In our previous newsflash, on the Climate Change Amendment Bill, 2023 (the Previous Draft Bill), we highlighted the the key provisions of the Previous Draft Bill that are essential for businesses to comprehend in their pursuit of carbon projects, including the development, structuring and financing of carbon transactions.
Following consultations and public participation, the Government of Kenya has published and introduced to Parliament an updated and somewhat improved Climate Change Amendment Bill, 2023 (the New Draft Bill).
This article highlights the key changes introduced by the New Draft Bill that were missing from the Previous Draft Bill:-
The New Draft Bill introduces a distinction between land-based projects and non-land-based projects. However, it does not define the terms land-based and non-land-based projects.
The New Draft Bill clarifies that a Community Development Agreement would only be required in the context of land-based projects.
The Previous Draft Bill had proposed an annual aggregate contribution of at least 25% of the aggregate earnings. The New Draft Bill now proposes an increase in the contribution for land-based projects to at least 40%. The share for non-land-based projects has been kept at the rate of at least 25%.
It is crucial to note that the New Draft Bill provides for the sharing of the benefits from the carbon markets and carbon credits between the project proponents and the impacted communities. However, it is not clear what component from the benefits would be taxable.
In view of the above, it is clear that despite the amendments to the Previous Draft Bill, there is still need for further improvement of the New Draft Bill, especially in providing clarity in what would constitute land-based projects and non-land-based projects.
On 16 August 2023, Parliament invited members to submit their comments on the New Draft Bill and our team at Africa Law Partners will keep you apprised of the developments in respect of the New Draft Bill.
For further information please contact Walid Khan, Benedict Nzioki or your relationship partner at Africa Law Partners.