The archive · Climate & Energy · Strategic decision · 2013-2026
Koko's carbon-credit fuel bet: 1.5M Kenyan households, then 2026 shutdown
Koko sold subsidised bioethanol to Kenyan households, betting carbon-credit revenue would pay the subsidy; a refused Letter of Authorisation ended it
Koko Networks
What the business is
Subsidised bioethanol cooking fuel and stoves for Kenyan households, funded by international carbon-credit sales.
Starting capital：US$100M+ in debt and equity incl. Microsoft's Climate Innovation Fund; ~US$180M MIGA political-risk guarantee (2025)
How it started
Founded in 2013 by Greg Murray and Sagun Saxena, Koko Networks launched its bioethanol fuel-and-stove business in Kenya in 2019 as a cleaner alternative to charcoal, selling fuel through neighbourhood agents and automated dispensing machines.
What happened
Households grew from ~100,000 in March 2021 to 300,000 by December 2021, when TechCrunch covered the launch of Koko Club, a consumer-goods line sold through the same agents. Expansion to Mombasa followed, and the network eventually reached ~1.5M households and 3,000+ machines, with investors including Microsoft, Mirova and Rand Merchant Bank.
How it ended up
Koko needed Kenya's Letter of Authorisation to sell compliance credits under Article 6 of the Paris Agreement and CORSIA, where credits traded near US$20. After 8+ months without it, the company shut down at the end of January 2026, laid off all ~700 employees and entered administration on 1 February 2026 with PwC appointed to sell the assets.
Background
Koko Networks' bet was that Kenyan households would swap charcoal and kerosene for bioethanol if it was cheap and convenient enough, and that the environmental gain could be sold as carbon credits. It priced fuel at roughly half the market rate and heavily subsidised stoves, planning to recover the losses from compliance carbon markets where credits traded near US$20, roughly ten times voluntary-market prices.
The model scaled: from about 100,000 households in March 2021 to 300,000 by December 2021, when TechCrunch covered its Koko Club consumer-goods expansion, and eventually to roughly 1.5 million households served through more than 3,000 automated dispensing machines. Investors including Microsoft's Climate Innovation Fund, Mirova and Rand Merchant Bank backed the company, and in 2025 the World Bank's MIGA issued a political-risk guarantee of nearly US$180 million.
The catch was that selling credits into compliance markets required Kenya's Letter of Authorisation under Article 6 of the Paris Agreement. After more than eight months without approval, the revenue engine stalled, the fuel subsidy became unaffordable, and on 1 February 2026 the company entered administration, having laid off all ~700 employees in late January. Administrators put its kiosks, depots, trucks, software and intellectual property up for sale.
What has to be true
- The consumer value proposition was real but the business depended on one discretionary government approval that was never guaranteed.
- Subsidising a core product on future carbon revenue left no buffer when the authorisation stalled for eight months.
- Scaling to 1.5M households magnified the exposure: the bigger the network, the larger the subsidy gap when credits could not be sold.
- Compliance-market prices were treated as a near-certainty although host-country consent was the unmanaged risk.
What can be applied
A business model whose subsidy depends on a sovereign authorisation is holding a policy option, not a price; one refused letter can void the model no matter how strong the consumer adoption.
Aftermath
As of late February 2026, PwC administrators were inviting bids for Koko's business and assets, saying significant capital would be needed to resolve insolvency. Kenya's trade cabinet secretary said Koko's credit issuance would have absorbed most of the country's international carbon allocation. Former customers lost access to subsidised bioethanol, and lenders held a US$60 million facility secured against assets while the US$179.6 million MIGA guarantee faced possible arbitration.
Sources
- Tech-led biofuel startup Koko Networks launches new consumer goods business in Kenya
- Koko Fuel Halts Operations After Carbon Credit Row
- KOKO failure brings cookstove carbon credit model into question
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