By Racheal Nagawa | Senior Reporter, Business Express
Nairobi, Kenya – Koko Networks, the Kenyan clean-cooking startup widely recognized for its innovative bioethanol fuel distribution model, has ceased operations following a protracted regulatory impasse over carbon credit sales. The closure affects more than 700 employees and disrupts fuel supply to approximately 1.5 million households that relied on Koko’s products as a safer, low-emission alternative to kerosene and charcoal.
The company, founded in 2013, built its business around selling subsidized bioethanol fuel and low-cost cooking stoves, recovering costs through revenue from internationally certified carbon credits. These credits quantified reductions in carbon dioxide, methane, and black carbon emissions, with each credit representing roughly one metric ton of CO₂ equivalent avoided.
Koko’s innovative model hinged on participation in compliance-focused carbon markets, including the International Civil Aviation Organization (ICAO) emissions offsetting scheme. Prices in these regulated markets averaged around US$20 per credit, significantly higher than voluntary carbon market rates. However, participation required authorization from the Kenyan government under Article 6 of the Paris Agreement to issue transferable mitigation outcomes.
Regulatory Deadlock
Despite signing an investment framework agreement with the government in mid-2024, which was intended to enable such transactions, Koko never received the necessary letters of authorization. The refusal blocked access to international carbon markets, effectively cutting off the revenue stream that subsidized bioethanol at roughly half the prevailing market price.
“The regulatory impasse has made the company’s operations financially unsustainable,” sources familiar with the shutdown said. Staff were notified of the closure on Friday and instructed not to return to work. Koko did not release a public statement following the decision.
Impact on Clean Cooking and Climate Goals
The shutdown represents a significant setback for Kenya’s clean-cooking ambitions, which aim to reduce indoor air pollution and deforestation linked to traditional fuels. Koko operated over 3,000 automated fuel-dispensing machines nationwide, working with thousands of independent agents to reach low-income households.
The company’s model was considered a global benchmark for private-sector-led climate mitigation in emerging markets. It had raised more than US$100 million in debt and equity from commercial banks, climate-focused funds, and strategic investors including Microsoft’s Climate Innovation Fund. In 2025, the World Bank Group, through the Multilateral Investment Guarantee Agency (MIGA), issued nearly US$180 million in political risk insurance to support Koko’s expansion.
Lessons on Climate-Dependent Business Models
Analysts say Koko’s collapse highlights the vulnerability of climate-dependent ventures to regulatory shifts. While African governments increasingly explore carbon markets to generate climate finance, regulatory uncertainty—especially regarding authorization for international transfers—can undermine otherwise viable business models.
“Koko’s case underscores that even well-capitalized and internationally backed climate startups are highly sensitive to policy frameworks. Without clear government support, innovative climate solutions can fail despite strong demand and proven impact,” said an industry expert on renewable energy and carbon markets.
The closure also raises concerns about the livelihoods of employees and the hundreds of thousands of households that relied on Koko’s cleaner fuel alternatives, leaving many to revert to kerosene and charcoal—a step backward for Kenya’s environmental and public health objectives.
Koko Networks had been widely cited as a model for integrating climate finance into private-sector solutions in emerging markets. Its shutdown serves as a cautionary tale for startups and investors navigating the evolving carbon market landscape in Africa.
About the Author
Racheal Nagawa is the Senior Reporter at Business Express Magazine, covering energy, climate finance, and startup ecosystems in East Africa. She reports on innovation-driven solutions in clean energy, sustainability, and regulatory policy shaping Africa’s green economy. This content was originally published on SA varsity News.
