Impact Financing for Clean Cooking Energy Transitions: Reviews and Prospects

Abstract

Achieving universal access to clean cooking requires a significant mobilization of capital to close the current funding gap of around US$7 bn per year. The clean cooking landscape has changed considerably with substantial innovation in terms of technology, business models, and services. The transition towards higher-tier, modern energy cooking (MEC) solutions provides key opportunities for innovative financing models to scale MEC globally. Transitions from cooking with polluting fuels to MEC have significant positive impacts on the environment, gender equality, and health. Impact Finance to monetize these co-benefits for MEC solutions is widely seen as an outstanding opportunity to channel funding into MEC transitions. However, except for climate funding, opportunities to channel finance for wider impact SDG benefits arising from MEC have proved challenging to realize in practice. This article explores in detail two new approaches which are taking advantage of features of digital technology to overcome some of these obstacles. It adds to the recent debate around climate finance for clean cooking and presents key learning lessons from developing and piloting the ‘Metered Methodology for Clean Cooking Devices’ as the current most accurate approach to estimate carbon savings for MEC and the ‘Clean Impact Bond (CIB)’ which aims at monetizing health and gender-co-benefits. The paper demonstrates how robust methodologies can help to accelerate funding for MEC and calls for joint approaches to standardize and streamline climate and outcome finance approaches to enhance their impact by making them more accessible for a wider range of MEC technologies, geographies, and projects.