It’s time to reframe the development industry’s approach to clean cooking.
This week, Sustainable Energy for All is hosting a set of “charrettes” in Amsterdam, one of which is focused on clean cooking.
Invited participants are being asked to identify why there has been woeful progress within clean cooking despite three decades of development industry focus on the issue. We are asked to be critical, constructive and put forth our disruptive ideas.
So here goes.
1. Maintain an obsessive focus on solving for the consumer
There are a wide variety of issues that development actors focus on, most of which are important issues in themselves, but many of which are not actually relevant when trying to solve for the challenges associated with building a scalable clean cooking fuel industry.
There needs to be an obsessive focus on solving for the needs of the consumer, rather than confusing matters by introducing well-meaning but ultimately counterproductive secondary considerations such as the quantity of local content in the supply chain.
In simple terms, consumers want cooking fuel that is:
a) clean-burning, clean-handling, quick to ignite, and easy to control and extinguish;
b) safe for their children to use;
c) low-cost; and
d) available in small purchase bundles within a short walk of their homes.
These are all perfectly reasonable demands.
Where the fuel and appliances are produced, and how the supply chain is organised, is only relevant to the consumers insofar as it can contribute to solving their actual needs — around cost, safety, usability and availability.
To put it another way: if you were faced with a cost-benefit analysis that clearly showed that “development-optimizing” a supply chain would deny clean fuel access to millions of households by making it significantly more expensive, what should you do?
At KOKO, we argue and invest in favour of the consumer.
Given the status quo of death and destruction caused by the dirty cooking fuel industry, we assert that development actors should also prioritise the consumer.
And by the way: charcoal, wood and kerosene are not clean fuels. The science is in. Charcoal, wood and kerosene do not meet SDG7, nor do they meet reasonable demands of the consumer.
There is a distracting amount of development money and effort invested into trying to improve (and therefore justify) the use of dirty cooking fuels, that is reminiscent of the “clean coal” propaganda practiced by the dying coal industry in the west.
Focus in on the objective: solving the reasonable demands of the consumer with clean fuel.
2. Study what is working, and why
The only clean-burning cooking fuel that has scaled in emerging markets is LPG. It is useful therefore to study the LPG industry to understand why it has scaled, despite the shortcomings that make it difficult for LPG to meet the needs of the majority.
In some ways, LPG is like any other energy industry sector in history that has successfully scaled. Whether it is solar power, wind farms or petroleum transport fuel, all energy industry sectors possess four key ingredients that are required to scale: Customized Technology, Customised Infrastructure, Private Capital and Customised Policy.
a) Customised Technology
Technology that is built specifically for a type of fuel or energy source is critical to optimise the cost and efficiency of the use of that fuel.
Whilst it is possible to hack together a functioning windmill from your garage that runs your small farm irrigation system, it has only been in recent years that technology enabled wind power to undercut coal and natural gas power on price, and so hundreds of billions of dollars of institutional capital has flowed into the sector to help it scale.
When considering the scalability of clean cooking fuels, there needs to be a focus on customized technology that has been proven to achieve step-change improvements in efficiency and cost of delivery, and so can undercut dirty cooking fuels on price.
Development actors for decades have focused on a small part of the puzzle: the stove. Solving for fuels seems to have been put in the “too hard” basket. It’s time for those actors to get serious about fuel supply chain technology.
As we see in all successfully scaled energy industries, customized technology is required across the entirety of the energy and technology supply chains. If your perspective does not encompass the entirety of the supply chain, then you are probably leaving cost and inefficiency on the table, to the detriment of the consumer.
b) Customised Infrastructure
Cooking fuel in emerging markets is portable energy: portable solids, portable gases and portable liquids.
In wealthier nations, decades of government investment into centralized infrastructure has resulted in the right technical answer for low-cost cooking energy that is NOT portable: reticulated gas networks and robust electricity networks (paired with expensive but efficient electric stoves that lower the “fuel” cost of electric cooking).
In most emerging market cities, the per-house cost of a reticulated gas network across a city exceeds the average cost of the house itself. The fuel cost of electric cooking matches the fuel cost of LPG, only when buying an electric appliance at least four times more expensive than the equivalent LPG appliance. Electricity networks in emerging markets are often not built for the significant additional load that widespread electric cooking would entail. Solar + batteries is a fanciful concept for cooking, requiring an order of magnitude greater electrons and storage capacity (ie cost) than a typical solar home system used for lighting and phone charging.
And so we are back to portable energy. The only cooking fuels that exist at scale across most emerging markets are portable gas (LPG), portable solids (charcoal, wood) and portable liquid (kerosene).
Studying the existing infrastructure for each of the gas, solid and liquid forms of portable cooking energy that exist at scale provides clues about what alternatives might emerge.
For example, liquid bioethanol cooking fuel benefits from two realities:
i) the existence of a major global ethanol production base in excess of 100 billion litres, with plants in every populated continent;
ii) the existence of tens of billions of dollars of customized infrastructure for uncompressed flammable liquids (petrol, diesel, kerosene), extending from port bulk storage facilities at every major port, to customized and regulated bulk road transport fleets, to small depots called petrol stations.
As a result of these two realities, liquid bioethanol cooking fuel that is already in circulation can be “dropped in” on existing uncompressed liquid fuels infrastructure and moved efficiently and at low cost to a small depot near where people live. No need to invest in upstream capacity or build downstream infrastructure in order to solve for the consumer.
Uncompressed flammable liquids require an order of magnitude lower capital expenditure to handle than compressed gases, across the entire supply chain. A 2018 study by Dalberg Global Development Advisors found that scaling LPG requires 18 times more capex across the supply chain as compared to scaling liquid bioethanol, when utilising existing liquid fuels infrastructure and KOKO’s industry leading technology platform for liquid bioethanol cooking fuel.
For those development actors grappling with how to unlock the tens of billions of dollars in incremental LPG supply chain capex that is required to solve the dirty cooking fuel challenge, we suggest dividing the number by 18.
c) Private Capital
This ingredient is pretty straightforward.
If a solution does not have a clear pathway to unlocking large amounts of “returns-first” private capital, then it won’t scale quickly.
The sheer scale of the dirty cooking fuels industry provides ample incentive for innovators and risk investors to dig in with the requisite customer obsession, and for later-stage institutional capital to crowd into ventures that are delivering on traditional customer traction and profitability metrics.
Beware the ventures whose captables are populated only by development / impact money, and whose narratives solve for every buzzword in the development space, irrespective of the cost to the consumer.
d) Customised Policy
Throughout history, energy has been the least “free market” sector in the world. There are always subsidies or taxes depending upon the wealth and perspective of the relevant government in question. Globally, the IMF estimated fossil fuel subsidies of USD 5.2 trillion in 2018.
In most countries, LPG has a dedicated package of legislation that includes permitting, safety standards, regulations on the manner in which storage, transport and refilling can occur, and provisions for tax concessions or subsidies. These are generally sensible policies given the positive social and environmental impact that LPG delivers, by enabling households to switch from dirty cooking fuels.
It is foolhardy to think that alternative clean fuels will scale without a similar dedicated package of legislation, that is customised to the specific fuel in question.
Too often development actors have tried to gather all cookstoves and cooking fuels in the same bucket, despite the significant variances in each form of fuel and the clear need for customised policy that addresses the specific safety, storage, transport, handling and impacts of each fuel.
The Government of Kenya has assumed a global leadership position in recent years in purposefully crafting policy to enable the growth of the liquid bioethanol cooking fuel industry. In 2015, after observing pilots in Kenya and other countries, the category of “denatured bioethanol for cooking and heating” was formally recognised and provided an exemption from the USD 2 per litre excise tax charged on beverage alcohol. This new category of cooking energy was then regulated, with strict requirements on denaturing, colouring and supply chain accounting compliance.
Two new national standards were written and published by the Kenyan Bureau of Standards, covering ethanol cooking appliances, and bioethanol cooking fuel. VAT on ethanol stoves was exempted, and VAT on denatured bioethanol cooking fuel remain under discussion with Kenya's National Treasury around enabling policy change that can spur the growth of this industry.
A new public-private initiative to develop the “Kenyan Bioethanol Cooking Fuel Masterplan” has recently commenced, under the auspices of the Ministry of Industrialization and with involvement from the Ministries of Energy, Agriculture and Environment, whose specific purpose is to identify opportunities to introduce policies that attract large-scale institutional investment into the nascent sector.
The Government of Kenya recognises that the charcoal industry is a major driver of deforestation, which negatively impacts rainfall patterns, which reduces agricultural yields. Charcoal is a tax on agriculture, a tax on the village, and a tax on the National Treasury. Not to mention the 400 Kenyans who die each week, every week, from the diseases associated with indoor air pollution from dirty cooking fuels. It is a national imperative to clean up the cooking industry, and liquid bioethanol is now a firm part of the policy toolkit being deployed to do so.
Development actors looking to unlock the significant private capital required to solve the dirty cooking fuel challenge should look to the leadership provided by the Government of Kenya and find ways to encourage the scaling of this best-practice policy package for liquid bioethanol into other countries.
3. Pick winners
Development actors often have an aversion to picking winners, prioritising inclusivity over scalable impact. Whilst well-meaning, the knock-on effect of this aversion is that genuine breakthroughs that have the potential to become impact unicorns can become lost in the noise.
Those who are serious about solving the dirty cooking fuels challenge need to focus on bringing capability to the table in areas such as R&D, technology commercialisation, infrastructure, capital formation and mainstreaming of best-practice policy. This will enable the development industry to better understand and focus on the critical areas that breakthrough innovation is required, or help systematically remove the barriers for scaling the breakthroughs that already exist.
Ultimately, what matters is solving for the consumer. It is not hyperbole to state that millions of lives depend on it.
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