Innovative Black Carbon Certificates Fuel Traditional Cookstove Replacement

May 22, 2015

Recently, the Gold Standard Foundation, a leading standards organization for climate mitigation projects, launched a first-of-its-kind program to certify the reduction in black carbon emissions when traditional cookstoves are replaced with more efficient ones. While these certificates do not have monetary value in and of themselves, they have the potential to transform funding for cookstove replacement by providing donors with verified outcomes.

Black carbon or soot is generated from the incomplete burning of biomass – wood, animal dung or brush – as well as polluting diesel engines. It is second to carbon dioxide in its contribution to global warming. But, the detrimental impact of soot does not stop there. It also compromises water security for millions by accelerating glacial melt where it settles.

And worse, traditional cookstoves – responsible for up to 25% of black carbon emissions worldwide – are the primary cause of indoor air pollution for 3 billion people, causing the premature deaths of 4.3 million, including 500,000 children.* Not only does soot contribute to global warming, but a global health crisis too.

There has been a concerted effort by organizations such as the Global Alliance for Clean Cookstoves to replace traditional stoves with cleaner ones. Indeed, these programs have had success: since 2010, more than 20 million cleaner and more efficient cookstoves and fuels have been adopted by people in developing countries, largely in urban areas.

Yet, this effort has been hampered by a myriad of challenges, with cost being one of the most vexing. At $10-100 apiece, modern cookstoves are simply out of reach for many of the world’s poorest households.* Moreover, familiar benefits from such a purchase are often hard to put a value on, things such as time saved gathering wood or reduced risk of respiratory disease.

Cookstove replacement programs already attract financial support from carbon credits generated by reducing associated carbon dioxide emissions. But, current protocols neither quantify black carbon emissions nor measure its reduction. It is this gap that this certificate program seeks to fill.

And, by doing so, black carbon certificates have the potential to generate even greater benefits than carbon credits alone. Here’s how. These certificates:

• Attract funding from a wider range of sources given that they tackle issues beyond climate change including water security and human health. Donors could include governmental and non-governmental organizations, as well as multi-national corporations such as Unilever which already invests heavily in sustainable living initiatives around the world.

• Can generate greater premiums for associated carbon credits than otherwise would be expected because of the added benefit of certifying black carbon reduction too. Additional funding will accelerate stove replacement by subsidizing the purchase price and ongoing maintenance fees or distribution costs, especially in harder to reach rural areas.

• Provide a powerful signal to the market that demand for more efficient cookstoves is about to scale. To date, only 4% of traditional stoves have been replaced.* This leaves a massive market opportunity yet to be tapped and ripe for further innovation.

Reducing black carbon emitted from traditional cookstoves benefits human health and the environment. Though not a monetary instrument in and of itself, Certified Outcome Statements have the potential to accelerate cookstove replacement by attracting greater funding from donors that seek results-based outcomes. Replacement programs – certified to benefit both people and the planet – should ignite greater interest in this effort by all of us.

* Source: The Gold Standard Foundation

Distributed Generation Can Fuel Local Economic Growth

December 12, 2013

“Buy Local” marketing campaigns have long been a popular – and effective – way to spur economic growth within local communities. Such programs redirect consumer spending to independent businesses closer to home. Not only does this added spending increase local sales, but it fuels greater economic activity in general as the money is more likely to be re-spent locally on other goods and services. Traditionally, such campaigns have focused on boosting sales for local farmers and artisans. They have also been used to reinvigorate downtown shopping districts, helping local merchants retain customers against encroachment by big box retailers.

Distributed Energy Generation Creates Disposable Income

Perhaps not surprisingly, there has historically been little economic incentive to promote locally-generated energy as part of these campaigns since traditionally there has not been a more local alternative to energy provided by large national companies. Today, however, distributed generation energy (DEG) has the potential to fuel greater local economic activity by putting more disposable income (or profits) in the hands of local homeowners, businesses and investors that can be spent locally.

DEG systems – fueled by solar, wind, natural gas and other energy sources – are readily available for homeowners and business to install directly. Consumers can also partner with a full service provider such as SolarCity to finance, install and maintain such systems. By deploying DEG, homeowners and businesses typically reduce their overall energy costs as well as the variability in energy pricing. Renewable DEG has the added benefit of lowering ongoing cash outlays for fossil fuels. Moreover, local DEG owners can generate incremental income by selling excess power back to the utility – or perhaps longer term to neighbors through contracts negotiated directly or brokered through the utility.

DEG Provides an Attractive Investment Opportunity

DEG systems can also provide an attractive investment opportunity for investors looking to generate moderate returns at relatively low risk. Local economies can benefit by providing a way for locals to generate an attractive return on their money – especially in this low interest rate environment – while accelerating the deployment of DEG within their communities.

Investment vehicles have emerged to facilitate this. For example, Mosaic allows qualified investors to invest smaller amounts (minimum $25) in rooftop solar energy projects. This past week, SolarCity announced that it has completed the industry’s first securitization of large scale distributed solar energy assets valued at nearly $55 million.

Market Conditions Are Increasingly Favorable

Market conditions are increasingly favorable to scaling DEG. Just this past week, the Federal Energy Regulatory Commission announced new standards that make it much easier for small scale (<20 megawatts), renewable DEG including rooftop solar and wind to connect to the grid. Furthermore, installation costs are coming down rapidly as conversion efficiency increases and manufacturing costs fall which is accelerating adoption. Small solar PV power capacity, for example, is expected to double within the next two years.

Rapid growth in DEG is, of course, disrupting the traditional utility model. Yet, many utilities and regulators are moving aggressively to adapt to the changing competitive environment. Duke Power, for example, is increasingly focused on providing grid services like battery storage needed to ensure grid stability as more wind and solar power capacity comes online. Meanwhile utilities American Electric Power, MidAmerican Energy and others are backing new transmission capacity to bring wind power from the Texas Panhandle to major cities. Finally, regulators like the Arizona Corporate Commission are making accommodation for utilities to ensure that they get cost recovery for transmission investment and maintenance.

Distributed generation is growing rapidly and can provide a big boost to a local economy. Community leaders should take advantage of this by promoting its expansion – and motivate local consumers to buy home-grown energy. A “Buy Local” marketing campaign may be the perfect way to encourage just that.

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