September 23

Tracy Smith

E+Co’s Gold Standard – Lessons Learned?

Climate and carbon are hot topics these days, as what may be the most important climate conference ever approaches. Whatever its outcome, the December 2009 Copenhagen climate negotiations represent the first time since the election of Barack Obama that all countries will come together to discuss climate change under the rubric of the now universally accepted human-induced global warming.

The United Nations Climate Change Conference, or COP 15 as it is casually known, seeks to establish a successor to the Kyoto Protocol, which expires in 2012. Most countries are feeling the pressure to cut carbon emissions, but for rapidly developing countries, such as India and China, the call for emissions stands in oppositon to their own industrialization. Indeed, many would argue that the wealth enjoyed in Europe and the U.S. is a result of burning fossil fuels for the past one hundred years. For COP 15 to result in an aggressive agreement to reduce global carbon emissions, a fair strategy that addresses the needs of developing countries will be required.

, a mission-driven clean energy investor in developing countries, is working to implement strategies that enable Wall Street investors to put capital to work in developing countries through the carbon markets. Unlike more traditional carbon finance developers, however, E+Co strives to ensure that dollars flowing from carbon credits make it to the bottom of the pyramid. To that end, the organization recently announced that it has successfully registered two energy efficient cookstove projects with the Gold Standard, a Swiss-based non-profit that serves as a governing body for Verified Emissions Reductions (VERs). These are among the first such projects ever registered with the Gold Standard.

Energy efficient cookstoves are important for a number of reasons. First, they are 40% more efficient than traditional stoves, thus significantly reducing the amount of charcoal that is used for cooking. The stoves also reduce indoor air pollution, which is one of the leading causes of death in developing countries: according to the World Health Organization, one person dies of indoor air pollution every 20 seconds, and more people in the developing world die from indoor air pollution than from malaria.

Because of the triple bottom line benefits associated with energy efficient cookstoves, E+Co has long invested in companies that manufacture and sell the products, particularly in West Africa. Now, two of its investee-enterprises, Katene in Mali and Toyola in Ghana, have successfully completed the validation process, the carbon credits are registered and awaiting sale.

“More than any carbon project, cookstoves address most directly health and poverty at the bottom of the pyramid,” says E+Co Carbon Finance Manager, Erik Wurster. “What we want to do is get more money flowing down to the local cookstove manufacturers, enabling them to drop the price of stoves and make more stoves accessible to more people. This, in turn, greatly reduces the amount of soot and other particulates that are released into the air. When burned in poorly ventilated conditions in primitive stoves, solid fuels such as wood and charcoal have a tremendously harmful public health impact and are a leading cause of respiratory illness in developing countries,” Wurster notes.

It took E+Co over two years to complete the application and registration process. The benefit of the arduous process, though, is that it offers needed transparency and confidence to a new and abstract commodities market, which is critical for this market to thrive. Wurster acknowledges, “E+Co learned valuable lessons from this experience and is leading the way in terms of developing carbon credits from cookstoves. We are among a short list of organizations who know how to develop these types of projects. And, we know how to do it well.”

E+Co anticipates that these two stove projects will generate an enormous amount of carbon dioxide emissions reductions over the next several years. These reductions will be sold on the market as carbon credits. Entrepreneurs will see a significant slice of the carbon revenues in the form of cash, which is then used to grow their business. E+Co will continue to work with other companies in its portfolio to develop carbon credits.

As for COP 15, it is this type of cash-in-hand transfer to developing countries that will bring them to the table to discuss emissions reductions. Wurster notes, “E+Co does not really engage in crafting policy, we’re not a think tank or a lobbying group. We are doers. We develop and implement sound business strategies for the bottom of the pyramid. Yet, we are optimistic that demonstrating the benefit of these projects can improve the upcoming climate talks. Perhaps in a small way, this achievement shows how capital can be used to curb greenhouse gas emissions, improve public health, and perhaps most importantly, offer ingredients for an equitable climate change treaty post-2012 in which all countries benefit.”