Nairobi — The government has said concerns over possible monopolization of Kenya's carbon credit market led to the decision to deny Koko Networks approval to sell carbon credits internationally, a move that contributed to the company shutting down operations in the country.

Trade Cabinet Secretary Lee Kinyanjui said Koko sought to claim Kenya's entire carbon credit allocation, which would have locked out other local firms from accessing the global market.

The State declined to issue letters of authorization under Article 6 of the Paris Agreement, preventing Koko from trading carbon credits -- a key revenue stream the company used to subsidize bioethanol cooking fuel and stoves.

Without the carbon credit income, Koko's business model became unsustainable, forcing it to wind down operations.

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The government also questioned the transparency and credibility of Koko's carbon credit calculations, saying strict controls are needed on how Kenya's credits are issued and shared.

Officials argued that allocating all credits to a single firm would disadvantage players in energy, agriculture and manufacturing.

Last week, Koko informed customers of its exit through a text message announcing the closure of its services.

Koko has operated in Kenya for nearly a decade, offering a cleaner alternative to charcoal and kerosene for urban low- and middle-income households.

Analysts warn the shutdown could push some households back to polluting fuels, highlighting the regulatory challenges facing climate-focused startups that rely on carbon markets in Kenya.