The Government seems to be talking the talk when it comes to making Kenya a climate change leader, but when it comes to walking the walk, they seem to be stumbling in the dark. On paper, they are all about transitioning to a low-carbon, climate-resilient development pathway, but in reality, it is a different story.
Just last week, the Ministry of Environment, Climate Change, and Forestry proudly submitted Kenya’s Second Nationally Determined Contribution (NDC 2031-2035) to the UNFCCC, outlining plans to reduce greenhouse gas emissions by 35% between 2031 and 2035. However, the plot thickens as the proposals in the 2025 Finance Bill, unveiled the same day, seem to throw a twist in the works of this ambitious commitment. It is like Kenya is shooting itself in the foot while trying to run a marathon towards a greener future!
One glaring example of the lack of commitment to fighting climate change is the suggestion to slap a 16% VAT on solar, wind, and geothermal inputs. Currently, these inputs are VAT exempt, but if this proposal goes through, they will become expensive, putting a damper on investments in green energy. These green energy sources play a crucial role in reducing greenhouse gas emissions, combating global warming, and safeguarding the environment.
The 2025 Finance Bill is further shaking things up by suggesting a reclassification of VAT for electric bicycles, electric buses just when Kenya Power was announcing an ambitious plan to install 45 electric vehicle (EV) charging stations across six counties within the next 12 months to support the country’s shift toward clean and sustainable mobility. The chargers will be deployed in Nairobi, Nyeri, Kisumu, Eldoret, Nakuru, Mombasa, and Taita Taveta, with six earmarked for the Jomo Kenyatta International Airport (JKIA) in Nairobi.
With the Finance Bill 2025 tax proposals, the currently zero-rated electric buses and bicycles are now on the fast track to becoming exempt, with standard VAT looming on the horizon. The move is a step backward in Kenya’s dream of transitioning to electric mobility to catalyze the reduction of carbon emissions, majorly driven by the use of fossil fuels – diesel and petrol, as it will negatively impact investment in the manufacturing of electric buses and bicycles, and also reduce their affordability.
The Bill further puts to question the Government’s commitment to tackle climate change by proposing to move solar and lithium-ion batteries, and bioethanol vapor (BEV) stoves from the zero-rated category to the exempt category. This unexpected twist seems to contradict Kenya’s commitment to reducing greenhouse gas emissions.
In a country aiming to lead the way in green technology, these surprising taxation maneuvers throw a curveball in environmental dodgeball. Environmentalists are now crossing their fingers that Parliament can bring some sobriety and smart sense to the table to help the country recover from this unexpected twist, dodge this environmental curveball, and hit a home run for a cleaner, greener future.
