KOKO’s collapse: Corresponding Adjustments, CORSIA and wider implications

The collapse over the weekend of KOKO Networks, one of the world’s largest and highest profile cookstoves project developers, sent shockwaves through carbon markets. But what does it mean, for carbon credits, for CORSIA, and for national governments?

A promising market leader

In recent years, clean cooking fuels developer KOKO Networks seemed to have skirted the credit quality pitfalls of the 2010’s—instead managing a soft landing among those much sought-after projects with strong co-benefits, likely recognition and use under the Paris Agreement, and access to CORSIA, the aviation sector’s global compliance carbon market. 

Even more promising, KOKO was operating in Kenya, a host country with a reputation for valuing independent high-integrity crediting and taking an active interest in CORSIA. Kenya is a co-chair of the Coalition to Grow Carbon Markets and the Kenyan President, as recently as 2023, called carbon credits an “unparalleled economic gold mine” and his country's “next significant export”. 

The missing piece: A letter of authorization

So no one was surprised by the Kenyan government’s participation in the world-first investment guarantee that was issued to KOKO in 2025 by the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA). This meant that, by mid-2025, KOKO’s credits faced just one more sovereign-sized hurdle to being fully usable toward Paris Agreement targets or CORSIA: they needed Kenya to authorize their use in those markets, which a government typically provides in a letter of authorization (LoA) to the developer or its certifying standards body. 

Find out more about Article 6 authorizations in our recent explainer blog here.

But despite many years of Kenya’s market-enabling gestures, as of this weekend the LoA still hadn’t arrived, and KOKO ran out of time. This is painful news for its 700+ former employees, not to mention the over 1 million Kenyan households that rely on its systems to cook with. 

And more widely, this episode is having a chilling effect on domestic projects, in Kenya and beyond, whose business plans hinge on expectations of credit authorization, compliance market access, and resulting high(er) prices.

KOKO’s collapse: Key takeaways and market implications

Here are some initial reactions to this cautionary tale:

1. MIGA’s investment guarantees are not like traditional business insurance, because they cover such novel political risk categories and also operate quite far upstream in the process (e.g., business planning, investment stages), compared to the tightly-defined LoAs being communicated in the market today, mostly post-issuance, as the basis for the new clutch of private carbon insurers. Given the complexities of the MIGA guarantee and the wider politics this plays into, between the World Bank and the Kenyan Government, we do not expect to see a clean resolution of this particular issue anytime soon.
2. Some project developers will likely be revisiting and further diversifying their commercial plans, based on this and inevitable similar future examples. Tying one’s commercial fate to a single government decision carries significant and probably under-appreciated risks and costs (yes, including cost of carry). But there are also steps market participants can take to reduce this risk, including deepening their engagement with host governments, helping build the technical capacity of host governments, and drawing on the emerging sources of market intelligence, including ours, on what direction individual governments are going in.
3. It may take several more years before some governments communicate LoAs, even those with very pro-market policies. Governments will take their time with these decisions, which effectively commit them to add authorized emissions reductions back to their total emissions—to not count them toward their national targets—through at least 2032 and with very little room for “take-backs”.
4. KOKO’s fate illustrates what host governments stand to lose by not communicating LoAs, too. Some developers will walk away, leaving governments to look for other ways to reduce domestic emissions that might require more direct government action, regulation, and public taxpayer cost.
5. Perhaps most importantly, this news should renew attention to CORSIA, where demand for credits covered by LoAs still dwarfs supply. Airlines must find and cancel qualifying credits between 1 December 2027 and 31 January 2028. Considering the typically extended lead times for carbon credit contracting and delivery, CORSIA could find itself at a crossroads within 12-18 months if new LoAs do not materialize, and particularly if CORSIA-facing developers like KOKO continue to exit the market. 

See our market modelling and analysis of future CORSIA pricing, supply and demand scenarios here.

What if you hold KOKO credits?

What should you do if you hold any of the 15 million KOKO credits out there in the market? 

This will depend on the reason you bought them - if it was to use them, or sell them on, in the context of the voluntary carbon market, then KOKO’s demise should make no difference. The quality of the credits - which we would be happy to discuss with you - is unaffected. 

However if you bought these credits in the expectation that they would receive the LoA, and ultimately a Corresponding Adjustment (CA), either for use under CORSIA or against a national target under Article 6 of the Paris Agreement, then the value of the credits may have taken a hit. However some or all of these credits could still receive the LoA or CA. While the likelihood and timing of this is unclear, what we can say for certain is that if it does come, it will be too late for KOKO Networks.

Navigate the carbon market with confidence

We and the rest of the Sylvera team are working around the clock to produce market intelligence and tools for project developers and host countries, to inform and accelerate LoA decisions that build on the latest best practice. Much of this is already available in the Sylvera platform, and we have even more coming soon. 

Our team’s broad experience across the modelling and policy fronts — including previous work within national governments or the carbon market itself — gives us confidence that the tools we’re working on will be game-changing in terms of providing the transparency and clarity needed for all stakeholders active in the carbon market. 

This market needs accurate data and insights to take off, and we’re doing everything we can to help. If you need help navigating any of the complexities discussed in this blog, get in touch with us here.