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Carbon Markets Need to Help the Poor

By David South, Development Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

The global carbon credit trading schemes emanating from the Kyoto Protocol have created a multi-billion dollar market – the global carbon market was worth US $30 billion in 2007 (World Bank) – and represents one of the fastest growing business opportunities in the world. The bulk of this trading is with the European Union’s emissions trading scheme, some US $25 billion. But the big problem to date has been most of this investment is enriching stock brokers, and not the poor.

And this is a huge opportunity missed, as some point out: “These numbers are relevant because they demonstrate that the carbon market has become a valuable catalyst for leveraging substantial financial flows for clean energy in developing countries,” according to Warren Evans, the World Bank’s director of environment.

And the way to do this is through the Clean Development Mechanism (CDM) – where wealthy countries can meet their greenhouse gas targets by investing in clean energy projects in the South. But so far, it has been criticised for spending 4.6 billion Euros on projects that would have cost just 100 million Euros if implemented by development agencies.

But if done right, the CDM could become directly beneficial to the so-called Bottom of the Pyramid (BOP) – the four billion who live on less than US $2 a day. The CDM allows developed countries to offset their greenhouse gas emissions by paying projects targeting the poor to develop clean energy, or to create what are called carbon sinks (planting trees for example), to cut global emissions.

One mechanism to make all of this work is the CDM Bazaar: officially launched in September 2007, it is about linking together buyers and sellers. This is a place where people with business ideas or projects can go for start-up funding. It is also a place to share information, contacts and learn about how to tap the market.

And two Southern innovators are showing what can be achieved by tapping the power of the sun to help the poor.

One such initiative In India, owned by Mr. Deepak Gadhia and Dr Mrs. Shirin Gadhia, is targeting the 63 per cent of the BOP market that is with rural populations. All of these people need affordable and clean energy if their lives are to improve: most currently use firewood and kerosene for cooking and heating. The company Gadhia Solar is building and selling solar steam cook stoves in rural villages. The giant solar dishes which resemble satellite TV dishes, can fry and roast using the sun and come in Do-it-Yourself kits. The enormous silver dishes beam concentrated sunlight on to a black plate on the oven, reaching temperatures of over 450 Celsius.

In Morocco, the company Tenesol, an electric supply co-operative society, is using solar power to bring electricity to 60,000 poor households in 29 provinces. And it is making Morocco a world leader in the use of solar for rural electricity.

Each house is equipped with a solar home system comprising a solar panel, battery and controller. It is powerful enough to light four to eight lamps, and support a television, radio or mobile phone charger.

Customers pay a connection fee of US $80, and then a monthly service fee of between US $7.50 and US $17.50. The fee competes well with what rural households were spending on candles and batteries.

The initial outlay for equipment is mostly paid for by investors, with the hope that the money will be made back on the service fees.

Tenesol hopes to bring electricity to 101,500 households, and also wire them up and provide light bulbs.

Resources

  • More on emissions trading: Click here
  • UNDP has produced a free users guide introduction to the Clean Development Mechanism.
    Website: http://www.undp.org/
  • South South North has also produced a Practitioners’ Practical Toolkit.
    Website: http://www.cdmguide.com/

By David South, Development Challenges, South-South Solutions

Published: March 2008

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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This work is licensed under a Creative Commons Attribution 4.0 International License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2021

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Baker Cookstoves – Designing for the African Customer

By David South, Development Challenges, South-South Solutions

New UNOSSC banner Dev Cha 2013

SOUTH-SOUTH CASE STUDY 

An innovative social enterprise is using design to create an energy-efficient cookstove for Kenya. By turning to an experienced Swedish architecture and design firm, the people behind the Baker cookstove wanted to make sure the stove’s design was as efficient as possible and relevant to the customers’ needs, while also making sure it is visually appealing and something a person would proudly want in their home.

The Baker cookstove (bakerproduct.com) has been designed to be a high-quality and desirable product that also accomplishes the goal of saving money for the user. This unique product is being developed and made at the company’s factory in Nairobi, Kenya.

Baker’s owner is Top Third Ventures Global (topthirdventures.com), a social-impact company registered in Kenya and founded in 2011 by American Lucas Belenky and Björn Hammar, a Swedish/Finnish entrepreneur. Their goal is to make sure that everyone in the developing world has access to an affordable, high-quality efficient cookstove.

While cooking is a daily necessity for billions of people, it is also costly and polluting. By switching to energy-efficient cookstoves, families can reduce the cost of cooking daily meals and, if the stove is designed right, cut the amount of pollution generated. One of the great obstacles to the take-up of energy-efficient cookstoves to date has been the absence of sustainable business models to sell and distribute them.

The Baker cookstove, designed as an aspirational product and backed up with a seven-year guarantee, hopes to change this dynamic. If things go to plan, the company hopes to significantly scale up its production based on customers wanting to have a Baker cookstove proudly on display in their home.

The Baker cookstove is the product of a deliberate attempt to use design and a well-thought-out production life cycle to create an item that is eye-catching, effective, and manufactured consistently to a high standard.

Designed by Claesson Koivisto Rune (http://www.ckr.se/), a Swedish architecture and design firm, the Baker cookstove is a sleek, round, modern stove and comes in eye-catching colors such as orange. It could easily fit in with other kitchen products in a high-end design shop. And that is the point: they want people to want the Baker cookstove.

Quality is key, and engineering and design teams constantly monitor the product and make adjustments to the cookstove as they receive feedback from customers.

The Baker cookstove is benefiting from new financing being made available through carbon credits, which its founders believe will bring big changes to the energy-efficient cookstove market over the next 10 years.

Baker’s chief executive, Lucas Belenky, told Southern Innovator magazine – this newsletter’s sister publication – about the thinking behind the Baker cookstove.

SI: What role does design play in the Baker cookstove social enterprise? At what stage did Top Third Ventures start to think through the production life cycle for the Baker cookstove? What did you feel was missing in the other cookstove models currently available on the market?

The Baker cookstove is the cornerstone of the social enterprise. Top Third Ventures is at its core a product company. There are different aspects to the business model to make it work (i.e. carbon credits and big data) but everything depends on the success of the Baker product. We started thinking through the production life cycle from the day the company was founded in late 2011. The Baker is designed for usability, aspirational value, and performance, prioritized in that order. The most important thing is that the Baker is easy to use and does not require its users to change their daily routines or cooking habits. Cooking cultures vary greatly across the developing world so it is important to understand exactly who your customer is and focus on meeting their requirements. When you have a product that is easy to use it needs to be desirable as well. Beyond the service provided, the product should make the customer feel good about themselves. Finally, the Baker cooks the same food with half the fuel and much less smoke.

The priorities seem reversed for other cookstove models on the market. Efficiency comes first, then the aesthetic design, and cultural conformity is last. Hyper-efficient cookstoves are great for health and the environment on paper but the benefits are not realized because widespread adoption isn’t achieved. Most products are imposed through a top-down approach instead of starting with the customer and designing the stove around them.

SI: Why did you choose to have the Baker cookstove designed by Claesson Koivisto Rune, a Swedish architecture and design firm? What were some of the challenges encountered when designing the product and the production life cycle? What advice do you have for other social enterprises looking to offer an appealing product to low-income households?

We wanted the Baker cookstove to be an aspirational product that you use as much because of the performance (less fuel and less smoke) as because it is beautiful. Claesson Koivisto Rune believed in our vision at a very early stage and I doubt we could have gotten where we are today without them. Challenges around the design mainly involve keeping the costs down. Our customers do not have a lot of disposable income so balancing affordability with performance and world-class design is tough.

For other entrepreneurs selling to low-income households my advice is identify your customer, listen to them, and never stop listening. This is obvious to most businesses but for social enterprises sometimes the grant organizations or other dispersers of donor funding become the customer without you noticing.

Finally, often just because the consumer is in a developing country, enterprises neglect aesthetic appeal and branding. Do not do this. Your consumer behaves for the most part like their counterpart in the developed world. They want products that look nice and make them feel good.

SI: What role is information technology playing in the Baker cookstove’s development? How do mobile phones help with reaching customers in Africa? How does offering software products such as Top3Tracker help Baker cookstoves?

Information technology has a huge impact in decentralized areas because it enables cheap flow of information. For Top Third Ventures it allows us to track our sales in real-time, communicate with current and future customers instantly, and gain valuable insights about how to improve the sales pitch and marketing strategy. The Baker cookstoves also depends on carbon finance, which requires a dialogue with current customers to ensure the usage of the cookstove is accurately measured. Information technology such as our Top3 Tracker significantly reduces the cost of accessing carbon finance.

SI: It is said an innovator is somebody who disrupts existing products and ways of doing things. How is Top Third Ventures innovating and disrupting the current approach to energy-efficient cookstove distribution?

We hope to change the way products for low-income households are designed, marketed, and sold. Top Third Ventures’ Baker cookstove embodies our conviction that these products should be customer-centric, have aspirational value, and conform to local cultures. The success of our product will show that consumers in the developing world want the same thing as their counterparts in developed countries.

Top Third is a partner of the Global Alliance for Clean Cookstoves (cleancookstoves.org).

Resources

1) Baker cookstove: The website details how the cookstove was developed. Website: bakerproduct.com

2) Top Third Ventures: The company designs, manufactures, and sells its own unique efficient cookstoves made to fit the local cultures and traditions of their customers, supported by a strong brand and world-class customer communication. In addition, Top Third Ventures works with existing manufacturers and distributors to secure carbon financing for their activities through their programmatic CDM activity and electronic data management system. Website: topthirdventures.com

3) Global Alliance for Clean Cookstoves: The Global Alliance for Clean Cookstoves calls for 100 million homes to adopt clean and efficient stoves and fuels by 2020. Website: cleancookstoves.org

This work is licensed under a Creative Commons Attribution 4.0 International License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2021

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