The African Ethanol Stove Program – carbon finance made simple for project implementation partners
Kenya based Green Development AS is implementing a PoA for ethanol and biogas based stoves in several countries in predominantly Eastern Africa and is aiming for 1 million of such stoves within 5 years. To scale up its operations, Green Development offers a straightforward deal to its local project implementation partners. Any organization that can implement at least 500 stoves over a period of 6 months can enter into a partnership agreement, by which Green Development guarantees to pay an annual fixed amount of USD 10 for every implemented stove for as long as Green Development receives carbon credits.
In this way, Green Development takes full responsibility for carbon market related risks and hopes to benefit from the upside. It also takes care of all CDM related documentation and requirements, employing professional staff to carry out the monitoring activities for each CPA. Project implementers have no direct exposure to the CDM and no on-going obligations. They only have to provide detailed user information and an end-user agreement at the time of sale. This is simplified by a smart-phone application that allows project implementers to send through the contact details, a photo of the user and the end user agreement by web application, feeding information directly into Green Development’s central database.
Technology risks of the project are shared: While the project implementation partner takes the risk that the stoves are in place and are being used, Green Development’s revenues depend on the rate of usage and the performance of the equipment as this determines the amount of carbon revenues. Since its inception as a carbon credit project developer, Green Development has invested approximately USD 2 million upfront from private funds into the development and registration of its PoA, of which USD 1 million has gone to the 10 head strong workforce that develops and manages the PoA, USD 0.5 million for DOE costs and USD 0.5 million for all other costs. The PoA was registered in 2012 with the first verification scheduled for early 2014. Green Development does not get involved in the business model and choice of technology of project implementers as long as stoves meet a 50% minimum efficiency.
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Figure 1: An ethanol stove featured under Green Development’s programme.