ITOCHU Announces Agreement with KOKO Networks, a Climate Technology Company Operating in Kenya, to Support the Generation of High Quality Carbon Credits

ITOCHU Corporation (Headquarters: Minato-ku, Tokyo; President and COO: Keita Ishii; hereinafter “ITOCHU”) announced today that it has signed an Emissions Reductions Purchase Agreement (ERPA) with KOKO Networks Limited (Headquarters: Kenya; CEO and Co-Founder: Gregory Murray; hereinafter “KOKO”).

KOKO harnesses carbon markets to drive energy transition and forest protection in Africa. KOKO operates a bioethanol cooking fuel utility that serves approximately one million households across eight cities in Kenya with low-cost renewable cooking fuel, as an alternative to deforestation-based charcoal. In 2021 KOKO was awarded the world’s leading emerging markets climate technology solution by FT / IFC Transformational Business Awards.

KOKO is a nine-year old technology company that was founded to solve the challenge of deforestation in Africa, which is driven primarily by charcoal cooking fuel. Customers use their smart canisters to access KOKO Fuel from a dense network of 2,500 high-tech KOKO Fuel ATMs located in convenience stores across urban Kenya. KOKO Fuel burns in modern 2-burner Cookers with a clean blue flame that is a similar experience to cooking with gas, but involving renewable bioethanol cooking fuel produced from sugar molasses. KOKO directly employs 2,000 staff across R&D, technology, manufacturing, utility operations and customer service, with their utility supporting the incomes of an additional 15,000 Kenyan families involved in the bioethanol supply chain. KOKO Cloud manages the flow of payments, fuel and data across the utility to ensure safety, quality and strong customer service.

Carbon emissions reduced by KOKO are audited in global compliance and voluntary carbon markets, and revenues from the sale of high-quality carbon credits are shared with Kenyan households in the form of significant discounts on KOKO Fuel, enabling the solution to be affordable by even the poorest household segments. KOKO has the strong regulatory support of the Government of Kenya, who have created customized regulations to enable this innovative new energy utility to be built in service of the Kenyan people. KOKO was selected as a “Lighthouse” project by the African Carbon Markets Initiative, recognizing the high integrity nature of their business.

In the GX-League (*1), going into full-scale operation in April, 2023, a carbon credit exchange market (GX-ETS) is in a pilot phase, in which the participating companies set and disclose the emission reduction goal voluntarily. In case the domestic Scope1 emission reduction goal is not met, utilization of eligible carbon credits to offset is one of the significant means to achieve emission reduction goal. Recently, “integrity” of carbon credits used for offsetting is getting more and more important. Qualitative characteristics of credits such as positive impact on biodiversity and local communities, have become important factors to assess the integrity of carbon credit, not to mention the suitability of the project’s operation and monitoring. When using carbon credits to achieve the NDC (Nationally Determined Contributions) target defined in Paris Agreement, Corresponding Adjustment (*2) is necessary in order to prevent double counting. It is said that correspondingly adjusted carbon credits are likely to be GX-ETS eligible.

ITOCHU has become a financier of KOKO to support the expansion of its business in Kenya, and will jointly market a portion of KOKO’s credits. Making use of ITOCHU’s global network of customers in a wide range of industries, it will contribute to the decarbonization of society and clients by supporting carbon credit trading particularly in Japan and other Asian countries

At the same time, Mizuho Bank, Ltd. (Headquarters: Chiyoda-ku, Tokyo; President & CEO: Masahiko Kato; hereinafter “Mizuho Bank”) concluded a Memorandum of Understanding with KOKO to support the marketing of KOKO credits to Mizuho’s client base. Hereafter, KOKO, Mizuho Bank, and ITOCHU will further discuss the possible collaboration.

Through these efforts, ITOCHU will steadily carry out the basic policy in its medium-term management plan, “realizing business transformation by shifting to a market-oriented perspective” and “enhancing our contribution to and engagement with the SDGs through business activities.”