Cement maker East Africa Portland Cement (EAPC) has entered the carbon trading market in an effort to diversify from the lucrative, but competitive cement market.
On Thursday, the cement firm singed a carbon trading deal with JP Morgan Climate Care, a division of investment banker JP Morgan, for purchase of 105, 000t of carbon credits annually worth Sh80m.
The carbon credits are the product of changes in the manufacture of cement through the reduction of the more expensive clinker, main raw material in the making of cement, leading to lower consumption of fuel in the firing process.
Mr John Nyambok, the EAPC managing director, said the carbon credit deal will not only translate to cost savings on cement production but open new income streams “Carbon trading is a win-win business for us,” said Mr Nyambok, adding that the cement firm would up its credits by 30, 000t from 2010.
Carbon trading involves the purchase of carbon credits from firms that emit less carbon dioxide by companies, mainly from Europe and Asia, which have exceeded their emissions limits.
EAPC joins a growing list of Kenyan firms including Mumias Sugar and KenGen that are tapping the lucrative carbon trading business.
The global trade in carbon credits is now worth US$30bn (Sh2.1trn), according to Unep.
But experts reckon that most Kenyan firms are yet to tap into the carbon trading business despite the country holding huge potential.
“Lots of companies are sitting on huge carbon assets,” says Tom Owino, the vice president of the local office of JP Morgan Climate Care.
East African Portland Cement announced a 36 per cent drop in its pre-tax profit for the year ending June, 2008, as exposure to a foreign currency loan took a toll on its books.
The listed cement manufacturer recorded a pre-tax profit of Sh715m against Sh1.1bn recorded in the year to June 30, 2007.