KOKO's Collapse Exposes an Authorization Bottleneck in Carbon Markets

KOKO Networks didn't fail because its stoves didn't work or its customers didn't want them. It failed because the revenue model underneath it depended on a government authorization that never arrived. That distinction matters for anyone trying to finance emissions reductions in carbon markets, and the lesson reaches well beyond Kenya.

How a well-funded model lost its revenue

KOKO was founded in 2013 by Australian entrepreneur Greg Murray. By its peak, it operated more than 3,000 bioethanol dispensing machines across Kenya's urban neighborhoods, serving roughly 1.5 million low-income households with subsidized clean cooking fuel. The company invested over $300 million in Kenya and employed 700 people directly. Its subsidy model rested on selling carbon credits into international compliance markets, specifically CORSIA-approved credits under a Gold Standard-registered project.

The structure looked sound on paper. In June 2024, the Kenyan government signed an investment framework agreement with KOKO meant to enable exactly these transactions. In March 2025, the World Bank's Multilateral Investment Guarantee Agency (MIGA) insured KOKO's Kenyan investment for $179.6 million, which was reported as the first carbon-linked political risk coverage of its kind, explicitly covering government breach of contract.

The snag came with the Letter of Authorization required under Kenya's Carbon Markets Regulations. When KOKO applied, the government declined. Its stated concern was that the volume KOKO wanted to sell would have used up Kenya's entire allocation of internationally transferable reductions, leaving nothing for other sectors or companies. On January 31, 2026, KOKO stopped operating, laid off its workforce, and filed for insolvency.

That's the core problem. A project can be verified, financed, and insured, and still have no path to revenue if a national allocation caps what it can sell. Insurance covered the investment, but it couldn't cover the authorization itself.

The health and household costs

The climate impact was measurable. KOKO was generating approximately 6 million tons of CO2e reductions annually, counting avoided CO2, methane, and black carbon from households switching away from charcoal and kerosene. Those reductions are now gone.

The health stakes are just as concrete. Indoor air pollution from charcoal, firewood, and kerosene is the eighth leading cause of premature death in Kenya, linked to an estimated 25,000 deaths a year. Women and children carry the heaviest load. Women exposed to high levels of solid-fuel smoke are more than twice as likely to develop chronic obstructive pulmonary disease, and PM2.5 concentrations near charcoal stoves can exceed WHO safety limits by a factor of 100.

KOKO's shutdown came by text message, a short apology reading "Samahani KOKO customer" on the morning of January 31. For the 1.5 million households in Nairobi, Mombasa, Kisumu, and Nakuru, most of them low-income urban families, bioethanol at half the market price disappeared overnight. Many are heading back to the fuels they had moved away from.

The economic damage is also specific. Hundreds of small-business agents, mostly women shopkeepers who earned commissions from KOKO points in their stores, lost a source of income. Households had bought proprietary stoves at a subsidized KSh 1,500, against a true commercial cost of KSh 15,000. Without bioethanol, those stoves are idle, and LPG is out of reach. A single six-kilogram refill averages KSh 1,350, roughly fourteen times the cost of an equivalent KOKO top-up.

Why aviation makes this a wider problem

The stakes extend well past one company. CORSIA, the aviation scheme administered by the International Civil Aviation Organization, enters mandatory Phase 2 in 2027, and its first compliance deadline requires airlines to retire eligible emissions units by January 31, 2028. Airlines on international routes must offset emissions above a 2019 baseline, which means a large volume of credits has to be retired soon.

Supply looks thin against that demand. According to analysis by Sylvera, CORSIA Phase 1 could face demand of up to 144 million eligible emissions units by January 2028, while current available supply is about 15.84 million credits. More than 4,000 projects could in theory supply eligible credits, but only around 1,500 sit in countries with even moderate readiness to issue the Article 6 authorizations CORSIA compliance requires.

KOKO was one of the projects in that pipeline. With MIGA backing, it planned to reach three million additional customers by the end of 2027, a forward pipeline of 20 to 25 million tons of annual reductions. Losing it removes a large chunk of future supply at the point when the market needs it most.

Market experts describe the result as a chicken-and-egg problem. Airlines hesitate to sign long-term offtake contracts for credits that may not exist in compliant form. Developers can't finance large projects without offtake certainty. Governments haven't moved fast enough to issue the authorizations that would unlock supply. Everyone is waiting for someone else to go first, and the 2028 deadline is closing in.

A climate gap that won't wait

The timing sharpens the point. On October 21, 2026, the UN Environment Programme published its Emissions Gap Report 2026, titled "The Point of Return." It concluded that the chance of limiting warming to 1.5°C with no or limited overshoot is now gone. UN Secretary-General António Guterres put it plainly: "The world can no longer avoid overshooting the 1.5 degree limit." Under current policies, the report projects about 2.8°C of warming by 2100. Even the most ambitious remaining pathway would peak at 1.7–1.8°C before temperatures could be brought back down.

UNEP's answer to that overshoot is to replicate proven solutions quickly across sectors and economies. Projects like KOKO are exactly that kind of solution, and they're the ones being stalled. My read is that the carbon market's authorization architecture is now as important to the climate outcome as the technology itself. If authorization is the bottleneck, the next KOKO will be a symptom of the same problem, not a one-off.

Here's the thing: the fix doesn't have to mean abandoning allocation limits. It means building authorization rules that move at the speed of verified projects, so national caps and corporate offtake needs can be matched before a project is stranded. Until that happens, the 2028 CORSIA deadline and the next wave of clean-cooking and other mitigation projects will depend on whether that gap gets closed.