Carbon Funding for Cookstoves

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Carbon Finance for Cookstoves - Overview

In order to support market introduction of improved cookstoves, adequate funding over a fairly long term is needed. Projects often face difficulties in getting enough money for their activities. Here, carbon finance has created opportunities for stakeholders who are developing sustainable energy projects.

Carbon finance (or carbon funding) is a general term applied to resources provided to projects that are generating or are expected to generate greenhouse gas (GHG) emission reductions in the form of the purchase of such emission reductions which are tradable on the carbon market.

As compared to traditional stoves, improved cookstoves generate less emissions and this reduced emissions is calculated as the product of the amount of woody biomass saved, the fraction that is considered non-renewable biomass, the net calorific value of the biomass, and an emission factor for the fuel used. The reduced emissions can further be converted into carbon credits and sold under international programs such as Clean Development Mechanism (CDM) of the Kyoto Protocol (Kyoto Protocol), the Voluntary Carbon Market (VCM), the Gold Standard or the American Carbon Registry (ACR). The revenue generated by selling the carbon credits (carbon finance) is then used to finance the cookstove projects.

In December 2007, stove projects were accepted under the Clean Development Mechanism (CDM) of the Kyoto Protocol.

However, the carbon funding is complex and the requirements for applying are substantial in terms of time and investment. Even though stove projects still account for a negligible share of the global carbon fund markets, the number of improved stove projects has been growing rapidly ever since. New stakeholders and project approaches have entered the stove business.
This chapter focuses on the possibilities and challenges of successful carbon finance for stove projects.

For more detailed information please refer to HERA's Guidebook Carbon Markets for Improved Cooking Stoves - A GTZ Guide for Project Operators.

The Clean Development Mechanism (CDM) for Clean Cookstove Projects

Carbon credits for certified emission reductions of greenhouse gases (GHGs) can be generated in developing countries through the CDM. The generated funds must be used to enable emission reductions, which would otherwise not be possible (additionality).

The CDM is one of the three flexible mechanisms to reduce GHG under the Kyoto Protocol; the others being Emissions Trading and Joint Implementation. Emissions reduction credits that have been achieved through the CDM in a project in a developing country can be sold to a country with commitments listed in Annex I of the Kyoto Protocol (Annex I Countries).

The CDM has two primary goals:

1. to assist Annex I countries in achieving their reduction targets
2. to contribute to sustainable development in the host countries

The CDM encompasses renewable energy, energy efficiency, and avoidance of GHG sources projects. Relevant GHGs are Carbon dioxide (C0₂), which also serves as reference value, Methane (CH₄), Nitrous oxide (N₂0), Hydrofluorocarbons (HFCs), Perfluorocarbons (PFCs), Sulphur hexafluoride (SF₆). Certified Emissions Reductions (CERs) of a project are measured in tCO₂ euqivalents compared to emissions of the baseline scenario.

All countries that wish to participate in the CDM must:

1. have ratified the Kyoto Protocol and
2. designate a national CDM authority (the Designated National Authority (DNA)) which evaluates and approves the projects and serves as a point of contact.

As each DNA can establish its own working procedures, the project developer should be well informed about the requirements of the national DNA.

In December 2007, stove projects were accepted under the Clean Development Mechanism (CDM) of the Kyoto Protocol. In February 2008, two small-scale methodologies for reduced use and displacement of non-renewable biomass were accepted by the CDM Executive Board (EB): "Switch from Non-Renewable Biomass for Thermal Applications by the User" (AMS-I.E) and "Energy Efficiency for Thermal Appliances by the user" (AMS-II.G).

AMS I.E only applies to projects introducing 100% renewable energy and zero emission technologies such as solar or biogas cookers and therefore cannot be used by stove projects disseminating efficient biomass cooking stoves.

It is AMS-II.G, “Energy Efficiency for Thermal Appliances by the user” that provides the opportunity for conducting efficient biomass stove projects under the CDM.

The methodology assumes that in the absence of the project activity, a fossil fuel (kerosene, liquefied petroleum gas, etc.) would be used to satisfy local demand for cooking energy. Hence baseline emissions are calculated on the basis of the CO2 emission factors of the fossil fuel that is most likely to be used to replace non-renewable biomass for cooking purposes in the project area. 

For formula on calculting the emission reductions, please see http://cdm.unfccc.int/methodologies/DB/KZ6FQOCEEHD1V02ARWTW1W2R9G45BX

The CDM Project Cycle

The Project Design Document (PDD) is the central document in a CDM project. The PDD describes the technology used in the project activity, the relevant project participants and project location(s). It defines the methodology used to calculate emission reductions, including the baseline, project boundary´, leakages and monitoring plan. The life time of the CDM-project can be a fixed crediting period of ten years or a flexible crediting period of seven years which can, if desired, be renewed twice. It has to be validated by an independent operational entity (Designated Operational Entity (DOE)) and is then submitted to the CDM-Executive Board for registration. The PDD is the key document that the host country, investors, stakeholders and DOEs will use to evaluate the project’s potential, and to judge its achievements - it's preparation follows UNFCCC requirements .

The process from project idea until registration as CDM project and final issuance of credits takes 6 month at a minimum; in fact the procedures normally take much longer, possibly up to two years. The CDM project cycle (see Table below) is complex, regulations are strict and developers are always at risk that their project activity will not create any credits at the end. The development of a CDM project documentation and the involvement of different institutions throughout the project cycle generate substantial costs. See also https://cdm.unfccc.int/Projects/diagram.html.

Project Cycle	Description	Estimated Costs
Planning a CDM project activity Preparing the PDD	Project participants employ a consultant for PDD writing, communication with DNA, EB, etc. The standard format for the PDD must be used.	Consultant: 30-40 person days, plus travel costs
Getting DNA-approval from each party involved	The written approval of the host country must include the confirmation that the project activity assists in achieving sustainable development	Depends on DNA regulation
Validation	Validation by the DOE is the independent evaluation of a project activity against the requirement of the CDM on basis of the PDD.	20.000 - 45.000 €
Registration (to be deducted from the share of proceedes)	The registration by the CDM EB is the formal acceptance of the validated project as a CDM project activity. The registration fee is an advance payment of the share of proceeds due for the issuance of certified emission reductions likely to be achieved during the first year.	< 15.000 tCO2= no fee = 15.000 tCO2= $0.10/CER > 15.000 tCO2 = $0.20/CER (max. 350.000) (No registration fee to be paid for proposed project activities hosted in least developed countries)
Monitoring a CDM project activity	Project participants collect all relevant data necessary for calculating emission reductions by the CDM project activity.	10.000 -20.000 € (excluding equipment)
Verification and certification	Verification is a periodic independent review and ex post determination of the monitored emission reductions and results in the certification of the emission reductions. It is carried out by a second DOE that is different from the one having validated the project.	15.000 - 45.000 €
Issuance of CERs	The EB will issue certified emission reductions equal to the verfied amount.	2% of the CERs issued must be paid as adaptation fee. Least developed countries are exempted. Depending on national regulation other fees may accrue.
Distribution of CERs	A consultant works out agreements of CER distribution among project participants. Broker markets the CERs	5.000 - 10.000 € To be negotiated

There are two options concerning the size of project:

• Small Scale Projects and
• Programme of Activities.

Small Scale CDM Projects are projects comprising the following characteristics:

• Renewable energy project activities with a maximum output capacity equivalent of up to 15 megawatts (or an appropriate equivalent)
• Energy efficiency improvement project activities which reduce energy consumption by up to the equivalent of 60 gigawatt hours per year; and
• Other project activities limited to those that result in emission reduction of less than or equal to 60 kilotonnes of CO2 equivalent per year

Small-scale projects contribute clearly to the sustainable development aspect of the CDM; small-scale projects can use simplified baseline and monitoring methodologies as well as simplified procedures in order to lower transaction costs. Transaction costs associated with developing small-scale projects are still high relative to the emissions benefits that may be available. Transaction costs are particularly problematic when the volume of CERs being offered is relatively low. As a rule of thumb, it can be stated that an individual project activity should generate at least 10,000 CERs to cover the costs for CDM preparation safely. Due to the combination of perceived risk factors and lack of economies of scale, small-scale projects are challenging to transact in the market.

Programme of Activities

As emission reductions of small-scale projects such as projects disseminating efficient cookstove are often too small to justify the efforts of implementing a stand-alone CDM project, several small-scale projects can become CDM programme activities (CPA) under a Programme of Activities (PoA) in order to reduce the high transaction costs.

With the PoA approach the project approval process for many individual activities that are distributed over space and time are brought together.

The program is coordinated or managed by a coordinating entity, which can be private or public, and does not necessarily achieve the reductions but promotes others to do so. The coordinating entity is responsible for the CERs distribution and communication with the EB.

Features of PoA

Multiplicity of activities to reduce GHG distributed in time and space	Numerous activities are participating in the program and resulting in GHG emission reduction in multiple sites over lifetime of the program. The sites could be located in one or more countries.
Lower transaction costs	Registration and verification processes for CPAs are greatly streamlined.
Reduced risk of non-registration	Since the time to registration and associated uncertainties are greatly reduced for CPAs compared with standard CDM projects it will become possible to provide pre-payments or other forms of securitization for future CDM revenues.
Duration (PoA and CPA)	The length of the PoA is up to 28 years (60 for afforestation/reforestation projects (A/R)). The crediting period of a CPA is either a maximum of seven years (20 for A/R project acitivities) which may be renewed at most two times, or a maximum of ten years (30 for A/R) with no option for renewal.
Size / Scalability	For Small-scale (SSC) programmatic CDM only the individual CPAs have to be under the SSC threshold, while the overall program can go beyond. This reduces transaction costs and generates economies of scale.
Monitoring and Verification	A combination of several methodologies may be applied within a PoA.
No registration of CPAs	After the registration of the PoA, individual CPAs are not required to request registration. Instead the DOE includes the CPA after a check that the CPA follows the rules for inclusion in the PoA.

For more information on PoA , see https://cdm.unfccc.int/ProgrammeOfActivities/index.html

For a list of registered PoA, see: https://cdm.unfccc.int/ProgrammeOfActivities/registered.html

The Small-scale Methodology for Efficient Biomass Cookstove Projects: AMS-II.G

Consider the case of an improved cooking stove that saves fuel and therewith CO₂ emissions compared to the existing baseline technology. The methodology assumes that in the absence of the project activity, a fossil fuel (kerosene, liquefied petroleum gas, etc.) would be used to satisfy local demand for cooking energy. Hence baseline emissions are calculated on the basis of the CO₂ emission factors of the fossil fuel that is most likely to be used to replace non-renewable biomass for cooking purposes in the project area. According to this formula the fraction of the total annual biomass savings originating from non-renewable resources is determined and multiplied by the net calorific value of the biomass actually used and the emission factor of the fossil fuel that would most likely be used in the project area in the absence of the project activity. The projected emission reductions will therefore be based on a fossil fuel scenario. Annual biomass savings in tonnes are calculated by multiplying annual biomass consumption in the baseline by the efficiency improvement of the new technology in comparison to the old stove (or three-stone fire).

Higher efficiencies as well as higher fractions of non-renewable biomass (NRB) earn higher emission reductions. An increase in the number of stoves will reduced emissions linearly.

For the determination of the emission reductions that are relevant for the carbon market, please refer to the calculation method for “Emission reduction (ER_y)” in Carbon Markets for Improved Cooking Stoves - A GTZ Guide for Project Operators.

Additionality

The most challenging aspects of the PDD are dealing with establishing the baseline and assessing the project’s ‘additionality’. A project activity is ‘additional’ if GHG emissions are reduced below those that would have occurred in the absence of the registered CDM project activity. This is the central point of the CDM. It means that a CDM project activity is additional if GHG emissions are reduced below those that would have occurred in the absence of the registered CDM project activity. A CDM project must not be a project that would have been implemented under the business as usual scenario. The fulfilment of the additionality criteria is vital for the successful registration of a CDM project.

Leakage

The project activity’s impact outside the project boundary must also be assessed. If the savings of non-renewable biomass within the project area result in an increase in non-renewable biomass consumption in neighbouring regions outside the project area, its value must be adjusted to account for this leakage.
Leakage assessment poses a general problem. AMS II.G requires ex-post surveys of users and biomass collection areas to gather data on leakage emissions. Illegal harvesting of wood fuel is difficult to detect. If people from outside the project boundary use non-renewable biomass that is claimed to be saved due to the project activity, exact values for leakage are difficult to define.

One approach could be to define an adjustment factor of 0.95 to account for leakage . This is however, only possible under the CDM's AMS-III.G methodology and the Gold Standard’s ‘Simplified methodology for Efficient Cookstoves.

For more information about calculating leakages, please see https://cdm.unfccc.int/methodologies/PAmethodologies/tools/am-tool-16-v2.pdf

Monitoring

Monitoring is an important step in the CDM-project cycle to ensure that constant savings of non-renewable biomass are achieved. The parameters that have to be monitored are given in the methodology and the monitoring plan laid down in the PDD: annual checks on the efficiency of all appliances, or a representative sample, data on the amount of biomass saved under the project that is used by non-project households/users.

The Voluntary Market

The compliance market regulated by the Kyoto Protocol is not the only option to financially benefit from emission reductions. Voluntary Carbon Markets (VCMs) are developing rapidly. They function outside of the compliance markets and enable companies and individuals to purchase carbon offsets on a voluntary basis.

Companies and individuals are increasingly concerned about their environmental impact. Some will neutralise activities they cannot avoid by “offsetting” their own emissions. Individuals may seek to offset their travel emissions and companies claim they are ‘carbon neutral’ by buying large quantities of carbon offsets to ‘neutralize’ their own carbon footprint or that of their products.

They see voluntary offsetting as part of their corporate responsibility and/or as part of their image strategy. Emission offsets in this category are usually verified by independent agents and are commonly referred to as Verified Emission Reductions (VERs).

The voluntary market comprises more different project types than the compliance market. Because the voluntary market is not subject to the same level of scrutiny, management, and regulation as the compliance market, project developers are more flexible to implement projects that might otherwise not be viable (e.g. projects that are too small or too disaggregated). This provides opportunities for innovation and experiment.

Although VER projects are not necessarily required to go through the project cycle, they should be developed and documented according to CDM rules and procedures, for example, by using the PDD format to develop the project.

To provide evidence of its effectiveness, it is recommended that the project is validated, particularly as the voluntary offset market has been criticised for its lack of transparency, quality assurance and third-party standards. To address these shortcomings, several Standards have been developed on the Voluntary Carbon Market to ensure reliable emission reductions. Each standard has a slightly different focus, and none has so far managed to establish itself as the industry standard.

-> A good overview of the Standards has been published by WWF in March 2008

Gold Standard

The Gold Standard (GS) Foundation offers a quality label to CDM/JI and voluntary offset projects, fetching premium prices. It was established in 2003 under WWF and UN's CDM. Only renewable energy and energy efficiency projects with sustainable development benefits are eligible. Under www.cdmgoldstandard.org the relevant guidance and the PDD formats for the generation of Gold Standard CERs and VERs can be found.

The GS has accepted a ‘Methodology for improved Cook-stoves and Kitchen Regimes’. The methodology differs from the CDM-requirements as it allows the use of multiple fuels, includes methane reductions in the calculation of emission reductions, and is eligible for large scale projects. Despite its complexity, the GS methodology leaves room for new and innovative project outlines and for mixing fuels and technologies within one project. However, mixing stove and fuel types leads to extremely complex monitoring procedures. Prior to implementation, a project planner must care-fully assess whether mixing fuel and stove types is a feasible option. The advantage of using the GS methodology for a project’s emission reduction calculations lies in its all-inclusive approach. It not only accounts for CO₂ emission reductions during the cooking process, but also takes into account other GHG emission reductions, i.e. methane (CH4) and nitrous oxide (N₂O), as well as emissions produced during fuel production. Although combustion of wood and charcoal does not give rise to high emissions of methane and nitrous oxide, even small amounts of these emissions constitute considerable CO₂ equivalents due to their strong global warming potentials (GWP).

Black Carbon Quantification Methodology (2015):This is a pioneering development in the improved cookstove sector. This methodology will provide the tool for quantifying and monitoring the emissions from black carbon and other short-lived climate pollutants. It then provides a verified outcome that can be used in a "results based finance" funding scheme.

For more information about the methodology, see http://www.goldstandard.org/articles/black-carbon-and-other-short-lived-climate-pollutants.

By mid 2017, GS launched the new Gold Standard for the Global Goals which encompasses quantification of all projects working towards the Sustainable Develoment Goals.

In April 2020, the GS accepted a new "Simplified Methodology for Efficient Cookstoves" that is applicable

• If the baseline fuel is only fire wood;
• If the baseline stove is a three stone fire, or a conventional device without a grate or a chimney i.e., with no improved combustion air supply or flue gas ventilation:
• If the project stove is single pot or multi pot portable or in-situ cook stoves with specified efficiency of at least 20%.

 

Advantages, Disadvantages and Risks for the Cooking Energy Sector

Advantages of Carbon Finance for the Cooking Energy Sector

• So far, mostly public sector funds were used to introduce improved cookstoves to the market and to change user behavior. But public sector funds for cookstoves were not flowing easily. Now Carbon Finance offers a separate source of funding. These funds could allow for a massive increase in stove promotion.
• The more efficient and clean the stove the more carbon credits can be generated. Thus, there is an observable effort to increase efficiency and improve combustion of stoves. As a result, more researches and developers are working on stoves.
• Experience has shown, that in order to achieve sustainability in use of improved stoves, long term awareness creation and consumer follow-up for at least 5 years is needed. Carbon funded projects can run at least 7, even up to 28 years. This offers an enormous opportunity for achieving sustainability in use of efficient and clean burning cookstoves.
• Selling emission reductions requires intensive monitoring, This allows and forces project staff to better understand stove users’ needs and stove market specifics and to adopt strategies accordingly.

Disadvantages and Risks of Carbon Finance

• Planning a carbon funding project is very cumbersome and time consuming. And it takes at least two years before revenues are earned.
• Bringing stoves to the market supported with Carbon finance needs high up-front costs for project development and for introducing the stoves. Not many investors are ready for this up-front payment.
• Many project developers and implementers don’t have experience in the cookstove market. Only with time will they realize how difficult it is to change consumer habits and cooking behavior, There is the risk that these projects will stop on the way and leave a high number of stoves unused. This again might lead to the impression that stoves don’t work.
• There is no one size fits all approach, therefore a producer needs a variety of stoves to meet the local demand.
• There is evidence that some carbon funded projects give away (or distribute) stoves for free or with high subsidies. If this happens in countries with an established stove market where stoves are sold without or with low direct subsidies, these projects will disturb the existing market and commercial stove producers will lose their jobs. Once the subsidies stop, the stove market and the reputation of stove projects is down to zero.

Further Information

Improved Cook Stoves and the Carbon Market

• Carbon Markets for Improved Cooking Stoves - A GTZ Guide for Project Operators - HERA publication. Continously revised and updated.
  
• Emission Reductions Calculation Tool V. 1.3 (August 2010) - HERA Tool for calculating potential project emission reductions under the CDM AMS-II.G methodology; also available upon request from HERA.
• Guidebook to Gold Standardand CDM Methodologies for Improved Cookstove Projects, Gold Standard Foundation 2016.
• Carbon special interest group (Carbon SIG)
• Carbon finance: a guide for sustainable energy enterprises and NGOs from GVEP
• Webinar on Improved Heating Stoves for Air Pollution Reduction in Mogolia: http://www.pciaonline.org/webinars
  
• Global Alliance for Clean Cookstoves (2014): CLEAN COOKSTOVES AND FUELS: A Catalog of Carbon Offset Projects and Advisory Service Providers.
  
• Stockholm Environment Institute, Project Report 2014-01: carbon revenues help transform household energy markets? A scoping study with cookstove programmes in India and Kenya

General Information on Carbon Markets

• CDM Project Activity Cycle
• Gold Standard
• KfW PoA Blueprint Book(pdf, 3 MB) - Excellent overview on PoA issues for different energy technologies
• The World Bank: State and Trends of the Carbon Market 2012 (pdf, 656 kB)
• 10 Years of Experience in Carbon Finance - World Bank's lessons learned in 10 years of Carbon Finance projects
• CDM pipeline - UNEP Risoe Centre on Energy, Climate and Sustainable Development (URC) - news, statistics, etc.
• World wide news on carbon markets

Further Information on energypedia

• The Clean Development Mechanism
• Carbon Markets for Energy Access Projects
• see all carbon finance related article on energypedia
  

Project Examples from Peru 2013

Carbon Funding in Peru

Almost 15 years ago, in December of 1997, the industrialized countries committed themselves in the city of Kyoto, Japan, to execute a set of measures to reduce greenhouse gas emissions. These gases are emitted into the atmosphere, pollute the air, and generate global warming. Thus, the Kyoto Protocol actually realized the aim of the United Nations Framework Convention on Climate Change, reaching an international agreement that established clear measures to combat this reality.

According to the protocol, each country annually received a fixed number of emission allowances. However, actual emissions often exceeded these rights. Thus, if a country wanted to emit more gases, they could buy the rights from another country that had emitted less. Basically, the protocol was aimed at the three sectors that represent the majority of emissions worldwide: construction, transport, and industry.

“The official carbon market appeared along with the Kyoto Protocol and the buyers are highly polluting industries from industrialized countries, which are obligated to reduce their emissions. To do so, they can choose to buy carbon credits, for example, from a country like Peru, which balances out the emissions they have been unable to reduce,” says Paul Raguénès, founder of Microsol, a social enterprise which facilitates the certification process and transaction of carbon credits in Peru.

However, what happens if a country (or a company) doesn’t reach the reduction quota which it has committed to? If industries do not meet the quota, they receive fines for each ton of carbon that has not been reduced. Everything is specified in the protocol established in Kyoto.

In this sense, if a foreign company decides to buy credits in Peru, it can also finance a project that allows it to certify reductions which ultimately belong to them and can be used to reduce their own emissions.

While Kyoto is not renewed … the voluntary market

While obligations in the 2008-2012 period have been met, the protocol has not been renewed, which completely paralyzed the official carbon credits market and put on hold expectations regarding new agreements to address global warming. However, the carbon market remains in effect through voluntary agreements from companies and countries with a strong environmental conscience, such as Australia or the European Union. This is the so-called voluntary carbon market, i.e. a market parallel to the official one, but which is handled independently and in which entities that buy credits have no obligations under the Kyoto Protocol.

Thus, the buyer may be a company that decides voluntarily to reduce their emissions. An example would be a European industry that decides to buy carbon credits generated by an improved stoves project. These stoves reduce consumption (burning) of wood by families and thereby reduce the emission of polluting greenhouse gases, a process that can be certified to access carbon credits.

In general, the organization of this market is very similar to the official one, using international auditors accredited by the United Nations (UN) that certify the projects. But the voluntary market is not regulated by quotas and obligations like the official one. In this sense, the voluntary carbon credits market often becomes a promoter of social projects and programs that work with technologies that can benefit low-income populations. For example, improved stoves projects have been implemented in different regions of Peru by various public or private organizations, which then have been able to certify the reductions to obtain credits, which, in turn, have been sold in the voluntary market, and, finally, this money has been used to sustain the projects, increase their impact, or even finance new social interventions.

“In Microsol, our work is distinguished by promoting a social carbon, focusing on credits to generate social and environmental projects. We work with forestry projects and social infrastructure, for example, through our Qori Q'oncha project for improved stoves, we assess the certification and subsequent credit sale in the voluntary market, which is a process that demands a quality standard for stoves and the visit of international auditors,” says Nadia Wagner, manager of Microsol in South America.

She remarks that the first certification process of credits, in 2008, was quite complicated. However, since 2010, they were generated more rapidly, and currently the number of projects that adhere to the system is still growing.

“In Peru, the Qori Q'oncha program is very developed and may even be considered the most advanced in the world in regards to improved stoves. The basic idea is that an improved stove reduces the firewood consumption required by a traditional stove, i.e. it generates a certain percentage of savings. In this context, we measure the fuel savings made during the last year of improved stove usage in comparison to a traditional stove. Thus, we can certify a proportional reduction of emissions. This process can be repeated the following year to confirm another reduction and so, year after year, generate credits from the same stoves,” Raguénès adds.

Funding Social Projects

Generally, NGOs, government programs, international cooperation, or companies with social responsibility are the ones that invest in improved stoves. These initiatives, which seek to certify their kitchens to access credits, assume the commitment – when signing the contract with Microsol – that they will invest the money from the sale of the credits into the sustainability of the stoves, so that the certifications can continue.

In this context, the relationship between Microsol and the partner implementing the project is basically technical and in the last two years the distribution of more than 2,5 million dollars from carbon credits has been achieved. The companies would not have received these funds if they had not entered the credit market. “We know that the funds received are primarily invested in the sustainability of the stoves and to disseminate the technology, which is indispensable in order to maintain their social impact over time,” says Raguénès.

In this context, the reality is that although the official market of carbon is virtually stagnant, the voluntary market still remains in force. The price of credits has decreased, but a high quality credit can cost between 12 and 18 dollars. In that sense, demand still stands, especially in the European industrial market. Meanwhile, in Peru and Latin America, there are more and more companies interested in calculating their carbon footprint (level of contamination) and reducing their polluting emissions by financing projects or directly purchasing carbon credits.

This means that in Peru there is also a small domestic demand for credits; this will for social and environmental responsibility on the part of the interested companies allows differentiation from others. And, finally, we are all somehow involved in the struggle for clean air for our atmosphere. Meanwhile, Microsol is also promoting the entry of new clean technologies to the program, be they solar panels, solar water heaters, water filters, biodigesters, and others.

Microsol and The Qori Q'oncha Program

Microsol is a company with social aims which facilitates the development of projects that work towards generating carbon credits in Peru. Stemming from certified technologies, credits generated can be sold on the international carbon market and become financial resources, which promote the sustainability of these same projects.

With headquarters in Paris and offices in Lima and Mexico City, the company has a multidisciplinary team of professionals committed to combating social and environmental problems, as well as promoting sustainable development.

Thus, starting with the certification of over 100,000 improved cook stoves for the remittance of carbon credits, an initial sale of 53,228 credits was achieved, equivalent to 650,000 dollars, which were distributed among the institutions that implemented the improved stoves: Pro Peru and the Work and Family Institute. Also, in the second round a sale of 163,530 credits was achieved, equivalent to 1,850,000 dollars which were divided between the Regional Government of Moquegua, CARE, ProPeru, and the Work and Family Institute. These resources ensure the economic sustainability of the improved stoves project.
Till 2014, mircosol has managed to implement 82,099 stoves and save 2011. 74,235 tonnes of wood as well as reduce 331,754 tonnes of CO2. “We came from France to Peru because we saw a country where the access to clean cooking is still very low in comparison to the rest of Latin America and saw an opportunity to join the initiatives that seek to fill this need. It is worth noting that we found a very dynamic environment, which allowed us to quickly adapt. Thus, we want to highlight the work of the German Cooperation (implemented by GIZ) through the Energising Development Project (EnDev) as well as the work of Mrs. Pilar Nores, through the SEMBRANDO program, which have done important work in the sector.”

Paul Raguénès, Founder of Microsol

www.microsol-int.com

The SEMBRANDO Program

"Through the SEMBRANDO program, which includes certified improved stoves, we have been able to access the carbon credits topic. We started it in mid-2009 with the help of Microsol, who had already articulated the design of the Qori Q'oncha program.

They had developed a structure adapted to improved stoves projects, which has allowed us to incorporate our projects starting with the monitoring stage. Thus, Microsol prepares the technical dossier supporting CO2 reductions, information which once assessed and verified by international audits conducted by Gold Standard, gives rise to the remittance of carbon credits: one credit for each ton of CO2 verified to no longer being emitted due to the use of an improved stove. So, we signed an agreement with Microsol in mid-2009 and the first round of funding arrived in 2011, accomplishing the credits being purchased by the organization Myclimate.

To date, we have managed to add more than 70,000 kitchens to the Qori Q'oncha program and have received in two cases carbon credits because of them: in 2011 and then this year (2013). In the first phase, 24,000 stoves were installed in La Libertad, and in the second phase, 70,000 cooking stoves were installed, which included the initial 24,000 plus those we later installed in Huancavelica, Piura, and Cajamarca.

It should be noted that the same kitchen can produce credits for several years, so long as it keeps running efficiently, for which we regularly implement a monitoring process. In total, the SEMBRANDO program has come to install over 100,000 kitchens, and we expect all to be able to enter the carbon credits program; to this end, we are currently in our third certification process.

Additionally, the commitment stipulates that the money earned through the sale of credits be primarily invested in the sustainability of the stoves installed, so that they have the impact desired. This means a reduction in environmental pollution, as well as improved health and quality of life for the families. In this sense, we are in a process of replacing all combustion chambers stoves, since them having been refractory ceramics means they have exceeded their useful life. Therefore, we are replacing them with others made of cast iron, that have greater strength and durability. It is gratifying to see that the stoves are very accepted and families even feel encouraged to paint them as they like and enhance the environment of their housing.

Interestingly, this implies a large effort that is not obviously visible, as it is required to have an updated database of 100,000 families, so that international auditors can find reliable information, considering that families are chosen randomly for certification.

For this reason, we have a team of 35 people across the country that is constantly doing monitoring work, and we have acquired much experience in performing the necessary weighing measurements to calculate the carbon reductions. This process measures fuelwood consumption during three days in each one of the selected families and includes a qualitative survey. Monitoring is essential, as it helps the stoves work properly, reduces environmental pollution, aids families in improving their quality of life, and that they are certified for carbon credits, which eventually funds the sustainability of stoves and will allow more families to benefit from improved stoves.

We are convinced that the carbon credits are a good mechanism, not only to maintain sustainability of the project, but also for the financing thereof. The only drawback is that credits are obtained only after to the execution of the project. Therefore, we are looking for ways to generate a fund which allows social initiatives to access resources to implement improved stoves projects. Then, the credits generated by these stoves, serve to return the money to the fund. In that sense, we are encouraging and seeking to define a proposed loan within a period of four years with international organizations that provide financial assistance to developing countries, highlighting that access to adequate energy for cooking not only means an impact on a family’s health and income, but also benefits the environment by reducing CO2 emissions and deforestation. A traditional stove uses on average 10 kg of wood per day and produces 6 tons of CO2 per year, while with improved stoves this is reduced by 50 percent.

Finally, I would say that our institution is a clear evidence that credits work. To date, we have received significant amounts of money on two occasions, a third is on the way, and we are confident that there will be a fourth and fifth. Thanks to this, our projects are sustainable and we estimate serving no less than 10,000 new families next year. While it is said that the carbon market has an uncertain future due to the failure to renew the Kyoto Protocol and the official market having disappeared, we think that it simply is a juncture, since the pollution problem continues to grow and the world suffers the consequences. Therefore, there exists a voluntary market, where environmentally responsible countries and institutions continue to stay on top of the issue.

Let us recall, that next year Peru will host the Conference of the Parties (COP20), which will be the last world summit of the United Nations on climate change before the crucial meeting in Paris in 2015, in which an ambitious agreement to combat global warming is to be born. Decisions must be made, especially since we know that such problems are directly related to poverty. In conclusion, there are two major points of interest for everyone: poverty and climate change. Let us not forget that in the world there are 600 million families who still cook by burning wood or some other biomass, which represents three billion people still affected by this reality."

Comments from Ricardo Maraví, executive director of the Work and Family Institute, an NGO that has implemented the program SEMBRANDO with over 100,000 Peruvian families.

www.ityf.org.pe
www.sembrando.org.pe

References

This article was originally published by GIZ HERA. It is basically based on experiences, lessons learned and information gathered by GIZ cook stove projects. You can find more information about the authors and experts of the original “Cooking Energy Compendium” in the Imprint.

The information about Carbon Funding in Peru was originally published by EnDev Peru in the fourth edition (October 2013) of Amaray Magazine.

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