The Clean Cooking Loan Fund has just been launched to help leverage private sector finance to scale-up the roll out of clean cookstoves to billions of people around the globe. The Fund has been established by the Global Alliance for Clean Cookstoves, The Gold Standard Foundation and Nexus Carbon For Development. Until now there has been a lack of commercial financing for clean cookstoves and fuels which has created a barrier for entrepreneurs and others in developing a thriving market for these technologies.
Nearly 3-billion people cook with solid fuels every day that, when burned in open fires and traditional cookstoves, contribute to climate change and, through illness and injury, result in 4-million deaths annually. The Alliance, The Gold Standard and Nexus are committed to creating a global market for clean, safe and affordable cooking solutions and believe that this can only be made possible through innovative approaches to finance.
“Every market enabling option must be on the table in order to prevent unnecessary deaths and injuries, environmental degradation and lost livelihood opportunities caused by the seemingly simple act of cooking a meal, and we believe carbon markets are a viable, practical way to finance the adoption of clean cooking solutions at scale,” said Radha Muthiah, executive director of the Global Alliance for Clean Cookstoves, which has contributed 290,000 USD to capitalize the Fund.
Although the sale of carbon offsets provides a valuable revenue stream, clean cookstove projects often find it challenging to fund certification processes due to the one to two year time lag between registration and first revenues from carbon credits.
“The Fund is designed to take on financial risk associated with the carbon process by offering a loan to project developers. It will not purchase emission reductions but these will be used as collateral to the loan. This innovative approach has been used by Nexus since 2010 and results show that the model increases the value flowing back to projects,” said Marion Verles, executive director of Nexus, fund manager for the Fund.
“Eligible projects will need to demonstrate that they provide strong governance for both the greenhouse gas reductions and co-benefits associated with the project. The monitoring, reporting and verification of the environmental, social and economic benefits are critical to de-risking a project and ensuring success,” said Adrian Rimmer, Chief Executive Officer of The Gold Standard Foundation.