Kenya High Taxes: Hinders Rapid Transition to Renewable Energy

Kenya High Taxes: Hinders Rapid Transition to Renewable Energy
Kenya High Taxes: Hinders Rapid Transition to Renewable Energy
  • A recent study commissioned by Rural Electrification and Renewable Energy Corporation shows that high taxes in Kenya are responsible for the slow transition to renewable energy.

Kenya High Taxes Hinder Rapid Transition to Renewable Energy. This is according to A recent study that further shows that some of the government’s tax policies, especially Value Added Tax (VAT) in the energy sector are hindering the country’s transition to renewable energy.

The study commissioned by Rural Electrification and Renewable Energy Corporation highlights that the government’s decision on which type of technology and components to be taxed affects imports and costs of renewable energy technologies, which in turn contributes to Kenya’s vulnerability to climate change.

In defining terms, the study shows that renewables, also called green energy, are vital to the alleviation of the climate crisis, because, unlike fossil fuels, they do not produce carbon dioxide and other greenhouse gases that lead to global warming. They are also essential to the realization of the seventh Sustainable Development Goal (SDG7), the report submits.

Diving deeper into issues surrounding the sector, the study further revealed that Kenya’s potential for growth of renewable energy is huge and capable of powering the entire country if the transition is smooth and affordable.

Accordingly, the study rules that one of the renewable energy options whose uptake is affected by taxation is bio-ethanol. 35% of the cooking fuel’s price goes to VAT and other taxes which makes its price in the market higher than any other fuel.

President Kenyatta now has a daunting task of making the transition to renewable energy faster.

Kenya-High Taxes: More Perspectives

While talking about the findings at a Nairobi hotel, researcher Dr . Francis Xavier Ochieng’ of the Institute of Energy and Environmental Technology at Jomo Kenyatta University of Agriculture and Technology (Jkuat) revealed that when costs rise due to taxes, consumers go for cheaper options such as charcoal and firewood to cook, disregarding the harm being inflicted on the environment.

The report revealed that out of 12,040,700 households surveyed, 55% use firewood, while 12% rely on charcoal. The rest uses electricity (1%), paraffin (8%), LPG (24%), biogas (0.47%), and solar (0.16%).

What this means is that 67% of households make use of charcoal or fuel wood for cooking while 0.14% of them use some form of solar thermal for cooking.

Dr. Ochieng said during the meeting, that the country needs to commercialize biogas and ensure there is the option of either biogas or LPG.

The report also revealed that Kenya has no current tidal wave power installation and challenges the government to conduct a national wind resource map other than putting in place tidal or wave technology systems. It also stressed the need to further adapt the Solar photovoltaic system.

Kenya-High Taxes: Recommendations to the Government

It admonishes the government to leverage waste to energy projects such as the planned 12MW grid-connected plant in Kibra, Nairobi, which will combine municipal solid waste, crop residues, and livestock byproducts to generate biogas.

On the flip side, recall that Kenyan President, Uhuru Kenyatta told the UN Climate Change Conference (COP26) in Glasgow, Scotland last year that the country is on its way to realizing a full transition to green energy by 2030.

He further mentioned that the greatest challenge now is how to reduce carbon emissions from the energy sector, while making sure that all people have access to clean energy.

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