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This post originally appeared on the Next Billion blog.
The clean cookstove industry has faced a strategic turning point in the past few years which has left investors, policymakers and other industry players in a state of confusion. After over a decade of promoting clean cookstoves programs, the industry’s attention has recently shifted away from cooking stoves themselves, and refocused on the cooking fuels these stoves utilize.
Though long-term health studies remain limited, these findings have sparked an international debate on where the industry should channel its resources and funding. Should it focus only on the cleanest solutions that have the potential to create the greatest health impacts? Or should it continue to fund and promote cookstove programs that have proven social and climate impacts, but that may only meet the second or third tier in terms of cleanliness of burn – as measured by the industry’s performance targets, which range from zero (dirtiest and highest emissions) to five (cleanest and lowest emissions).
The stakes of this debate are high: The wrong decision could leave millions behind.
At Envirofit, we are partial to cleaner solutions. In our 12 years working in the clean cooking industry, we’ve seen that consumers want clean, high-quality, affordable cooking solutions that improve their lives. While there are some studies that show people are highly influenced by the cultural aspects of cooking with biomass, if they’re given the option to light a stove at the push of a button and cook and clean in half the time, the choice is obvious. That’s why stoves that utilize liquified petroleum gas (LPG), ethanol, biogas and electricity are their aspiration. The challenge with these technologies comes down to affordability.
Pay-as-you-go solutions are beginning to grow in the industry, in an effort to make these fuel and cooking technology options accessible. But these business models are still being proven – and in the meantime, lack of affordable solutions means market penetration has suffered. Access to clean cooking has only increased by 0.5 percentage points per year since 2010. This is both slower than population growth, and far behind the targets of the Sustainable Development Goals (SDGs). That’s why, if the industry is going to meet these goals, significant and continued investment is needed – for both future technologies and solutions that can be scaled today.
But the key questions remain: Which of these solutions can be scaled, and which can be classified as “clean” cooking? There continues to be a considerable debate on how cleanliness of burn is defined. But based on the internationally defined clean cooking standards, there are only a few solutions that meet the cleanest (tier 4 and 5) standards, which eliminate household air pollution. And few of these solutions are scalable today, and able to meet the SDGs in the near term. Let’s take a look at some of these approaches:
Pay-as-you-cook™ technologies like SmartGas are finally making LPG affordable and fully accessible to the urban poor. It is an important part of the health and environmental solution nexus to improved cooking, and it could reach millions in a short amount of time, as LPG is currently available at scale in urban and peri-urban areas. So the integration of renewable bio-LPG in the future wouldn’t require a behavior change in the customer – though it would require investments in infrastructure, which is limited outside of peri-urban areas in emerging markets.
Other clean technologies like electric cooking and ethanol are currently not affordable or available at scale. The Beyond Fire report by HIVOS found that willingness to pay for clean cooking solutions in rural areas is much lower than in urban and peri-urban areas, and the cost of delivering clean cooking fuel is markedly more expensive.
So the biggest question remains: How does the clean cooking industry reach rural wood collectors? While studies show that this population could afford improved cooking solutions that are under $10, there are no market-based solutions that can bring the top-tier, cleanest solutions to the 1.7 billion people who collect free biomass fuel. Even with pay-as-you-go solutions, rural consumers earning less than $3 a day don’t have the disposable income to pay for cleaner fuels.
These facts are misaligned with many of the grant and investment initiatives in the sector, which are focused on finding market-based solutions to bring (tier 2 or higher) cooking solutions to this population – and failing to find applicants with realistic solutions. Improved cooking solutions that are certified above tier 2 (the minimum requirement for being considered “clean”) all cost above the $10 cap of affordability for the wood collecting population. Thus, as the industry fights to direct funding to the cleanest solutions, it is leaving the majority of people behind.
Solving the clean cooking challenge requires the recognition and funding of a multi-tiered approach. The industry desperately lacks investment and financing, driving a war between stakeholders and confusion on where funding should go. If the industry wants to achieve the SDG targets, funding needs to be channeled to both clean and cleanest solutions that are realistic.
The cleanest solutions are still proving scalability, and funding is still needed in both R&D and proof-of-concept to bring these solutions further to peri-urban and rural fuel purchasers before they are ready for investment. These initiatives will contribute to future progress, but alone will not achieve the SDGs. That’s why investment needs to be channeled to the cleanest solutions that are currently available. The International Energy Agency’s Sustainable Development Scenario predicts that LPG is the prominent solution for urban areas, and improved biomass stoves are the most likely solution for rural areas to make progress on these goals by 2030.
But there is still a need to fund clean solutions that won’t leave the highest-risk populations behind. For many rural and peri-urban populations, the carbon market should be utilized and recognized as a pivotal solution – even if it is a transitional one that doesn’t meet the strictest ideals of a market-based approach.
The carbon market works when companies and even governments buy carbon credits from the carbon savings which are generated when a family converts from a traditional stove to a clean cookstove. It’s part of the “cap and trade” system that emerged after many countries decided to impose national caps on greenhouse gases, and companies were required or encouraged to maintain emissions below a certain allotted amount of carbon credits (or to buy/trade credits with other companies if they exceeded those limits). It allows companies like Infosys, Aviva and others committed to becoming carbon neutral to calculate the monetary value of the CO2 they produce, and offset that carbon by buying credits generated by programs that reduce CO2 – like clean cooking companies. Funding from this purchase subsidizes the cost of implementing a clean cooking program, reducing the cost of the stove for the consumer. The carbon credit offset market can be (and has been) a viable option for funding these cost subsidies. While this approach has received some criticism, it has also demonstrated proven impact, and should be viewed as an integral part of the solution tool-kit.
The Gold Standard Foundation has shown the effectiveness of this approach. The Foundation is a certifying organization that creates and sets the protocol for carbon certification, sells carbon offsets, and works to advocate for carbon offsetting. It has helped to estimate the monetary return of the social benefits of carbon offsets for 289 audited clean cooking projects, finding that these benefits have a projected lifetime value of $11.6 billion for beneficiaries, in areas including health, environment and economic impacts. Carbon credit subsidization has been among the largest sources of financing for clean cookstoves. It has also been a crucial interim stepping stone that has helped to level the market for the highest-risk (ie: lowest-earning) biomass fuel purchasers, bringing them up the technology ladder and a step closer to the cleanest solutions.
But the industry also needs more diversified funding. Indeed, it needs a reality check: The nearly 2 billion wood collectors or peri-urban and rural charcoal users are not currently reachable with a strict market-based approach. The only solution that has worked for this population is carbon credit financing, which is heavily reliant on cookstove cost subsidization to enable market penetration. That means the clean cooking agenda has been narrowly defined and funded based on climate impacts, while largely ignoring large-scale health impacts.
Diversifying the objectives and channels of funding for clean cooking would provide resources for innovation across the cooking value chain. It would also provide funding for both currently scalable solutions to meet the SDGs – and future innovation to make the cleanest solutions affordable and available worldwide. It is only through such a dual approach, focused on both the present and future, that the industry will truly realize its potential.