any further authorizations granted – or the country itself could be forced into the Article 6 market to secure eligible credits to cover the shortfall.
Despite the setback with Koko, Kenya is still pressing ahead with the operationalization of its carbon market framework, with it launching its National Carbon Registry at the end of February.
The registry will track the registration, credits, authorizations and processes of carbon projects in the country and points to the country still looking to engage with Article 6 authorizations and markets.
At the launch of the registry, Dr Pacifica Ogola, director of climate change directorate, of the government of Kenya, said that the country is in the process of facilitating research on carbon markets, including having marginal abatement cost curves for different project types. This will then allow Kenya to create a whitelist of project types it could grant LoAs to, with it not wanting to do this without knowing the cost implications.
At the same time, other projects in the country have continued down the path of attempting to secure authorizations. In mid-January cookstove developer M-Gas received a Letter of Approval from the Kenyan government, which is the step required before an LoA can be granted.
Another aspect affecting Koko as well as other cookstove projects is how their fraction of non-renewable biomass (fNRB) is calculated. The figure is key for calculating the carbon emission reductions the project achieves, with higher numbers granting a greater number of credits.
In its latest monitoring report, Koko was using an fNRB rating of 0.93, which was calculated using CDM TOOL 30 and national-level forestry data.
The cookstoves market has gone through a lot of scrutiny over the past couple of years, including accusations of over-crediting. In October 2024, Verra canceled over 5 million tCO2e of credits issued by C-Quest Capital projects following a review into over-crediting allegations.
Subsequently there have been updates to cookstove methodologies, while the ICVCM only approved Verra’s newer VM0050 methodology as well as broad caveats across approved methodologies including how fNRBs are calculated. This included having to use the updated TOOL 33 rather than TOOL 30, which would typically give lower values.
Ratings agency BeZero had assigned Koko’s project a “B” rating, meaning there was a low likelihood that each credit achieved 1 tonne of CO2e avoided. Material over-crediting risk was flagged and, in particular, a substantially overstated fNRB despite the project scoring well for additionality and permanence.
Market participants had told Fastmarkets that the high fNRB used by the Koko project could have been one of the factors in a cautious LoA approach from Kenya. Other market participants also indicated that host countries could be cautious of authorizing cookstove projects with high fNRB values as this could lead to a higher calculated deforestation rate in the country.
Currently, there is only one cookstove project in Kenya that has issued CCP-tagged credits. In order to achieve this label, it had to use the updated TOOL 33, which gave an fNRB of 0.29 from its previous 0.84. This, in turn, led to a significant reduction in the emissions reductions achieved by the project from 2.27 tCO2e per stove per year to just 0.88 tCO2e per stove per year.
In March 2025, the World Bank’s Multi-Lateral Investment Guarantee Agency (MIGA) issued a guarantee of $179.6 million to cover Koko’s Kenya operations against risks of expropriation, war and civil disturbance, transfer restriction, and breach of contract for up to 15 years.
At the time, MIGA stated the breach of contract coverage protected Koko’s carbon credits against the risk of host governments failing to uphold their legally binding commitments, including the provision of corresponding adjustments.
The guarantee was underpinned by an IFA signed between Koko and the Kenyan government in June 2024. The Framework set out obligations for both sides, including the granting of corresponding adjustments for credits from the project from vintage 2021 onward subject to the meeting of regulatory requirements.
Any claim under the guarantee is likely to center on the wording of the agreement, with multiple sources reporting that parts of the IFA were “blurry”, “open to interpretation” and relied heavily on “best efforts”.
Others have posited that the outcome could involve other scenarios such as the Kenyan government granting authorizations to a portion of the current credits. The possibility of this was, however, mostly viewed as small by the wider market.
Under Fastmarkets Carbon Analytics base scenario, just over 13 million tCO2e of supply from the project was expected during Phase 1, rising up to around 20 million tCO2e in a high-supply scenario, equating to up to 5-10% of expected supply.
But despite this “loss” of upcoming supply, the market has actually seen prices drop sharply over the past month from $19 per tCO2e at the end of January to $15.90 per tCO2e at the start of March.
The market instead reacted more to new supply entering the market, with total supply rising from around 17.5 million tCO2e from three projects at the end of January to around 32 million tCO2e from 10 projects by the start of March.
The slow emergence of demand from airlines has also weighed on pricing, with the market waiting for clearer demand signals given most airlines so far seem to be backloading purchases toward the end of the current compliance cycle.
Fastmarkets CORSIA provides structured market intelligence for regulated aviation decarbonization. Our all in one digital platform integrates benchmark pricing, airline demand modelling, and supply forecasts to quantify carbon compliance costs. Discover more.