CORSIA Market Adjusts to Koko Networks' Insolvency and Kenyan Authorization Standoff

CORSIA carbon markets digest the insolvency of Koko Networks after Kenya denies LoA. Analyze the impact on supply, pricing, and Article 6 authorizations.

By: AXL Media

Published: Mar 16, 2026, 6:21 AM EDT

Source: The information in this article was sourced from Fastmarkets

The Insolvency of a Carbon Giant

Koko Networks, once a cornerstone of the Kenyan voluntary carbon market, entered a formal insolvency process in early February 2026, with its UK arm following suit on February 19. The downfall was triggered by a protracted and ultimately unsuccessful negotiation with the Kenyan government over a Letter of Authorization (LoA). This document is the critical final step for credits to be tagged for the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) Phase 1. Without it, Koko’s credits lost the substantial premium associated with aviation compliance, rendering the company’s business model unsustainable under its current debt obligations.

Kenya’s Strategic Hesitation and NDC Constraints

The Kenyan government's refusal to grant the LoA has sparked intense debate over the role of host countries in the Article 6 era. Cabinet Secretary Lee Kinyanjui clarified that the volume of credits Koko sought was so vast that granting them would have effectively exhausted Kenya’s carbon inventory, preventing other local firms from accessing international markets. Central to this caution is Kenya’s Nationally Determined Contribution (NDC); officials are wary that authorizing too many exports (Corresponding Adjustments) could leave the country unable to meet its own 2030 climate targets. This "headroom" uncertainty remains a significant hurdle for large-scale carbon projects across the Global South.

Methodology Scrutiny: The fNRB Factor

Beyond sovereign risk, Koko’s collapse has highlighted technical disputes regarding the "fraction of Non-Renewable Biomass" (fNRB) used to calculate emission reductions. Koko utilized an fNRB of 0.93 under older CDM tools, a figure critics argued led to material over-crediting. Recent shifts toward stricter standards, such as the ICVCM’s Core Carbon Principles (CCPs), require the use of updated tools that often slash fNRB values to as low as 0.29. This transition significantly reduces the number of credits a single cookstove can generate, fundamentally altering the unit economics for developers like Koko and Burn.