On November 28, 2023, the Clean Cooking Alliance (CCA) introduced the 12 Interim Principles for Responsible Carbon Finance in Clean Cooking, a result of three months of collaboration with over 500 members spanning 267 institutions.

These Principles underpin the importance of integrity, transparency, fairness, and sustainability in high-quality carbon projects in the clean cookstove sector.

Key messages:

• The 12 Interim Principles for Responsible Carbon Finance in Clean Cooking aim to improve market norms, instill confidence in clean cooking carbon markets, and incentivize investment in the clean cooking sector.

• These Principles are now under public consultation until January 31st, 2024, and the final version will be released in 2025 to form a set of voluntary codes of conduct.

• Although these principles could unlock significant growth in the clean cooking sector by catalyzing trusted carbon finance investments, they may create additional entry barriers for new players, making it critical for institutions to increase funding and technical support.
  
  
  

The Interim Principles proposed by the Clean Cooking Alliance. Source: Clean Cooking Alliance

Clean Cooking Alliance’s Interim Principles for Responsible Carbon Finance

The Clean Cooking Alliance (CCA), a US-based nonprofit, targets universal clean cooking access by 2030. It collaborates with industry players to boost demand for cleaner stoves, attract investments for quality products, and promote industry growth and effective policies. The CCA established the Responsible Carbon Finance for Clean Cooking Initiative (RCF4CCI), a consortium of working groups focusing on ethical and transparent principles for the clean cooking sector.

The Initiative was set up in response to carbon credit buyers’ concerns about the general integrity, fairness, and transparency of clean cookstove carbon projects. While buyers remain interested in cookstove credits and retired more credits than in previous quarters, spot prices have dropped almost by half as compared to around a year ago. Restoring buyers’ confidence is critical to securing access to carbon revenue and the growth of the market.

Clean cooking carbon credits pricing and retirement trends. Source: Clean Cooking Alliance

After months of deliberations, the working group came up with 12 principles governing the actions of project developers (PDs) and market actors:

1. Integrity: Evidence-based, case-specific, and substantiated claims

• I1: PDs use realistic, geography-specific, and conservative baselines and assumptions.

• I2: PDs accurately and conservatively monitor fuel consumption and stove usage.

• I3: PDs only claim co-benefits that are substantiated and evidenced.

2. Transparency: Non-commercially sensitive information is accessible

• T1: Market actors are transparent about the proportion of carbon revenue reaching actors down the value chain.

• T2:  Market actors enable buyers to reflect co-benefits in carbon credit prices.

3. Fairness: Solicit informed consent from users and share revenue fairly along the clean and improved value chain

• F1: PDs engage users in project design.

• F2: PDs ensure users make informed decisions on participation at the start of a carbon project.

• F3:  PDs share carbon revenue with users in recognition of their role in generating emission reduction.

• F4: Investors and intermediaries earn carbon revenue proportionate to the value they add and the risks they assume.

4. Sustainability: Carbon markets complement other funding sources and do no long-term harm to the local cooking markets.

• S1: Provide official development assistance and philanthropic capital to ensure funds complement carbon finance.

• S2: Project developers avoid creating excessive market distortion in clean and improved cooking markets.

• S3: Governments create an enabling environment to incentivize the development of national clean and improved cooking markets

The Process: Next Steps

Over 500 members, representing 267 institutions across the clean cooking and carbon financing landscape were consulted prior to the formation of these principles, including NetaCarbon. Key players include project developers, carbon credit sellers and resellers, service providers, market facilitators, consultants, carbon standards providers, and end buyers of carbon credits.

These consultations were part of a 5 stage process, running to 2030. The first two stages, “discover” and “describe”, have been completed, with the Interim Principles as the output of these processes. Now, these principles are open for public consultations until January 31, 2024, as the Working Group enters into the “co-create” phase until Q3 2024. After that, the focus will be on “scaling” (Q2 2024 to Q4 2025) and “sustaining” (2026 to 2030) the finalized Principles.

Additional information on thematic principles can be found here. CCA aims to establish a final set of principles and develop a voluntary code of conduct by the beginning of 2024, followed by efforts to increase awareness and adoption.

Implications: NetaCarbon’s Views

NetaCarbon believes that the Interim Principles are a crucial step towards a more transparent and sustainable carbon market for cookstove projects:

1. The principles could spur growth in the clean cooking sector by catalyzing reliable carbon finance investments, crucial when the credibility of past projects is in doubt. Carbon finance enables investment in superior technologies, enhancing revenues, cutting user costs, and boosting market reach. As the sector grows and faces increasing scrutiny over assumptions and usage monitoring, these principles offer a robust blueprint to build trust, assure quality, and highlight the sector's role in reducing global CO2 emissions.

   
   

2. However, meeting higher benchmarks may create barriers to deter new entrants. It is critical to increase funding and technical support for smaller players who have yet to access carbon finance. The expected growth of the carbon market from $2 billion today to over $50 billion by 2030 could place clean cooking credits on track to represent 5 to 10% of the market. The emphasis on higher quality credits, partly through more stringent operating guidelines like these 12 interim principles, might pose challenges for new and industry players in carbon credit project development and market traction. While preserving project integrity is crucial, funders and organizations, such as the Clean Cooking Alliance, must recognize the additional challenges faced by smaller-scale players and support them throughout the process.

   
   

3. The CCA’s consultation process must balance speed and equity while ensuring it aligns well with other industry efforts (such as the ICVCM’s Core Carbon Principles, as we covered in a previous blog post). While NetaCarbon welcomes the extensive consultation process as inclusive of all stakeholders, we also hope that it will not hinder the industry’s ability to respond swiftly to the heightened concerns around the integrity and quality of carbon projects.

   
   

4. Eventually, for a “voluntary” standard to be successful, it must be widely adopted and recognized. The CCA mentioned the Fair Trade Principles and labels multiple times during their presentation, which could be a good example for the organization to study and explore. Once finalized, project developers must commit to these principles, and in turn, carbon credit buyers should award them with premium prices. 

For more questions about the Interim Principles and the carbon market more broadly, please feel free to contact NetaCarbon’s team via email or use the above contact form. Stay tuned for our next update!