This study analyses the existing fiscal space for financing green economy investments in Kenya and how additional fiscal space can be created through the strategic use of revenues generated from future oil exploration and exploitation and reform of taxes on energy products (initially focused on gasoline, diesel and kerosene). To avoid creating an excessive burden on central government finances and to increase accountability of the counties, the study also suggests that subnational governments need to rely more on their own sources of revenue.

The suggested reforms to fiscal policies outlined in this study cover a broad range of sectors and areas, including reformed local taxes, options for the use of revenues from oil exploration and exploitation and reforms to the system of fossil fuel taxation. The revenues generated from such reforms could be used not only to further fiscal policy reforms overall but also to mobilize additional resources for investment in key priority areas, thereby advancing Kenya’s green economy pathway.