Report On Consideration Of Sessional Paper No. 5 Of 2024 On The National Green Fiscal Incentives Policy Framework

DATE:

3 0 SEP 2025

REPUBLICOFKENYA THENATIONALASSEMBLY

THIRTEENTHPARLIAMENT-FOURTHSESSION-2025

DIRECTORATEOFDEPARTMENTALCOMMITTEES

DEPARTMENTALCOMMITTEEONENVIRONMENT,FORESTRYANDMINING

REPORTON

CONSIDERATIONOFSESSIONALPAPERNO.5OF2024

ON

THENATIONALGREENFISCALINCENTIVESPOLICYFRAMEWORK

NATIONALASSEMBLY RECEIVED

3 0 SEP 2025

SPEAKER'SOFFICE P.O.B0X 41842, NAIROB1.

DIRECTORATEOFDEPARTMENTALCOMMITTEES, CLERK'SCHAMBERS, PARLIAMENTBUILDINGS, NAIROBI.

SEPTEMBER,2025

TABLEOFCONTENTS

| LISTOFABBREVIATIONSANDACRONYMS. 4 | LISTOFABBREVIATIONSANDACRONYMS. 4 | LISTOFABBREVIATIONSANDACRONYMS. 4 | |---------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------| | LISTOFANNEXURES.. | LISTOFANNEXURES.. | 5 | | CHAIRPERSON'SFOREWORD. | CHAIRPERSON'SFOREWORD. | | | PARTONE.. | PARTONE.. | 6 | | 1.0 | PREFACE. | 6 | | 1.1 | ESTABLISHMENTOFTHECOMMITTEE | .6 | | 1.2 | MANDATEOFTHECOMMITTEE | .6 | | 1.3 | COMMITTEEMEMBERSHIP.. | .7 | | 1.4 | COMMITTEESECRETARIAT. | .8 | | PARTTWO.. | PARTTWO.. | 9 | | 2.0 CONSIDERATIONOFSESSIONALPAPERNO.5OF2024ONTHENATIONALGREENFISCAL INCENTIVESPOLICYFRAMEWORK.. 9 | 2.0 CONSIDERATIONOFSESSIONALPAPERNO.5OF2024ONTHENATIONALGREENFISCAL INCENTIVESPOLICYFRAMEWORK.. 9 | 2.0 CONSIDERATIONOFSESSIONALPAPERNO.5OF2024ONTHENATIONALGREENFISCAL INCENTIVESPOLICYFRAMEWORK.. 9 | | 2.1 | BACKGROUNDINFORMATION.. | .9 | | 2.2 | POLICYGOALSANDGUIDINGPRINCIPLES | .9 | | 2.3 THEMATICPOLICYAREASINTHENATIONALGREENFISCALINCENTIVESPOLICYFRAMEWORK. ..1.0 | 2.3 THEMATICPOLICYAREASINTHENATIONALGREENFISCALINCENTIVESPOLICYFRAMEWORK. ..1.0 | 2.3 THEMATICPOLICYAREASINTHENATIONALGREENFISCALINCENTIVESPOLICYFRAMEWORK. ..1.0 | | 2.3.1 | Disaster risk management... | ...10 | | 2.3.2 | Water and theblueeconomy | ..11 | | 2.3.3 | Health and sanitation... | 12 | | 2.3.4 | Agriculture,Food,and NutritionSecurity | ..13 | | 2.3.5 | Forestry,wildlifeand tourism. | .14 | | 2.3.6 | Human settlements and infrastructure. | .14 | | 2.3.7 | RenewableEnergy..... | .15 | | 2.3.8 | Cleancooking.... | ..15 | | 2.3.9 | Manufacturing | .16 | | 2.3.10 | Transport. | .16 | | 2.3.11 | WasteManagement... | .16 | | 2.2.2 | Enhancedgreen financial intermediation actions: | ..17 | | PARTFOUR.. | PARTFOUR.. | 18 | | 4.0 PUBLICPARTICIPATION/STAKEHOLDERSCONSULTATION. | 4.0 PUBLICPARTICIPATION/STAKEHOLDERSCONSULTATION. | 18 | | 4.1SUBMISSIONSBYTHENATIONALTREASURY | 4.1SUBMISSIONSBYTHENATIONALTREASURY | ..18 | | | | ...20 | | 4.3SUBMISSIONSBYTHESTATEDEPARTMENTFORFORESTRY | 4.3SUBMISSIONSBYTHESTATEDEPARTMENTFORFORESTRY | ..20 | | 4.4SUBMISSIONBYTHEATTORNEYGENERAL | 4.4SUBMISSIONBYTHEATTORNEYGENERAL | ...23 | | PARTFIVE.. | PARTFIVE.. | 24 | | | COMMITTEEOBSERVATIONS | 24 | | PARTSIX... 25 | COMMITTEERECOMMENDATION. | 25 |

LISTOFABBREVIATIONSANDACRONYMS

CIDPs

CountyIntegrated DevelopmentPlans

FLLoCA

FinancingLocally-Led ClimateAction

GFIPF

GreenFiscal IncentivesPolicyFramework

GHG

Greenhouse Gases

KUP

KenyaUnionParty

MSMEs

Micro,Small and MediumEnterprises

MTPs

Medium-TermPlans

NCCAPs

National ClimateChangeActionPlans

NDC

NationallyDetermined Contribution

ODM

OrangeDemocraticMovement

PES

Paymentfor ecosystemservices

PPP

Polluter Pays Principle

UDA

UnitedDemocraticAlliance

UPIA

United Party of Independent Alliance

WDP

Wiper DemocraticParty

LISTOFANNEXURES

1. Report adoption Schedule 2. 2.Minutes 3. 3.Copy of the Newspaper Advertisement onPublicParticipation 4. 4.Letterinvitingstakeholdersformeetingswith theCommittee 5. 5.Stakeholder submissions

CHAIRPERSON'SFOREWORD

The SessionalPaper No.5 of 2024 on the National GreenFiscal Incentives Policy Framework was laid on the Table of the House by the Leader of the Majority Party on 6ih November 2024 and thercafter stood committed to theDepartmental Committee on Environment,Forest and Mining.

The Paper seeks to steer Kenya's economy onto a desired low-carbon, climate-resilient green development pathway through a variety of fiscal and economic mechanisms.

The Paper contains five chapters. Chapter One gives a background on the threats posed by climate and other environmental challenges, and Chapter Two highlights the policy goals and the guiding principles underpinning the policy. Chapter three provides the situational analysis of the various sectors, including disaster risk management, water and the blue economy, health and sanitation, food, agriculture, electricity, clean cooking, manufacturing, transport and waste management. Chapter four outlines a series of green fiscal policy actions of particular interest to the government of Kenya. Lastly, Chapter Fivc contains a policy implementation matrixwhich gives the policy/fiscalaction,key performanceindicators,and lead actors.

Following the placement of advertisements in the print media on 6"h December 2024, secking public and stakeholder views on the Sessional Paper pursuant to Article I18(1) (b) of the Constitution and Standing Order 127(3).the Committee didnot receive any memorandum.

The Committee also invited Ministries, Department Agencies (MDAs) vide letters, REF: NA/DDC/ EF&M/2025/41, REF: NA/DDC/ EF&M/2025/42 dated 30 July 2025, REF:NA/DDC/ EF&M/2025/46, dated 29th July 2025, for a mceting. The Committee reccived submissions from the followingMDAs:

• i) The National Treasury.
• i) Ministry of Environment,Forestry and Climate Change.

3. iv) The Attorney General. 4. iii) The State Department for Forestry.

The Committee, having considered the Sessional Paper No. 5 of 2024 on the National Green Fiscal Incentives PolicyFramework,unanimously resolved that itbe adopted.

The Committee is grateful to the Offices of the Speaker and the Clerk of the National Assembly for the logistical and technical support accorded to it during its sittings. Finally, I wish to express my appreciation to the HonorableMembers of the Committee and Secretariat who made useful contributions towards the consideration andproductionofthisreport.

Onbehalf of the Departmental Committee on Environment,Forestry and Mining and pursuant to provisions of Standing Order 127 (4), it is my pleasure and honour to present to this House the Report of the Committee on its consideration of the Sessional Paper No. 5 of 2024 on the National Green Fiscal IncentivesPolicyFramework.

HON.VINCENTMUSYOKAMUSAU,CBS,MP CHAIRPERSON,DEPARTMENTALCOMMITTEEONENVIRONMENT,FORESTRYAND MINING

1.0PREFACE

1.1 ESTABLISHMENTOFTHECOMMITTEE

1. TheDepartmental Committee on Environment,Forestry andMiningis one ofthe twentyDepartmental Committees of the National Assembly established under Standing Order 216,whose mandate pursuant totheStandingOrder216(5)is asfollows:

• i. Toinvestigate,inquire into,and report on all matters relating to the mandate, management,activities,administration,operationsandestimatesoftheassignedministries anddepartments;
• ii. Tostudy theprogramme and policy objectivesofMinistries and departments andthe effectivenessoftheirimplementation;
• iii. Ona quarterlybasis,monitor and report on theimplementationof the national budget in respectofitsmandate;
• iv. Tostudyandreviewallthelegislationreferredtoit;
• V. Tostudy,assessandanalysetherelativesuccessoftheMinistriesanddepartmentsas measuredbytheresultsobtainedascomparedwiththeirstatedobjectives;
• vi. Toinvestigateand inquireinto allmattersrelatingtotheassigned Ministries and departments as they may deem necessary, and as may be referred to them by the House;
• vii. Tovet andreport on all appointmentswheretheConstitution or any lawrequires the National Assembly to approve,except those under Standing Order 204 (Committee on appointments);
• viii. Toexaminetreaties,agreementsandconventions;
• ix. To make reports and recommendations to the House as often as possible,including recommendationofproposedlegislation;
• x. ToconsiderreportsofCommissionsandIndependentOfficessubmitted totheHouse pursuanttotheprovisionsofArticle254oftheConstitution;and
• xi. To examine any questionsraised byMemberson amatterwithinits mandate.

1.2 MANDATEOFTHECOMMITTEE

• 2.In accordance with the Second Schedule to the Standing Orders, the Committee is mandated to consider matters related to climate change, environment management and conservation, forestry, mining and natural resources,pollution and waste management.

3. In executing its mandate, the Committee oversees the Ministry of Environment, Climate Change and Forestry and theStateDepartmentforMining.

PARTONE

1.3 COMMITTEEMEMBERSHIP

• 4.The Departmental Committee on Environment, Forestry and Mining was constituted by the House on 27h October 2022 and on 5th March 2025 and comprises the following Members:

Chairperson

Hon.(Eng.) Vincent Musyoka Musau, MP MwalaConstituency

UDA Party

Vice-Chairperson

Hon.Charles Kamuren,MP BaringoSouthConstituency

UDA Party

Members

Hon.Mbalu JessicaNdukuKiko,CBS,MP Kibwezi East Constituency

Hlon.MohamedAliMohamed,MP Nyali Constituency UDA Party

WDPParty

Hon. Mwanyanje Gertrude Mbeyu, MP Kilifi County

Hon.Masito Fatuma Hamisi.MP Kwale County ODM Party

ODM Party

Hon.Hiribae Said Buya, MP Galole Constituency

Hon. Titus Lotee, MP Kacheliba Constituency

ODM Party

KUPParty

Hon.Salim Feisal Bader,MP

Hon.Mohamed Tubi Bidu,MP

Msambweni Constituency UDA Party

IsioloSouth Constituency Jubilee Party

Hon.Emathe Joseph Namuar,MP

Hon.Yakub AdowKuno,MP Bura Constituency UPIA Party

Turkana Central Constituency UDA Party

Hon. Joseph Wainaina Iraya, MP Nominated UDA Party

Hon. Kemei Beatrice Chepngeno, MP Kericho County UDA Party

Hon. Charity Kathambi Chepkwony, MP Njoro Constituency UDA Party

1.4 COMMITTEESECRETARIAT

• 5.The Committee isfacilitated by the following staff:

Ms.Hellen Ekadeli

Senior ClerkAssistant/HeadofSecretariat

Ms.MercyWanyonyi Senior Legal Counsel

Mr.Hamdi Hassan Mohamed Clerk Assistant II

Dr. Joseph Kuria Research Officer II

Ms.Nancy Chamunga Fiscal Analyst II

Mr. Stephen Otieno SeniorSergeant-At-Arms

.Mr. Kevin Obilo Media Relations OfficerIII

Mr. Eric Ogola

PublicCommunicationsOfficerII

PARTTWO

2.0CONSIDERATIONOFSESSIONALPAPERNO.5OF2024ONTHENATIONALGREEN FISCALINCENTIVESPOLICYFRAMEWORK

2.1 BACKGROUNDINFORMATION

6. Kenya has made significant progress in moving toward a green and blue development pathway, as sustainable natural resource utilization, including marine and aquatic resources, is cmbedded in the Constitution. The Green economy has been mainstreamed in the MTPs and County Integratcd DevelopmentPlans(CIDPs). 7. Under the Climate Change Act 2016, the government is required to develop five-year NCCAPs to guidethemainstreamingof adaptation andmitigation actions into thesectorfunctions of thenational and county governments. The NCCAP, covering the period 2018 to 2022, identifies a series of actions for government and other stakeholders,with a particular focus on adaptation.The NCCA,covering 2023 to 2027, has the main goal of promoting Kcnya's sustainable development by providing mechanisms and measures to achieve low-carbon, climate-resilient development. The Action Plan identifies the following eight priority areas, where actions and targeted measures nced to be implemented: disastcr risk management; food and nutrition sccurity; water. fisheries and blue economy;forestry,wildlifeand tourism:health,sanitation and human settlemcnts:manufacturing: energy and transport;children andyouth. 8. The National Policy on Climate Finance (2018), provided a clear direction on mechanisms for enhanced mobilization of climate finance from all sources: private. public. multilateral Agencies. bilateral, philanthropic, etc., to finance Kenya's updated NDC and NCCAPs. The policy recommended the development of green fiscal incentivepolicies to catalyze theprivate sector tofinance the transition toalow-carbonandclimate-resilientdevelopmentpath. 9. There is a range of further specific policies that provide for green growth and sustainable natural resource management,including theEnvironmental Management and CoordinationAct,1999 and the Sustainable Waste Management Policy and Sustainable Waste Management Act, 2022.

2.2 POLICYGOALSANDGUIDINGPRINCIPLES

10. The goal of this policy is to identify and prioritize the implementation of a coherent suite of green fiscal actions that will enable Kenya to exploit the opportunities for accelerating the transition to a low-emissions development pathway while enhancing climate resilience and ensuring environmental sustainability. 2. 11.The specific objectives of thepolicy are to: 3. i)Provide a framework for fiscal incentives to attract private sector investment into a low-carbon emission,climate-resilient and environmentally sustainableeconomy. 4. i)Direct government planning, budgeting and spending/procurement toward green production andconsumption. 5. ii) Provide a framework for generating additional revenue streams for the government. 12. In seeking to achieve this goal, nine principles have informed the development of the policy to date andwillguidetheimplementationofthespecific actionsthispolicyframeworkidentifies:

• D Predictability:Thepolicywill providegreater certaintyingovernment policy to encourage higher private sector investment in green growth. Sunset clauses for phasing out incentive schemeswill be developed toprovidecertaintyfor theinvestors.
• ii) Cost-effectiveness: The policy will promote fiscal measures that maximize value for money while ensuring sustainable growth.
• iii) Polluter-pays: The policy will provide ways of allocating the costs of pollution prevention and control to polluters to encourage the rational use of scarce environmental resources by evoking thePolluterPaysPrinciple (PPP).
• iv) Coherence: The individual actions developed under this policy will be additional. There will be a focus on both ensuring that all policies are aligned to achieve the same objective and on
• Consultative: The policy and its individual actions are developed in a consultative manner, drawing on the full range of expertise within Kenya and internationally, allowing those who will bebothpositively and negatively affected bypotential changes to express their perspective
• vi)Inclusiveness:Thepolicy and its actionswillpromote theparticipation ofprivate investors and communities, including small-,medium- and large-scale enterprises. This will, in turn, support thegovernment's employment andwealth-creationinitiatives.Thisis consistentwith theBETA,which laysemphasisonleavingno onebehind.
• vii) Transparency and accountability: Spending on green fiscal policies and any revenues raised will bemanagedinlinewith theprovisions oftheConstitutionofKenya and thePublicFinance Management (PFM) Act (2012) on sound public expenditure management.
• viii) Equity:Thepolicy and itsindividual actionswillpromotereallocation andredistribution of resources while taking cognizance of the needs ofthe most vulnerable sectors and members ofsociety.
• ix) Sustainability: The Policy will provide an opportunity to meet economic, environmental and social needs of the present without compromising the ability of future generations to meet their ownneeds.

2.3 THEMATICPOLICYAREASINTHENATIONALGREENFISCALINCENTIVES POLICYFRAMEWORK

• 13.Thepolicy areas in theframework include:Disaster risk management;Water and the blue economy; Health and sanitation; Food, agriculture and nutrition security; Forests, wildlife and tourism; Human settlements and infrastructure;Electricity;Clean cooking;Manufacturing;Transport and Waste management.

14. The following are policy actions in the eleven (11) sectors.

2.3.1DisasterRiskManagement

15. The national and county governments will pursue the following actions to reduce the devastating impact of climate-related disasters inKenya. 2. i)Flood control measures: To address the problem of perennial floods and related risks, thegovernmentwillputinplacemeasurestoincreasefunding and strategically implement preventative resilience measures for flood control projects such as dikes, dams,catchmentandriparianreserves. 3. i)Promote crop and livestock insurance:To cushion farmers from loss of crops and livestock,the government,in collaboration with insurance providers,will put in place

measures to scale up climate-oriented insurance programs. This will include a consideration ofwhether toprovide additionalsubsidies toreduce thecost ofinsurance for farmers without discouraging appropriate risk-reduction behavior. It vill also include optionsfor thedesign ofinnovativeweather-based insuranceproducts.Thegovernment will also consider options for increasing awareness,education and training around the role andvalue of crop and livestock insurance,especially in the provision of agricultural extensionservices at thecountylevel.

• iii)Disaster risk financing: To ensure that it has sufficient funds to respond to inevitable disasters,the government will promote the use of innovative disaster risk-financing instruments like catastrophe (CAT) bonds,risk pools and contingency bonds as well as sovereign and subnational level disaster management funds.This vill be complemented by the Kenya Sovereign GreenBond Framework,which provides a clear set of protocols foridentifyingt theresponsibilitiesofdifferent stakeholdersinrelationtotheuseofsuch financing in the event of a disaster.
• iv) Climate information services:To enhance climate information services,the national and county governments will increase funding for meteorological services and Early Warning Systems (EWS) and climate information systems,including the dissemination ofweather information,andprovision of tax incentivesfor earlywarningequipment.
• Compensation fund for climate impacts:To cushion vulnerable and marginalized communities from the effects of extreme weather and climate-related events.the government will increasefunding for resilience-building and safety net programs.

2.3.2Waterand theBlueEconomy

16. To both reduce the risks that climate change poses to the country's water resources and to cxploit its huge blue economy potential, the national and county governments will undertake the following actions. 2. Enhance water harvesting and storage: To address water shortages,the national and countygovernmentswill implementfiscal measuresto enhance acquisition,affordability and access ofequipmentusedforwater harvesting and storage including roof catchment, water storage tanks,ensure strict quality controls on water storage tanks,construction of underground tanks,dikes and gabions in flood-prone areas. 3. Promote water use efficiency:To ensure sustainable use of the availablewater resources, the national and county governments will institute fiscal measures for innovations and equipment that promote water saving, efficient use, and industrial wastewater recycling and treatment. The governments will also explore the current system of water charging, with the intention of developing a set of water tariffs that provide the right incentives for wateruseefficiency. 4. iii) Elimination of invasive species: The national and county governments will support research,technology and innovationsin the sustainable management ofinvasive species suchaswaterhyacinth. 5. iv)Promote sustainable fishing and restoration of coastal and freshwater ccosystems: To address thechallenge caused byuncontrolled andunsustainablefishing,thegovernment will impose tax measures on large-scale fishing companies and trawlers. Additionally, the government will introduce fishing quotas to establish quantitative upper limits for fishing catches, with quota rights either being non-tradable or tradable. In addition, along,the government willput inplacefiscalmeasuresfor therestoration of shallowcoastalwater ecosystems,such as mangroves,tidal marshes and seagrass beds.Second, the government

willpromote sustainablefishing along theKenyancoast.Quotaswould establish quantitative upperlimits for fishing catches,with quota rights either being non-tradable (as is the case in Namibia) or tradable (as is the case in Iceland). Quota policies would be budget-neutral if distributed for free, or a source of government revenue if auctioned. Similar measures will be instituted on the freshwater lakes such asVictoria,Naivasha, L. Baringo,L.Turkana,among others.

• Restore degraded deltas and wetlands: Wetlands are essential life-support systems and play a vital role in controlling water cycles. However, a growing population, together with the need for increased agricultural production, has led to substantial pressure on the deltas and wetlands. In view of this, the government will develop fiscal instruments such as PES topromoteprivatesectorparticipationin therestorationof degraded deltas andwetlands.
• vi)Protect riparianland in arid and semi-arid areas:In order to promote sand storage dams and waterpans forlivestock and small-scale cultivation,the governmentwill provide anenablingenvironmentthroughincentivestowardstheseadaptationprograms.
• vi) Provide green shore power as a viable alternative to contribute to emissions reductions atKenya's seaports:Inorder topromote investmentin cold ironing as an alternative marine power to cover the energy demands of ships calling at the ports, the government will consider providing incentives to investors in green shore power supply
• viii) Provisionof appropriatereceptionfacilitiesforthecontrol ofemissionsfrom ships:To control GHG emissions from the anticipated increase in the number ofvessels coming toKenya duetothe expansion of thePortof Mombasa and theconstructionof the Lamu Port, the government will promote the establishment of vessel reception facilities that will ensure ozone depleting substances and vessel equipment containing such are handledanddisposedappropriately

2.3.3HealthandSanitation

17. Recognizing the threats that climate change and other environmental risks pose to the health of Kenyans,the government will undertake thefollowing actions. 2. Combatincreasedincidenceofmalariaandothervector-bornediseases:Climate changehasresultedinanincreaseinthenumberofcasesofmalaria.Thenationaland countygovernmentswillprovidefundingforresearchandinnovation tocontrol mosquitoes in an environmentallyfriendlymanner,tohelp combat the increased malaria incidence. 3. i)Handling & disposal of hazardous & toxic waste: Hazardous waste poses a threat to both human health and the environment when handled improperly. The national financiallypunitivemeasuresfor improperhandling of hazardous materials such as mercury, cyanide and lead. 4. iii) Promote energy efficiency in health facilities: Energy is a prerequisite to quality healthcare, given that most life-saving medical equipment requires power to operate. Having energy-efficient medical equipment will help improve access and availability of quality andaffordablehealthcare.The governmentwill provide fiscal incentivesfor the importation of energy-efficient medical equipment. Additionally, the national and county governments will support the installation of renewable energy standalone mini off-grid systems in health facilities. 5. iv) Promote use of organic pesticides: The excessive use of inorganic/harmful pesticides poses a threat to human health and the environment,especially with prolonged use and exposure.In addition,using suchpesticides contributes to an increase in acute respiratory

infections from the resulting air pollution. Promoting the use of environmentally friendly, bio-degradablepesticideswill helpreduce the effects ofinorganic/harmful pesticides.The national and county governments will therefore provide fiscal inccntives to promote production,preferential procurement and use of organic pesticides such as pyrethrumbased (pyrethrin).

• Support surveillance of climate-related health risks:The effects of climate changewill lead to increased emergence and re-emergence of disease outbreaks such as Malaria, Rift ValleyFever and theEast Coast Fever.In response,the national and county governments will provide financial support by allocating funds to the surveillance of climate-related health risks.

2.3.4 Agriculture,Food,and Nutrition Security

18. The agriculture sector is both exceptionally sensitive to climate change, which in turn threatens the food security of Kenya's vulnerable population, and a significant source of GHG emissions. It is also a source of, and is exposed to,a range of further environmental risks.The government will therefore explore a range of fiscal policy response measures, as follows: 2. Water-saving irrigation systems and strategies. Overreliance on rain-fed agriculture and outdated non-water-saving irrigation technologies hampcrs adaptability to climate change for farmers. The Government will support innovations in the development of water harvesting and irrigation infrastructure,including dripirrigation systems and strategies like deficit irrigation and partialrootzone drying aretechnologieswithpotential for saving water,which will bebeneficial compared with the sprinkler irrigation system currently usedby farmers.Thegovernment will thereforeprovideincentivcs topromotetechnologies forwater-efficientirrigationsystems. 3. ii) Reduetion of post-harvest losses: To reduce post-harvest losses, the government wil! promote agro-processing andprovide incentives that are aimed at increasing adoption of post-harvest storage technologies and equipment such as cooling plants,on-farm storage technologies,such ashermetic bags. 4. iii) Green technology in crop production. The full potential of arable land productivity in Kenya has not yet been realized. Moreover, it is rare across Kenya to apply and utilize green technologies and strategies topromote sustainable productivity,even though these measureswould improve food security.The governmentwill incentivize theuse ofgreen technologyandthe application of sustainable strategics inagriculturalproduction.ln particular,thepolicywill promote,through fiscalpolicy interventionsthe useofintegrated cropmanagement technology,organic farming and the use of low-carbon emission equipmentforcultivation 5. iv) Livestock production. The government will explore opportunities and fiscal incentives to livestock production and productivity by 2030.Additionally,the PES,will also have a strongimpact ontheland-usedecisions andpracticesof farmers acrossthecountry. 6. Cooperative development and climate-smart agricultural practices:This policy will incentivize cooperative development andprudential management throughtheprovisionof performance-basedcooperativegrants andconcessionalloans.This willsupport advancements,includinglandconsolidation andmechanization and,hence,promotelargescale crop,livestock and fisheriesproduction andvalue addition. 7. vi) Dcgraded land rehabilitation: The government will also explore and introduce opportunitiesforgovernmentprograms toprotect andrehabilitate degraded lands,such as

the degraded landscape restoration deal scheme(DELARES),so that they can be used for sustainable agriculture.

2.3.5Forestry,WildlifeandTourism

• 19.Forestry,wildlife and tourism are at the forefront of both Kenya's mitigation and adaptation efforts. The proposed fiscal actions for the forestry sector include the following:
• i Incentivize tree growing and management. The government will promote tree growing, management and protection of gazettedforests to increase forest cover to10%.Thiswould also restore and conserve water towers. The government recommends planting on both publicandprivateland.
• i Ecological Fiscal Transfers (EFTs):The National Treasury and the Ministry of Environment and Forestrywill workwith the Commission on RevenueAllocation (CRA) tocomeupwithanEFTparameterin therevenuesharingformulafor allocatingmore resources to strengthen the capacity of the counties in preserving environmental and ecologicalfunctions.
• ili)Payment forEcosystemServices (PES):The Government shallpromoteresponsiblefor environmentalandecosystemmattersincollaborationwithrelevantsectorministrieswill fast track the development of PES schemes to incentivize scaling up of conservation and restorationprograms.
• iv)IntegrateafforestationandreforestationintotheReducingEmissionsfrom Deforestation and Forest Degradation (REDD+) and Carbon trading design.As part of the design proposals for a carbon tax scheme, the government will consider opportunities forcompaniestoreducetheirtaxliabilitybypurchasing offsetsfromforestryprojects.
• Concessions and PublicPrivatePartnerships:Thegovernmentwill provide incentives and long-term concessions for promoting tree planting and growing on public and private lands; improve saw milling technologies, production of high-quality seedlings and mass timbertechnologies.
• vi) CommercialForestry:Thegovernment will provideincentives to spur investmentsin commercialforestryandtheimportationofsustainabletimber.

2.3.6HumanSettlements andInfrastructure.

20. The fiscal policy and other measures that the government will pursue to ensure that these infrastructure and buildings support low-carbon, climate-resilient development are as follows. 2. i)Enhance the climate resilience of roads:To climate-proof the road network,the NationalTreasury willinclude climate-resilience criteria withinPublicInvestment Management (PIM) Guidelines for funding infrastructure projects and enhance the incorporation of the concept of'roadsfor water'in the design and construction of roads. 3. ii) Integrate thecircular economyintoinfrastructure development:Torealize the sustainable development benefits,thegovernment will providefiscal incentives in the use ofrecycledmaterialsininfrastructuredevelopment. 4. iii) Support green building development: The government will provide incentives to developerswhomeet therequirementsforgreenbuildingspecifications/codes. 5. iv) Supporting Adoption of Water and Energy-Efficient Infrastructure: The government willincentivize the construction ofwater and energy-efficient buildings.Additionally,all newpublicbuilding designs will incorporate water and energy-efficient measures into theirconstructionandoperation.

2.3.7Renewable Energy

21. To promote Renewable energy production and deployment and increase consumer connectivity,the governmentwill: 2. D Phase out fossil-fucl-based thermal clectricity: The government wil provide fiscal incentives needed to lower the cost ofrenewable energyrelativetofossil-fuel-intensive energy sources. 3. ii)Accelerate geothermal development: The government will provide targeted incentives for private investment in geothermal electricity generation and other productive uses.The fiscal incentives envisage concessional funding andpublic support for early-stage investments in geothermal resource assessments,whichwill enable privateinvestment where geothermal is most promising. 4. ii) Expand off-grid electricity solutions: The government will incentivize off-grid renewable energy options to enable access in areas far from the national grid. Tax exemptions and credits will be considered. 5. iv) Incentives for clcctricity conncction: The government will provide consumer-level incentivestoenablemorehouseholdsandMSMEstoaffordclectricityconnectivitythrough enhancing initiativessuchas thelast-mile connectivity. 6. Continue to implement Feed-in-Tariff projects: These are projects below 20 M W capacity for all technologies except solar and wind. The latter are targeted to be procurcd through renewable energy auctions. The feed-in-tariff projects are incentivized by pre-set tariff and expeditedprocedures.

2.3.8 Clcan Cooking

22. In response to various existing global and local commitments such as Sustainable Development Goals (SDGs),Sustainable Energy for All(SEforALL) and the NDC,the government of Kenya commits to accelerate actions in clean cooking, targeting to achieve Universal Access to Modern Energy Cooking Services by 2028. A range of incentives are desired to unlock and accelerate the transition to modern and clean cooking.Theoptions that will be considered include: 2. i Incentives for clean cooking fucls and technologies: The government will incentivize and encourage the production, access and use of clean cooking fuels and technologies.This will include targeted incentives across the clean cooking supply and demandvalue chains. 3. ii)Enabling Markets for clean cooking services: To ensure a sustainable and inclusive market system for clean cookingsolutions,there is need to develop standards,establish stove testing infrastructure across the country to support voluntary labelling and certification system and regulations to incentivize local production of cooking products and curb the proliferation of counterfeitimportedproducts. 4. iii) Investment in Research and Development (R&D) of renewable energy: The Government will support investment in Research,Development and innovation on renewable energy as a means to close inherent information gaps and embrace informed policy and decision making. This will also include incentive options for the private sector to conduct R&D. 5. iv) Integration of cooking into national electrification programs: To support the mainstreaming of electric cooking,it isimperative that cooking isembedded into electrification programs to leverage from successes in both on and off-grid electrification. The government will consider duty exemptions andValue Added Tax(VAT)zero-rating for energy-efficient e-cooking appliances (such as electric pressure cookers) and establishment of dedicated e-cooking tariffs.

2.3.9Manufacturing

• 23.The following fiscal incentives will be considered:
• i)Promote efficient management of production systems. The government will provide fiscal incentives to the private sector for innovative production, acquisition and use of efficient machinery to optimize theuse ofenergy,materials and reducewaste.
• i)Develop eco-labelling schemes.An eco-label identifies products or services that meet prescribed environmental criteria. The government will prioritize the procurement of products andservicesthatareeco-labeled.

2.3.10 Transport

24. The Kenyan government aims to use fiscal policy to promote sustainable transportation, both public and private.Thefollowing arefiscalincentives togreen the transportationsector: 2. i)Promote mass rapid transit: The government will develop a national transitional plan to emobility as well as other green transport systems. This will include shifting public expenditure in the transport sector toward sustainable mass rapid transport infrastructure. 3. i)Incentives for electricvehicles.The government will provideincentives for import, manufacture and assembly ofelectric and hybrid motorvehicles,electricmotorcycles,spare parts and Electric Vehicle (EV) batteries. This will be necessary to support the transition toward low-emission and clean transport systems. Options include tax incentives for electric vehiclesand theoperationalizationof afeebatesystem.TheGovernmentwillshiftto the procurement of electricvehicles over themedium term. 4. iii)Expansion of e-mobilityinfrastructure.The government will put in placefiscal measures to develop and expand infrastructure across the country to support e-mobility and non-motorized transport. 5. iv) Congestion charging. The government will explore the development of a congestion charging schemeinthe cities. 6. Development of alternative transport fuels.Incentivizeproduction of alternative transport fuel sources such as biofuels (biogas, bioethanol, bio-Liquefied Petroleum Gas (LPG), biodiesel) andgreenhydrogen.

2.3.11WasteManagement

25. The government's actions in greening the waste management value chain will be consistent with the SustainableWasteManagementPolicyof 2021and theSustainableWasteManagementPolicy Act,2022.The government will provide the following fiscal actions: 2. i)Development of Material Recovery Facilities (MRF): Provide incentives for waste recovery facilities,the circular economy,incentivize sanitary landfills and disincentivize dumpsites

• i) Incentives for private sector engagement in waste management: The government will provideincentivestopromoteprivatesectorinvolvementin thewastemanagementsector, includingtaxincentives,removalofinvestmentbarriers,creation ofa conduciveinvestment climate,and incentivize access tofinance.

4. iii) Encouraging circular business models: The government is keen on providing a range of incentives topromote circular business models.These include incentivizing adoption of EPR regulations, encouraging recycling, offering preferential use of recovered materials over

virgin materials, and promote the procurement and use of recycled goods. Support innovative waste-to-energytechnologies.

2.2.2 Enhanced green financial intermediation actions:

• i)Green investment bank: The government will develop a green investment bank that will provide a range of funding instruments and associated incentives to support the public and privatesectorinovercomingbarriers tomakinggreeninvestments at scale.Theinstitution will help address the perception and/or reality that the capital costs and risks of grecn investments are toohigh, and the returns toolow.It wouldprovide a range of financial instruments which couldpotentiallyincludecreditguarantees.risk-recctionfacilities.debtequityandblended finance.
• i) Carbon tax: Recognizing the ability of carbon taxes to both cost-efficiently reduce GHG emissions and alsotoprovide arevenuestream thatcanbeused tomeetbroadergovernment objectives, the government will explore the viability and design of a carbon tax in Kenya.

PARTFOUR

4.0PUBLICPARTICIPATION/STAKEHOLDERSCONSULTATION

26. Following the call for memoranda from the public through placement of adverts in the print media on 6tl December 2024 and vide letters REF: NA/DDC/ EF&M/2025/41, REF: NA/DDC/ inviting stakeholders for a meeting, the Committee received submissions from the following stakeholders: 2. i)The National Treasury 3. ii)Ministry of Environment,Forestry and Climate Change 4. ii)TheStateDepartmentforForestry 5. iv)TheAttorneyGeneral.

4.1SUBMISSIONSBYTHENATIONALTREASURY

27. In a meeting with the Committee held on Friday, 8th August 2025, Mr. Peter Odhengo, Head of the Climate Finance and Green Economy Unit at the National Treasury,on behalf of the Principal Secretary,madethefollowingsubmissions:

Background

• 28.The GreenFiscal IncentivesPolicyFramework seeks to steerKenya'seconomy onto a desired lowcarbon,climate-resilientgreendevelopmentpathwaythroughavarietyoffiscalandeconomic mechanisms. Green fiscal reforms can help shift consumption patterns, generate additional revenue, and drive private investment in projects and programs that adopt climate-friendly production mechanisms.
• 29.The policy sets out how the government Ministries,Departments and Agencies can enhance mobilization of climate Finance from all sources: private, public, multi-lateral agencies, bilateral, philanthropic,etc.tofinanceKenya's updated NDC and NCCAPs.
• 30.The Policy Framework considers green fiscal reforms asmechanisms that have beenused by governments to correct environmental externalities,support national climate change goals,and promotecleanenergyinvestments.

31. The mechanisms range from tax policies, subsidies and expenditure programs, and regulatory instrumentswithfiscal components all of which have revenue implications.As such:government taxes canbe used to stimulate a shift in production,consumption and investment in low-carbon climateresilient and environmentally sustainable practices; concessional loans, guarantees and interest rate subsidies can be effective tools in overcoming investment barriers and leveraging private sector green investments; and government spending can directly target the delivery of environmental outcomes that theprivate sectormight otherwiseignore.

Policy Context

• 32.Recognizing the threats posed by climate change and other environmental challenges,theworld is now taking more rapid action. Investors are rapidly shifting from dirty to clean assets, and key technologies neededforenvironmental sustainability are experiencingrapid costreductions.

33. The world's largest emitter, China, in 2020 pledged to reduce carbon dioxide (CO2) emissions to net zeroby 2060.TheUnited Nations Call forAction onAdaptation and Resilience spelled an urgent need for enhanced resilience and also recently adopted a landmark framework that considers the contribution of nature when measuring economic prosperity and human wellbeing. 34. In accordance with the updated NDCs that build on national policies, plans and legal frameworks, it is essential for Kenya to play a full and active part in this global transition to a low-carbon climate resiliencedevelopmentpath. 35. A development path characterized by continued low emissions, enhanced climate resilience and environmentalsustainability. 36. Formulation of this Policy was initiated within the framework of the Climate Change Act, 2016 and the National Climate Change Action Plans whose objective is to encourage low carbon climate climate-resilient development through implementation of the National Climate Change Response Strategy,2010.

Goals and Objectivesof thePolicy

• 37.He noted that the goal of this policy is toidentify and prioritize the implementation of a coherent suite of green fiscal actions that will allow Kenya to exploit the opportunities of accelerating the transition toa low-emissions development pathway while cnhancing climate resilience and ensuring environmental sustainability.In doing this.thepolicywill:
• i)Direct government planning. budgeting and spending/procurement toward grcen and consumption.
• ii) Provide a framework for fiscal incentives to attract private sector investment into a lowcarbon emission,climate-resilient and environmentally sustainable cconomy.
• iii) Provide a framework for generating additional revenue streams for the government.

Benefitsof thePolicytoKenya

38. The Policy is an important part of accelerating the implementation of the Constitution of Kenya, 2010, where a clean and healthy environment (Articles 42, 69 and 70) are fundamental right. 39. The policy will encourage private sector participation in climate-relevant financing opportunities. 3. 40.The policywill enhance resilience to climate change and other shocks. 41. The policy is essential for Kenya to manage transition risks. Failure to align with global low-emissions trends may lead to international marginalization, impacting trade and capital flows 42. The policy will provide for the Establishment of the Kenya Green Investment Bank that svill provide a range of fundinginstruments and associated incentives to support climate action.

4.2 SUBMISSIONS BY THE MINISTRY OF ENVIRONMENT,CLIMATE CHANGE,AND FORESTRY

43. In a meeting with the Committee held on Friday, 8th August 2025, the Cabinet Secretary, Dr. BeborahBarasa,highlighted thefollowing: 2. ( The development of the National Green Fiscal Incentives Policy Framework, 2022, was led by anInteragency Taskforce under theleadership of the National TreasuryandEconomic Planning.

• i) The framework is a critical policy tool to support Kenya's climate agenda, including the implementationoftheNationallyDeterminedContribution(NDC).

4. iii) The framework proposes a balanced mix of incentives to encourage investment in green, lowcarbon,and climate-resilient initiatives,as well as disincentives aimed at phasing out environmentallyharmful and unsustainablepractices. 5. iv) That similar green fiscal approaches have been successfully implemented in developed countries andeconomiesintransition. 6. Given the far-reaching implications of this policy, the National Treasury, as the custodian of fiscal policy,needs to undertake a comprehensive financial assessment of the proposed measures. This will ensure that the incentives and disincentives are not only aligned with national developmentprioritiesbut are alsofiscally sustainable and effectivein delivering the desiredenvironmentalandclimateoutcomes. 44. In a meeting with the Committee held on Friday, 8th August 2025, the Principal Secretary, Mr. GitongaMugambi,submitted asfollows: 45. The Green Fiscal Incentives Framework Policy (GFIPF) recognizes forestry as a critical sector for driving Kenya's transition to a low-carbon, climate-resilient economy.It acknowledges forests' role in regulating water resources, supporting biodiversity, sequestering carbon, and sustaining livelihoods.Deforestation,forest degradation and desertification are significant challenges, primarily driven by poverty, agricultural expansion, unsustainable exploitation, and climate change effects. 46. The Policy supports tree growing through a Tree Growing Guarantee Scheme, allowable tax deductions for costs related tonursery establishment andplanting onpublicland.Tradable carbon creditsfor treeplantingonprivateland,and Concessionaryloans andgovernmentgrantstogrowers. Thisalignswiththenationalforestpolicy'sgoaltoincentivizeforest-basedlivelihoodsand commercialforestry. 47. He noted that the Policy aligns with the Kenya Industrial Wood Sector Vision 2020 through the followingkey areas: 11. i)PrivateSectorInvestment:The GFIPF aims toprovide a frameworkfor fiscal incentives to attractprivate sector investment into a low-carbon,climate-resilient economy.This directly supports the Vision's need for significant private investment to expand production and upgrade processing capacity. 12. ii Enhanced Productivity andSustainableManagement:The GFIPFproposes measures to incentivize the efficient management of production systems, including the use of innovative and efficientmachinery.This alignswiththeVision's objectivetoincreaseproductivityper

• unit area throughinnovativesilviculturalpracticesand improvewoodprocessingsystemsfor better efficiency and higher recoveryrates.
• iii) Carbon Sequestration: The GFIPF's focus on a low-carbon and climate-resilient pathway that is supported by theVision's environmental goals.

48. The GFIPF does not explicitly mention agroforestry, but the provisions on Carbon credits for diversified trees on private land (upto 50% land cover), Grants for commercial plantations, Promotion of clean cooking to reduce forest pressure, could be cxtended to support agroforestry systems. However, the lack of explicit agroforestry is a gap, considering its policy prominence. 49. The GFIPF proposes the Degraded Landscape Restoration Deal Scheme (DELARES). Ecological Fiscal Transfers(EFTs) to counties based on restoration efforts, andPayment for Ecosystem Services (PES) schemes.These fiscal tools align with the National Landscape and Ecosystem Restoration Strategy (NLERS's) call for innovative financing and incentivizing subnational governments and communities. 50. The GFIPF seeks to steer Kenya's economy onto a desired low-carbon, climate-resilient grccn development pathway. It recognizes forests as critical carbon sinks for the country and recommends the development of PES schemes to incentivize the scaling up of conservation and restoration programs. 51. The Reducing Emissions from Deforestation and Forest Degradation (REDD+) strategy describes the approach for achieving low emissions development through REDD+, which is an international framework to mitigate climate change by incentivizing developing countries that address the problem of deforestation and forest degradation and those that promote conservation, sustainable forest managementandafforestation andreforestation.

• 52.He noted that the Policy outlines several positive impacts in the forestry sector, including:
• i)Afforestation/Reforestation: Promotion of direct govcrnment investment in large-scale tree plantingandlandrehabilitation.
• ii) CarbonSequestration Incentives:( Opportunity touse( carbon offsets from afforestation/reforestationunderemissionstradingorcarbontax.
• iii) Payments for Ecosystem Services (PES): Adoption of international models like Ecuador's Socio Bosque program or India's ecological fiscal transfers (EFTs) that reward conservation effortswithfiscaltransferstocommunitiesorcounties.
• iv)Revenue Generation:Introductionof greenbonds andfiscal tools to mobilizeprivatesector anddonorinvestmentsforforestrestoration.
• Incentivized Private Participation:Carbon credits,concessional loans,and tax incentives encourage private sector and farmer investment in tree growing.
• vi)) Subnational Empowerment:EFTslinked to environmentaloutcomes empowercountiesto investinrestoration andsustainableforest management.
• vi)Restoration Financing: Instruments like DELARES and PES provide new avenues for fundinglandscaperestoration.
• viii) Diversification of Forest Products: Support for commercial plantations may boost wood valuechains andrelievepressureonnaturalforests.
• 53.He alsohighlighted the following are some of the gaps relating to the forest sector:

• Insufficient Focus on Community Forest Associations (CFAs):The role of CFAs in conserving and managing forests under the Forest Conservation and Management Act (2016) isnot emphasizedin theincentives design.
• i) No Direct Incentives for Agroforestry: Although mentioned under agriculture, there is limited focus on integrating forestry into farming landscapes to improve land productivity and treecover.
• ili) Tourism Linkages Underexplored: While tourism is discussed, there's no concrete proposal to tiefiscalincentivesforwildlife and ecotourism directlytoforestconservation outcomes.
• iv) Tree seed systems and certification: Though nursery registration is mentioned, broader
• Forestry contribution to Gross Domestic Product (GDP): under-valuation of the forestry contribution to the GDP.Forestry plays a critical role inKenya's economy and environmental sustainability.However,its contribution to GDPis grossly undervalued in official statistics, typically reported as less than 1.6% of GDP. This figure fails to reflect the full economic, social,and ecological value offorests andforest-related activities.

54. To bridge the forest valuation gap and reflect its real contribution to the economy, he proposed the followingfiscal andpolicymeasures:

• i)Institutionalize Forest Natural Capital Accounting (NCA) to capture both market and nonmarket forest benefits, including: Carbon storage and offsets, Hydrological regulation, Soil protectionanderosioncontrol,andBiodiversityservices.
• ii Broaden GDP Metrics to include Ecosystem Services by promoting the adoption of "Green GDP"or adjustedindicatorsthatreflect natural capitaland ecosystem services.Use these metrics toguide national budget allocations andperformancemonitoring.
• iii) Create a Forest Ecosystem Services Valuation Framework by establishing a standard methodology for valuing forest ecosystem services (e.g., through contingent valuation, costbenefit analysis, or replacement cost methods). This can be linked to fiscal planning tools such asMedium-TermExpenditure Frameworks (MTEF).
• iv)DevelopmentofaForestSectorSatelliteAccountinKenyaNationalBureau ofStatistics (KNBS) to capture informal sector forestry employment, Household-level fuelwood and NonTimber Forest Products (NTFP) use, Community Forest association (CFA) contributions, and Forest-basedtourismrevenues.
• Link Forest Valuation to Climate Finance by leveraging accurate forest valuation to mobilize climate and biodiversity finance, including REDD+, carbon markets, and ecosystem payment schemes.
• vi)Incentivizeprivate sector and communityinvestments.Once trueforestvalueisknown,it can justify: Tax credits for private reforestation, Subsidies for community forest enterprises, and tiePESschemestoforestprotection and restoration.
• vi) Integrate valuation into planning and budgeting. Mandate that all forest-related projects and policies undergoeconomicvaluation toinform cost-benefit andpolicydesign.
• vii) Include forests in Public Investment Management (PIM) systems and climate budget taggingframeworks.
• ix)Strengthenthemonitoringandevaluationframeworkbygeneratingspecificmetrics or baselines for forest cover, biodiversity health, or restoration success.

55. To enhance the forestry component on the Green Fiscal Incentives Policy Framework and align it with national development and environmental goals, he made the following recommendations:

• i)DevelopForest-Specific FiscalInstruments:Introduce targeted fiscal tools such as reforestation tax reliefs or rebates, Payments for Ecosystem Services (PES) schemes, and

• green insurance products specifically tailored for forest-based enterprises.Theseinstruments would help de-risk investment and encourage sustainable forest management practices.
• ii) Strengthen Community-Based Forest Management (CBFM): Provide dedicated fiscal support includinggrants and subsidies to Community Forest Associations(CFAs) to cnhance their capacity in nursery development, forest conservation, and implementation of benefitsharing mechanisms,in line with the Forest Conservation and Management Act,2016.
• iii) Promote Agroforestry through Targeted Incentives: Institutionalize agroforestry within thepolicy by offering specific incentives such asinput subsidies.access to extension services, and eligibility for carbon credits.This will support theintegration of trees intofarming systems,contributing to increased tree cover and income diversification as well as food security.
• iv) Implement Ecological Fiscal Transfers (EFTS): Design and pilot EFT mechanisms that allocate fiscal resources to counties based onmeasurable environmental outcomes such as forest and tree cover retention,restoration efforts,and biodiversity conservation. This will encourage county governments toinvest in sustainable landscape management.
• SupportTrceSeed GermplasmSystems:Expandfiscal supportfor the certification of tree seed sources,establishment of seed banks,integrate research in the development of climate resilient seedlings and development of a national Centre of Excellence for tree seed systems. Strengthening the seed supply chain isvital for achievinglandscape-scalerestoration and maintaininggenetic diversity.
• vi) Revitalize the Industrial Wood Sector: Introduce fiscal incentives to promote domestic industrialforestryby offeringVAT/duty exemptionsonimportedmachineryandcquipment for wood processing.Additionally,provide income taxexemptions for investors establishing industrialwoodplantationstostimulatevalueadditionandjobcreation.
• vii)Facilitate Private Seetor Participation in Publie Forest Management: Promote concessions in public forests to allow responsible private sector involvement. This will leverage private capital and technical expertise to enhance the productivity, protection, and sustainabilityofstate-managedforestresources.
• vii)Re-Evaluate Forestry's Contribution to GDP: Institutionalize natural capital accounting regulation,and biodiversity conservation.These values should beintegrated into national GDP computation to reflect forestry's true economic contribution.
• ix) Introduce Incentives for Green Construction and Public Procurement.: Encourage the use of sustainably sourced wood in construction by offering duty exemptions for certified timber products and green building materials. Public procurement policies should prioritize environmentally friendly building practices to promote demand for forest products.
• X Establish a Robust Monitoring, Reporting, and Verification (MRV) Framework.: Develop a comprehensive MRV system incorporating satellite imagery, forest inventories, and carbon accounting methodologies. This framework will be essential for tracking the effectiveness of fiscal incentives,measuring forest cover changes,and ensuring transparency and accountabilityinpolicyimplementation.

4.4SUBMISSIONBYTHEATTORNEYGENERAL

56. In a meeting with the Committee held on Friday, 8th August 2025, Ms. Olivia Simiyu, representative of the Solicitor General, submitted that the development of the National Green Fiscal Incentives Policy Framework, 2022, was led by an Interagency Taskforce under the leadership of the National Treasury and EconomicPlanning and the Office of theAttorneyGeneral was fully involved.

5.0COMMITTEEOBSERVATIONS

57. Upon studying the Sessional Paper No.5 of 2024 on the National Green Fiscal Incentives Policy Framework,theCommitteemadethefollowingobservations: 2. i)The goal of this policy is toidentify andprioritize theimplementation of a coherent suite of green fiscal actions that will enable Kenya to exploit the opportunities for accelerating the transition to a low-emissions development pathway while enhancing climate resilience and ensuring environmental sustainability. 3. i)The framework identifies sector-specific fiscal measures covering areas such as disaster risk management, agriculture, renewable energy, transport, waste management, and forestry, thereby ensuring a comprehensive approach toclimate action. 4. iii) The policy proposes a balanced mix of incentives to encourage investment in green, lowcarbon, and climate-resilient initiatives,while introducing disincentives aimed at phasing out environmentallyharmfulandunsustainablepractices. 5. iv) The policy will encourage private sector participation in climate-relevant financing mechanisms, including green bonds, Payment for Ecosystem Services (PES), and Ecological Fiscal Transfers (EFTs)that will enhance resilience to climate change and other shocks; and 6. v)The policy is essential for Kenya to manage transition risks, where failure to align with global low-emissions trends may lead to international marginalization, impacting trade and capital flows. 7. vi)The establishment of aKenya GreenInvestmentBankwill de-riskgreen investments,making them more attractive to the private sector through blended finance,guarantees,and concessional funding.

PARTFIVE

6.0COMMITTEERECOMMENDATION

• 58.TheCommitteerecommendsthat-
• i The House adopts this Report on Sessional Paper No. 5 of 2024 on the National Grcen Fiscal Incentives Policy Framework;
• i) Following the adoption of this Policy, all proposed legislation and regulations to be guided by the provisions of the National Green Fiscal Incentives Policy Framework.

2S

09

2025

SIGNED.

.DATE.

HON.VINCENTMUSYOKAMUSAU,CBS,M.P. CHAIRPERSON, DEPARTMENTALCOMMITTEEONENVIRONMENT,FORESTRYANDMINING.

(CHA(nPEnSON)

30 SEP 2025 hN·VIMCENTMVOKA MNALE

PARTSIX