Impact Carbon co-hosted a meeting with the Global Alliance for Clean Cookstoves to discuss innovative approaches to carbon finance that can kick start the commercial investment required to drive stove dissemination and adoption on a meaningful scale.  The proposed cookstove accelerator facility is a toolkit through which governments, foundations, multilateral institutions, and commercial and social investors might effectively activate capital to meet this challenge.  The purpose of this meeting was to receive targeted feedback on the cookstove accelerator facility and to begin constructing a roadmap for implementation.

The Need

However, to date, carbon markets have supported the dissemination of less than 1 million efficient stoves – a penetration rate of less than 0.2% in a global market where more than 2.5 billion people cook with unhealthy, inefficient, emissions-intensive stoves. The projected annual emission reductions from all registered cookstove projects† are less than 702,000 metric tons per year,which is less than 0.2% of the expected annual average CERs from all registered CDM projects. Cookstove projects have not attracted the private capital required for scale due to market uncertainty and price risk,and perceived project risk among investors that have not been shown a cost-effective pathway to scale.

Carbon projects that seek to address the unmet need for efficient stoves face a lack of capital to support project opportunities with social, health, and environmental cobenefits. Capital is typically unavailable because of price risk due to market uncertainty, and perceived project risk among conventional investors lacking experience and familiarity with efficient stove projects.

The Opportunity

A cookstove accelerator facility would create a price guarantee fund and provide the initial capital needed to kick start the development of a large and diversified portfolio of carbon offset projects with pooled risk across countries and project developers.

The Cookstove Accelerator Facility (CAF) would address the financing gaps that cookstove projects face asthey seek to leverage carbon markets through two primary functions. The first function of the CAF would be creating a price guarantee fund that reduces price risk due to future market uncertainty and attracts matching private sector investment. The second function would be raising the capital needed to develop a portfolio of projects to demonstrate a pathway to scale for conventional investors. This capital would be applied to individual projects in the form of prepayments primarily, and would also provide capacitybuilding grants. These two functions of the CAF could be funded by governments, multilateral institutions, development organizations, foundations, and social investors interested in leveraging their investments towards the climate mitigation and social benefits of efficient stoves.

To download the full concept note, click here: Cookstove Accelerator Facility Concept Note