Koko Networks, one of Kenya’s most prominent clean-cooking technology companies, has ceased operations and laid off its entire workforce after a protracted dispute with the government over carbon credit approvals effectively cut off a vital revenue stream.
The abrupt closure underscores the difficulties climate-focused startups can face when regulatory frameworks lag behind innovative business models.
Founded in 2013, Koko built its business around supplying bioethanol fuel and compatible cookstoves to low-income households at heavily subsidized rates, supported by the sale of carbon credits that arise when customers switch from more polluting fuels such as charcoal and kerosene to cleaner alternatives.
The subsidies helped keep fuel and stove costs low, making the technology affordable for many urban and rural families.
Relevant: Standard Chartered Leads $200M Article 6 Bond For Clean Cooking In Ghana
The government’s refusal to issue a Letter of Authorization (LoA), required to sell emissions credits on international markets, severed the company’s financial backbone, according to sources familiar with the matter.
Koko’s leadership determined that the company could not remain financially viable without the approval, following intense internal deliberations that preceded the decision to shut down, the sources were quoted as saying by Africa Sustainability Matters.
Under Article 6 of the Paris Agreement, a LoA is critical because it formally confirms a host country’s approval for an emissions reduction or removal to be transferred internationally, ensuring the credit can be used toward another party’s climate targets without risking double counting.
The collapse comes after a wave of regulatory delays and disputes tied to carbon credit ownership and access to compliance markets, spotlighting the fragile intersection of climate innovation and state policy.
While Koko’s technology had attracted widespread attention and investment, its reliance on carbon finance made it vulnerable when regulatory support failed to materialize.
The shutdown marks a setback for Kenya’s clean energy transition, which aimed to reduce reliance on polluting cooking fuels among millions of households, and raises questions about the security of climate finance mechanisms that depend on clear government authorization.
Read more: Singapore, UK, And Kenya Launch Coalition To Boost Carbon Markets
