Carbon trading: a new route to funding improved stove programmes?

by Dr Wim Hulscher*, Regional Wood Energy Development Programme (RWEDP) in Asia, FAO Regional Office for Asia and the Pacific, Maliwan Mansion, Phra Atit Road. Bangkok 10200, Thailand, Email: [email protected]

* a full analysis of this initiative can be obtained from Dr Hulscher

Le commerce du carbone: une nouvelle voie pour le financement des projets de foyers amor/B> Cinq des de cas ont analysafin de montrer comment les programmes foyers amorpeuvent e justifien terme de rction des ssions de gaz ffet de serre. Toutes les des de cas montrent que le co rction des effets de gaz ffet serre de ces programme serait de l'ordre de US$ 1.7 par tonne de CO2 (hors coogramme). La rction des effets de gaz de serre devrait e conside comme le principal indicateur de succde ces projets.

Introduction

The majority of the world's households using woodfuel still lack a proper stove. Despite this, rural electrification dominates the policy agenda, mainly because the stakeholders involved are more powerful than those who use biomass fuels. However, there is a new way in which improved stoves can be justified, in terms of greenhouse gas emissions, at a competitive cost.

Traditional benefits from stoves programmes

India - health benefits

Studies by Natarajan (1999) have shown that, in India, there is an economic return on stove investment of more than 200%. These calculations account for estimated consumer benefits in terms of fuel saving and producer benefits in terms of additional employment. However, from the financial perspective of the user, the stove is not successful, because the user does not put a value on fuel saving, as it is often collected at no financial cost. It has been estimated that less than 1% of the total fuelwood used in India has been saved as a result of disseminating 23 million improved stoves in the last 16 years.

The Ministry of Non-conventional Energy Sources (MNES) recently confirmed that in their stove programmes, priority is now given to the women's health aspect rather than efficiency. This means that only stoves with chimneys are being promoted, even when this compromises efficiency.

Laos - financial benefits

Participatory Development and Training Center (PADETC) stoves are being introduced at the rate of more than 15 000 per year. They save about 30% fuel and people buy them for cash. In this case, where time saved in fuelwood collection can be used profitably, the programme is deemed a success.

Vietnam - fuel saving & health benefits

The Institute of Energy has developed a stove for rice straw that combines increased efficiency (30%) with safety and health. Dry straw is highly flammable, and when a proper stove was lacking (Figure 1), windows were kept closed to avoid wind entering the kitchen. Now even poor farmers buy the stoves for cash (Figure 2). They are aware of both fuel savings and improved air quality.

Figure 1: Traditional tripod rice straw stove, Vietnam

RWEDP/Auke Koopmans

Figure 2: Improved rice straw stove, Vietnam

RWEDP/Auke Koopmans

Reducing greenhouse gases - a new reason for stove programmes

'Carbon trading' involves countries from the industrialized world funding reductions in greenhouse gases from the developing world, and being credited with some of the pollution reduction themselves. This reduction can be costed in terms of the number of dollars it takes to prevent one tonne of carbon dioxide being produced ($/tonne CO₂). This would be paid by the 'carbon buyer' for whom the improved global environment is what they are 'buying'.

From the experiences described above, it is seen that for a stove programme to be self-propelling, there must be benefits for the user. This is relevant, as the target groups may not perceive world climate as a personal benefit.

To explore how programmes for introducing improved wood-stoves can be justified in terms of greenhouse gas reduction, five cases were analysed. In all these cases, the programme costs have not been included in the estimate.

Case studies 1&2: Improved fuelwood stove where fuel is scarce (Thailand & India)

This applies where fuel is not, or will not be sustainable now or in the near future. An improved Thai bucket stove (Figure 3) costs more to buy than a traditional one (4US$ compared to 1.5US$) and is therefore less popular. However, once users move to the improved stove, they tend not to revert back. If the marginal cost of the improved stove could be met by the industrialized world, the greenhouse gas savings would cost 0.8-1.2$/tonne CO₂. The exact costs depend on the assumptions made for stove price, fuel consumption, emission factors for fuel. These assumptions are based on known stove characteristics in Thailand and India.

Figure 3: Thai bucket stove being assembled, Thailand

RWEDP/Auke Koopmans

Case study 3: Improved fuelwood stove where wood is sustainably produced (India)

This means that as much wood re-grows as is being used as fuel. This situation applies to most areas in Asia. In this case there are no carbon dioxide benefits, as growing wood absorbs CO₂, but there are benefits from reductions in other gases. With known emission data, and estimates made of fuel consumption, the results show a reduction cost of 1.7US$/tonne CO₂ equivalent.

Case study 4: Improved charcoal stove where wood is sustainably produced (India)

This is a similar case to case study 3 but with charcoal as the fuel. In this case the cost of reducing greenhouse gases would be 1.2US$/tonne.

Case study 5: Substitution of coal by sustainable fuelwood (China)

This case applies where people use coal, especially low-grade coal, as domestic fuel. It could be particularly attractive where reforestation also prevents erosion and flooding in upstream river areas. The case is based on woodfuel costs from a sustainable plantation. In this case it does not cost anything at all to make the substitution, as wood is cheaper than coal, and the stoves cost the same.

Discussion of findings

These studies show that wood-stove programmes can help to reduce greenhouse gases at basic costs of less than 1.7$/tonne CO2 (excluding programme costs). As many greenhouse gas projects are being undertaken at costs of 5US$/tonne, the results of this analysis are attractive.

Outline of a stove project for the carbon market

A 'greenhouse stove project' would differ from a conventional one in that the criterion for success would be the reduction in a known quantity of greenhouse gases.

For example: in Thailand, the Department of Energy Development and Promotion (DEPD) wishes to introduce five million improved stoves, but does not have the funding to do so. The stove project would consist of the following activities:

· Emission data would be established for traditional and improved stoves.

· A 'baseline' study would be implemented showing current stove use in the region.

· Stove producers would be compensated for the extra costs of producing the improved stove (2.5$ per stove extra) on the understanding that they charged the traditional stove price. The agreement would also require the manufacturers to cease production of the traditional type.

· During start up production and marketing, records and regular checks would be made by project experts for stove quality.

· During the 'payback' period where the stoves need to be used; this could be ascertained by the project team. A realistic figure should be set for improved stoves to be still in use after two years - say 75%.

Conclusion

A stove programme of this sort would cost about 3.3 million US$ and take about five years to complete. This estimate of costs includes expertise, training, travel and publication campaigns. It would result in about 1 million stoves being introduced into NE Thailand, with consequent emission reductions of about 2.25 million tonnes of CO₂, at a cost of 3.3/2.25 1.5US$/tonne CO₂ prevented.

Willem Hulscher is the Chief Technical Adviser of the FAO Regional Wood Energy Development Programme in Asia, based in Bangkok