Wind power firm to donate Sh880 million from carbon credits to locals

Some of the wind turbines towering 30 metres at Sarima and the road network in Turkana. [Ali Abdi, Standard]

Lake Turkana Wind Power (LTWP) is set to benefit from the sale of 780,000 carbon credits it is holding.

With the minimum carbon offset price for wind per unit standing at $10 (Sh1,130), the farm will earn an estimated Sh880 million from the sale of the credits.

LTWP Chief Executive Phylip Leferink said they are looking to channel the first large chunk of revenue from the sale to the communities impacted by the project.

He said they are handing over the benefit of the carbon credits to Kenya Power, after which the government is supposed to reallocate the funds into the areas affected by the project.

“These areas will also include the transmission lines all the way from Suswa to the site,” Leferink told The Standard at the project site in Marsabit.

The wind farm, which was projected to earn up to Sh26 billion from the carbon markets during its life, is holding talks to monetise the credits.

“We want to discuss with Kenya Power how we are going to do this with the government because there might be a significant amount of money in there,” the CEO said.

A carbon credit is a tradable permit or certificate that provides the holder of the credit the right to emit one tonne of carbon dioxide or an equivalent of another greenhouse gas, says the Corporate Finance Institute on its website.

The main goal for the creation of carbon credits is the reduction of emissions of carbon dioxide and other greenhouse gases from industrial activities to reduce the effects of global warming.

Governments or regulatory authorities set the caps on greenhouse gas emissions but for some companies, the immediate reduction of the emission is not economically viable. Therefore, they can purchase carbon credits to comply with the emission cap.

The carbon credit market is promising to become a significant source of funding for development projects across the world.