How a clean cooking pioneer combusted

Failed clean cooking pioneer Koko Networks raised $300mn on the grounds that 1.3mn Kenyan households used its stoves daily, saving African forests from being turned into charcoal and protecting users from smoke inhalation.

Its collapse this year has reverberated around global carbon markets, raising questions about Koko’s business model and the cookstoves market in general. It has also put in jeopardy the plans of companies, including airlines, to use the carbon credits they claim to offset their own emissions.

PwC, which took over Koko after it went into administration in February, is putting what remains of the business up for sale.

The company, which won backing from global commodity trader Vitol and $180mn in insurance cover from the World Bank’s Multilateral Investment Guarantee Agency, was ahead of rivals in rolling out its network of stoves fed by canisters of bioethanol cooking fuel made from plant sugars.

Among questions that will be asked, according to climate finance experts, is why Gold Standard, the Swiss-based certification and verification company, approved the methodologies Koko used for calculating carbon credits and why MIGA underwrote the scheme. MIGA declined to comment.

Koko distributed stoves at a discount of up to 85 per cent and fuel at half its cost or less. To recoup its losses, it needed to sell credits under the auspices of the UN’s 2015 Paris Agreement on climate change.

But Kenya’s government withheld the necessary approvals, despite a prior agreement, eventually plunging Koko’s finance model into disarray and the company into receivership.

To Koko’s advocates and backers, its collapse will damage Kenya’s environment and health outcomes and its reputation as an African green finance hub. To sceptics, it is a cautionary tale about the risks of using flawed carbon credit markets to fund real-world infrastructure.

To regain the $300mn invested in Kenya, Koko relied on a 2024 legally binding investment framework with Kenya’s government, parts of which were seen by the FT. This committed Kenya to discount from its own sovereign commitments to reduce emissions all of the 15mn certified carbon credits that Koko had generated since January 2021. Koko planned to sell the credits at upwards of $20 each.

Robert Ondhowe, a carbon markets development expert, said internal battles within the Kenya government had hampered the establishment of a functioning framework for such credit sales.

But there were also doubts among government officials and industry experts about the assumptions underlying Koko’s business model and the authenticity of the carbon credits it was generating, he said.

“There are credit originators who have learned how to game the system,” he said, adding that “where there is ambiguity in rules and regulations, the tendency has not been to err on the side of caution”.

David Ndii, President William Ruto’s economic adviser, said Koko’s model lacked transparency in a sector where the “veracity of cookstove credits” was itself in question.

Academics previously found that some types of credits from cookstoves were practically worthless. However, some doubts about the category were allayed this month when a UN oversight body announced that the first carbon credits it had approved were from a clean cookstoves project in Myanmar. Nigeria is poised to issue and sell credits also.

Trade minister Lee Kinyanjui said Kenya had no choice but to block Koko’s authorisation. The volumes the company was demanding, he said, would have consumed almost all of the credits that Kenya could have used to improve its own national emissions profile.

Koko declined to answer questions about its collapse.

After Koko wound up its operations, some were quick to blame Ruto’s government for breach of contract. A close supporter of Koko said the company had followed the rules during a complex period of transition and had put risk capital to work answering the vexed question of how to subsidise a shift to cleaner energy in poor countries.

However, several Koko rivals as well as some carbon market experts said the company was at fault. Instead of releasing actual figures for bioethanol sold, Koko had based its carbon credit claims on maximalist assumptions, risking damage to the wider reputation of the cookstove sector, they said.

Carbon rating agency BeZero assigned Koko an overall “B” rating indicating moderate likelihood of achieving one tonne of CO₂ reduction per credit. For its carbon accounting integrity it scored the lowest possible “D”.

Tom Price, a former US cookstove entrepreneur who worked in east Africa, said Kenya and other African governments were right to scrutinise the export of private companies’ carbon credits. “Letting Koko sell their credits would be like letting a florist sell limp flowers,” he said, adding that its collapse could restore integrity to the market.

Fuel for Koko’s stoves was distributed through a network of urban kiosks, allowing low-income customers to buy small amounts. Even critics praised the infrastructure but said the company relied on questionable data and an outsized role in Kenya’s emission-reduction plans.

Experts said the outdated methodology Koko used, approved by Gold Standard, had extrapolated data from customer surveys, which allowed it to inflate its carbon credits.

Gold Standard said “robust” reporting, monitoring and verification was a core requirement and credits were successfully issued “only after a project follows the full certification cycle”.

The Koko baseline assumptions included claims that nearly all of its customers were converted from cooking with non-renewable charcoal or wood. But in 2019, a household survey found fewer than half the people in the urban markets where it operates were using charcoal and fuelwood.

In Nairobi’s densely populated neighbourhood of Kangemi, Wilmar Minamu, a vendor, said Koko’s clients were fickle, abandoning ethanol when the price rose.

Some former buyers said they switched to Koko’s bioethanol from rival clean cooking fuels and not from charcoal. Customers also said there were frequent disruptions to ethanol supplies.

Koko claimed that an eye-catching 98 per cent of its stoves were in active use. But people familiar with the Kenyan market estimated that the numbers using Koko stoves regularly were under half those declared and that the amount of carbon reduced per household was a third or less than the roughly 5 tonnes Koko claimed.

With a more rigorous assessment of the customer base and its fuel consumption, the carbon credits Koko sought to monetise would have been as little as a tenth of those claimed, according to several experts.

The company has always insisted its methodology was accurate but has never made its fuel sales data public.

“If you had the fuel sales data you could have a very precise estimate of your carbon impact instead of these faulty estimates,” said Annelise Gill-Wiehl, a US academic who co-authored a 2024 critique published in Nature magazine that crashed the voluntary market for cookstove credits.

Unlike Koko, other companies had revised their methodology, using, for example, fuel metering, she said. “I think the lesson is, if you are going to succeed, you need to be playing by the new rules.”

The various parties to Koko’s collapse are now readying for a bruising lawsuit, according to Kenyan officials. Meanwhile, airlines must look elsewhere for an adequate supply of credits to buy and take off the market in 2027 and 2028.