Kenyan president aims to attract green investment during U.S. visit
William Ruto says the countries will foster clean energy production in Kenya, build supply chains for electric vehicles and attract plants using renewable energy.
By Katharine Houreld
May 17, 2024 at 2:00 a.m. EDT
NAIROBI — Kenya will launch an initiative with the United States next week to develop a green manufacturing base in Kenya, accelerating the country’s production of clean energy, building supply chains for batteries and electric vehicles, and encouraging investment by U.S. companies seeking factories powered by renewable energy, according to President William Ruto.
In an interview ahead of his state visit to Washington starting Wednesday, Ruto said the deal will draw on Kenya’s green energy production to help U.S. companiesshrink their carbon footprint.
“The use of Kenya’s green energy resources and America’s technology can unlock huge potential, especially with data centers and artificial intelligence,” he said. He did not detail the cost or timeline for the initiative.
More than 90 percent of the country’s power now comes from renewable sources, according to Kenya Power and Lighting Co., including solar, wind, geothermal and hydroelectric. Ruto put the figure at 93 percent, ranking Kenya in the top five countries in the world.
Although Ruto announced plans this month for a one-gigawatt data center that would soak up all of Kenya’s spare generation capacity, government officials have promised that more power generation from renewables is in the pipeline. Investors have cautioned that Kenya needs to adopt changes, including cutting red tape, to unblock stalled power projects.
Ruto said he wants to see economic activities shifted to Kenya from countries more reliant on fossil fuels, including the production of apparel and steel, refining of minerals and metals, and manufacturing of green hydrogen, a gas used as fuel or to make fertilizer.
But Kenya has already found a niche: carbon removal. Ideally, carbon-capture plantsshould be set up in countries that have excess renewable energy, thus avoiding the use of fossil fuels to power the plants or competition with other industries for renewables.
The United Nations announced five years ago that carbon removal, which includes direct air capture, is vital to meet global climate goals. The fledgling technology sucks carbon dioxide out of the air and often pumps it deep underground permanently. In Kenya, carbon dioxide can be liquefied and injected in the Rift Valley’s porous basalt, where it slowly turns into rocks; abundant geothermal energy can power carbon-removal plants.
The United Nations says carbon removal is not a substitute for cutting emissions but can help mitigate emissions from sectors such as aviation and agriculture. The United States is investing heavily in the technology.
Kenya is already running in that race. Nearly two years ago, three young entrepreneurs — one Austrian and two Kenyans — founded the start-up Octavia Carbon. They built their first carbon-capture machine on a kitchen table and plan to open the first phase of Octavia’s plant this year. It aims to remove 1,000 tons of carbon dioxide per year once complete.
Dozens of young engineers are now perfecting their prototype in a warehouse emblazoned with a mural of Kenya’s top marathon runner, Eliud Kipchoge, U.S. writer Octavia Butler and the slogan “No human is limited.” The company’s goal is to achieve scientifically measurable, permanent carbon removal at $100 per ton. It’s still a way off. The cost now ranges from $600 to $1,000 per ton of carbon dioxide removed but could fall as the technology is more widely adopted.
“This machine takes up the same space as a tree, and it can suck out the equivalent carbon of 2,000 trees annually,” said Octavia’s head of product, Duncan Kariuki, proudly patting its shiny flank.
So far there are only two large carbon-capture facilities in the world, both in Iceland, which has similar geology to Kenya, and is run by the Swiss company Climeworks, which is also in talkswith the government to open a plant in Kenya.
“We’ve got the abundant green energy, the geology and the young talent,” said James Mwangi, whose fund has invested in the developer Great Carbon Valley, which is working with Climeworks in Kenya. “An ecosystem is starting to come together.”
Among the direct-air-capture companies planning to open plants in Kenya are Israel’s RepAir Carbon, Belgium’s Sirona, Germany’s Carbon Atlantis, Germany’s Greenlight Technologies and Octavia. All have partnered with the U.S.-based carbon-storage company Cella, which will store the concentrated carbon they extract from the air.
If green investment booms in Africa, it will need to develop even more renewable energy. Energy consumption is already set to spike because the continent’s population is projected to double by 2050. New technologies, such as more efficient methods of cooking and transportation, could limit the increase in energy consumptionto a 50 percent rise, a 2023 report by McKinsey found.
Green Kenyan companies still struggle to attract financing — a point that Ruto hammers repeatedly.
The lack of financing hobbles entrepreneurs such as Linda Davis, a former mountain guide whose brass earrings danced as she pitched her start-upto a U.S. venture capitalist this month. Davis holds a doctorate in microbiology focusing on ethanol production systems, was a director of two U.S. alternative fuel companies and was drawn home to Kenya by the booming cookstove industry. Ruto’s government wants a third of households to cook with ethanol in a bid to save its forests — a 16-fold increase — but the nation imports 98 percent of its ethanol.
Davis’s start-up employs women to farm cassava on unused, semiarid land for refining into ethanol. But it took her five years to raise her initial capital.
“I’m not a Silicon Valley bro who can do a family, friends and fools [funding] round,” she said ruefully. Eventually she raised enough to begin farming and is now fundraising to expand and build a 15 million-liter factory.
It’s hard for young start-ups to get loans from private banks: Rampant government borrowing drives up interest rates, and most banks would rather lend to the government than a potentially risky new company.
But bigger energy companies have a different complaint: government red tape. Power companies say Kenya has had a de facto moratorium on independent power purchase agreements since 2020, which means that power producers, including renewable energy companies, can’t sell power to the state-owned utility or its existing customers.
Ruto said that’s not true, arguing that Kenya must just make sure demand matches supply or risk taxpayers being on the hook for power it cannot use. Kenya’s generation capacity is at three gigawatts, but peak demand is currently only two.
Milele Energy, an owner of Africa’s largest wind farm, the Lake Turkana Wind Power Project, could more than double its capacity on its existing land if it had an agreement with either the utility or directly with industrial customers, said chief executive Erik Granskog. Ruto said it’s welcome to supply new companies but can’t cannibalize the utility’s customer base.
Kenya also lacks the type of single consolidated office that countries such as Rwanda and South Africa set up to streamline paperwork and attract green investment. “It is something that I’m focused on fixing,” Ruto said.
Severalcompany officials said they contacted Ali Mohamed, the president’s climate envoy, through back channels to resolve bureaucratic problems. Mohamed sits in the president’s office and meets with Ruto daily to remove obstacles. He has a mischievous side: When a white paper laying out ambitious climate goals was quietly removed from a ministry website, Mohamed had the goals inserted into Ruto’s public speeches anyway. When Kenya hosted an Africa climate summit, Mohamed arrived at State House with an electric car for Ruto to drive and followed on a locally assembled electric bike, surrounded by a deeply annoyed security detail on hastily requisitioned electric motorbikes.
“President Biden and President Ruto are agreed on one thing,” Mohamed said. “Climate change is an existential threat, but it’s also an economic opportunity.”
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