Connecting Vietnam’s cookstoves with carbon finance market

Connecting Vietnam’s cookstoves with carbon finance market

Hanoi, 21 October 2016 - SNV Vietnam, in partnership with Nexus for Development, successfully held a stakeholder consultation workshop on the carbon finance plan under the "Market Acceleration Clean Cookstoves in Cooking Solutions (ACCS) in the Greater Mekong Sub-Region" project.

The event, which was attended by representatives of Vietnamese government, cookstove producers and end-users, aims to share the developments and gather feedback from relevant stakeholders on the carbon finance plan under the ACCS project.

The ACCS project aims to increase access to efficient cooking solutions and fuels in rural and urban households, thereby addressing indoor air pollution and fuel needs. This is done through replacing inefficient traditional stoves and cooking practices with advanced cooking solutions to reduce biomass fuel consumption and greenhouse gas emissions.

In partnership with Nexus, a non-government organisation known as one of global leaders in the certification of voluntary emission reductions, SNV has been pursuing a plan to apply the carbon credit mechanism, using the Gold Standard certification, to the ACCS. This project provides results-based finance (RBF) incentives to producers instead of subsidising households directly.

Steven von Eije, SNV Energy Programme Manager said, “The beauty of this project is cookstove producers have freedom to develop their marketing strategies to reach the huge market of 12 million households in need of clean cooking solutions. They are free to invest in the RBF incentive as they see fit for their needs. The RBF that the project offers means that a producer will only receive the incentive after a third party has verified that predefined objectives of selling an advanced clean cookstove to a household has been achieved. All this is done in a competitive and transparent way”.

On a weekly basis, the ACCS project organises an auction in which bidders compete to obtain the RBF incentive options. The bidder who offers the lowest price per RBF incentive will be awarded with the whole batch of RBF options. After earning the RBF incentive options, the producers will be able to claim RBF incentives once have they successfully sold the advanced clean cookstove to an end user. This innovative scheme results in an optimal allocation of donor resources while ensuring a level playing field for the producers.

In response to concerns of some stakeholders about the sustainability of this project, von Eije stated: “Our project has an ambitious objective of supporting the distribution of at least 46,000 advanced clean cookstoves across Vietnam until the end of 2019. The current readiness of users to buy advanced clean cookstoves is still low, but we believe that over time, with cooperation from Nexus in  establishing  and implementing a sound carbon financing plan we will be able to prolong the lifetime of the project until many users are willing to pay the full retail price for these advanced clean cookstoves. The producers of these stoves will then continue to produce and sell stoves on a commercial basis upon which a commercial sector for advanced clean cookstoves in Vietnam is a reality.