We discuss the effectiveness of past clean cookstove deployment and subsidisation practices, before laying out alternative strategies for how funding should be structured to attract private investors and stimulate the development of subsidy-free vibrant markets for clean cookstoves.

Takeaways

  • Commercial markets for clean cookstoves are still a long way away. Despite more than 50 years of experience with deployment of clean cookstoves, signifi- cant more effort is needed to reduce the entrance barriers for private investors and create a vibrant and commercial market for clean cookstoves.
  • Direct price subsidies of clean cookstoves deter market development. Past experiences show that the deployment of fully subsidised clean cookstoves through development aid projects has had limited effects on long-term adop- tion. Direct price subsidies may, in fact, increase barriers for commercialisation as it reduces the intrinsic value of clean cookstoves which lowers customers’ willingness to pay.
  • Limited effect of CDM-based subsidies. The low price of CERs, high price volatil- ity, and cost increases incurred to access CDM revenues, reduces the effect of the CDM significantly. The strict requirements to qualify for CDM revenues stim- ulate policy-driven product development, rather than customer-driven, which increases cookstove costs and, hence, also the need for direct price subsidies.
  • Indirect subsidies is the most effective measure towards commercialisation of clean cookstoves. The lack of transparent market intelligence is one of the larg- est barriers for attracting private investors to the clean cookstoves sector. Fund- ing towards market developing activities such as market assessments, field test- ing and customer-driven product development reduces risk for private investors. Moreover, such activities can be used to increase customers’ willingness to pay, rather than lowering it, which will be another driver for private participation.

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