NAIROBI, Kenya — Koko Networks, one of Kenya’s most prominent clean‑cooking startups, has abruptly ceased operations in Kenya and laid off its entire workforce after a regulatory dispute over carbon credit sales undermined its business model.
The Nairobi‑based company, which supplied bioethanol‑based cooking fuel and subsidised cookstoves to roughly 1.5 million low‑income households, announced the closure late last week as it became financially untenable to continue without revenues from carbon credit sales.
Carbon Credits at the Heart of the Collapse
Koko’s innovative model relied heavily on the sale of carbon credits, certificates earned by reducing carbon emissions when households switched from charcoal and kerosene to cleaner bioethanol, in compliance markets under the Paris Agreement.
These sales were critical in subsidising the cost of fuel and cookstoves for customers.
However, the Kenyan government failed to issue a key Letter of Authorization (LOA) that would permit Koko to sell these carbon credits internationally, a requirement of the regulatory framework introduced in 2024 that governs carbon markets in the country.
Without this authorisation, Koko could not monetise its credits and lost its primary revenue stream overnight.
A source familiar with the situation described intense internal discussions at Koko’s Nairobi offices before the decision to halt operations was made.
Staff were informed that the company would no longer be able to sustain its pricing model or continue operations without access to carbon credit revenues.
Impact on Jobs and Households
The shutdown affects approximately 700 direct employees, spanning engineers, operations teams, customer support and logistics staff.
Thousands more agents who operated distribution outlets and fuel refill points across the country have also lost income almost overnight.
For the millions of Kenyan households that adopted Koko’s ethanol fuel as an affordable and cleaner alternative to charcoal and kerosene, the closure presents immediate hardship. The company’s network of more than 3,000 automated fuel dispensers now sits idle, and many families face reverting to more polluting, expensive cooking methods.
MIGA Insurance and Potential Compensation Claim
Koko had secured a $179.6 million political risk insurance policy from the Multilateral Investment Guarantee Agency (MIGA), the political insurance arm of the World Bank Group, in March 2025, making it one of the first carbon‑linked political risk covers of its kind.
This policy is intended to protect investors if a host government frustrates or blocks a project’s operations.
With Kenya’s regulatory actions now classified as a breach of that agreement, Koko is expected to file a claim under the MIGA guarantee, arguing that the government’s refusal to issue the necessary authorisation constitutes a contractual violation.
If upheld, Kenyan taxpayers could be liable for **compensation valued at roughly Sh23.1 billion ($179.6 million).
Broader Implications
The collapse of Koko, once hailed as a success story of climate and development finance, has raised concerns about Kenya’s regulatory environment for climate‑dependent business models and could dampen investor confidence in green innovation.
Critics argue that the failure to support one of the country’s flagship clean energy ventures may undermine ongoing efforts to expand clean cooking solutions, reduce deforestation, and improve public health.
As the company navigates potential legal claims and its former customers adjust to a post‑Koko landscape, the government faces pressure to clarify its position on carbon markets and strike a balance between regulatory oversight and enabling sustainable business innovation.
