More than a dozen companies, mainly from Saudi Arabia, are bidding on 2 million tonnes of carbon credits as the Kenyan capital hosts what organisers have billed as the world's largest sale of its kind.
Demand for carbon offsets, generated through projects such as tree planting or using cleaner cooking fuel, is expected to grow as companies seek to use the credits to help meet net-zero emissions goals.
The auction in Nairobi is being conducted by the Regional Voluntary Carbon Market Company (RVCMC), which was founded by the Saudi Public Investment Fund and Saudi Tawadul Group.
The certified credits that are sold will fund either projects that avoid emissions by using sustainable technologies or remove carbon from the atmosphere, RVCMC said in a statement.
Bidders at the auction include Saudi Airlines, RVCMC CEO Riham ElGizy told Reuters, since the certification of the credits includes offsetting airline emissions.
RVCMC, which held its first auction of 1.4 million tonnes of carbon credits in Riyadh last October, said it chose Kenya to highlight the need for investments in climate projects.
Although the East African nation is a small emitter, contributing to less than 1% of annual global emissions, it has been hit hard by climate change in recent years, with devastating droughts killing crops, wildlife and animals.
"We are here to walk the talk," ElGizy said.
Scaling the voluntary carbon market is seen as a crucial part of the world's response to climate change as it allows companies to offset a portion of their emissions by investing in projects that will lock the climate-damaging gas away.
As more companies target net-zero emissions by 2050, demand for offsets is set to grow, although some have been put off by concerns around the quality of some projects and various groups are seeking to put firmer guard-rails around the industry.
Worth around $2 billion in 2021, according to Ecosystem Marketplace, the annual global market for voluntary carbon credits could hit $50 billion by 2030, consultants at McKinsey have estimated.
Critics, however, have in the past cited concerns including poor transparency, a limited supply of credits and questions over the quality of projects.
ElGizy rejected the criticism, saying RVCMC works with two separate, independent teams of experts to vet projects that contribute credits for sale.
"If there are any red flags, we immediately exclude this from the auction," she said.
Some 70% of the credits at Wednesday's auction were generated by projects in Africa, RVCMC said.
"This includes the supply of improved clean cookstoves to communities in Kenya and Rwanda and renewable energy projects in Egypt and South Africa," it said.
