ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM
The Clean Cooking Fund
Energy Sector Management Assistance Program
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01
Synopsis
At the United Nations 2019 Climate Summit, ESMAP launched its US$500 million Clean Cooking Fund (CCF) – the first ever such fund to scale up investments in the clean cooking sector. The fund aims to scale up public and private investments by co-financing with Multi-lateral Development Bank’s lending operations, catalyzing technology and business innovation, and linking incentives with verified results. The CCF is expected to leverage US$2 billion in investments to support a sizeable number of businesses delivering clean cooking solutions, with a view to transforming the market. The CCF was operationalized in January 2020. The first CCF project is the Energy Access Quality Improvement Project (EAQIP) in Rwanda, which is the largest World Bank financed clean cooking project in Africa to date. The EAQIP Project will expand access to clean cooking to 500,000 households across Rwanda and leverage US$30 million in public and private sector investment. Other countries in the pipeline include Uganda, Burundi, Ghana, Myanmar, Niger and Mozambique.
26
COUNTRIES
beneficiaries reached by World Bank active lending portfolio
$440
Million
World Bank active lending portfolio in the sector
$500
Million
dedicated to the Clean Cooking Fund to scale up investment in the clean cooking sector
02
CHALLENGE
• Access to clean cooking cuts across multiple sectors (energy, health, environment, climate, agriculture, gender, social, rural, and private-sector development), but is not a priority for any of them.
• It is not high on governments' policy agendas, and often lacks institutional champions.
• Women and children, particularly from poor and rural households, are the most affected by Household Air Pollution (HAP).
• Households are unaware of the impacts of HAP and are not motivated to invest in cleaner solutions, making the sector unattractive for investors and policy makers.
• Cooking/heating solutions are highly contextual, with no one-size-fits-all solution.
• This means transaction costs are high relative to lending volumes, especially compared to large-scale infrastructure investments.
• Cleaner fuels and technologies have incremental costs.
03
APPROACH & RESULTS
04
PARTNERS
ESMAP, on behalf of the World Bank, together with the World Health Organization (WHO), the United Nations Department of Economic and Social Affairs (UNDESA), and the United Nations Development Programme (UNDP), established a Health and Energy Platform of Acton (HEPA). Under HEPA, the World Bank also has supported the launch of the convening of High-Level Coalition of Leaders for Clean Cooking, Energy, and Health to create the necessary political momentum for clean cooking solutions.
The MECS Program aims to create a stronger evidence base for transitioning to modern energy cooking services through socioeconomic and technological innovations to drive the process forward. ESMAP and Loughborough University are two direct implementers of the MECS program. ESMAP has successfully completed the first two years of collaboration on the FCDO-UK MECS program co-led by Loughborough University. The MECS program’s two-year activities, November 2018 to September 2020, received A+ by UK Aid’s external evaluation for two consecutive years.
05
MOVING FORWARD
The Clean Cooking Fund is set up to correct a temporary market failure by monetizing the co-benefits of clean cooking interventions not currently priced by the market. The CCF will subsidize market actors’ costs, building customer awareness and market adoption. It will develop an evidence base and a track record to crowd in new results-based financing buyers and future commercial financiers. The CCF will act as a revenue source to attract upfront private-investment funding for project developers.
How the Clean Cooking Fund will support market sustainability
CCF role
Ccf role
NEAR TERM
MEDIUM TERM
LONG TERM
The near-term role of the CCF is to leverage the donor subsidization and achieve the following objectives: i) to address the immediate financial bottlenecks to accelerate the market adoption of clean cooking solutions; and ii) to conduct pilots which will provide proof of concept and evidence base to monetize the co-benefits of clean cooking solutions.
Near-term:
Donor subsidization
NEAR TERM
If continued payment support is needed in specific country contexts, the medium-term capacity of the CCF is to galvanize more government support and help facilitate the transition from only donor subsidization to government funding.
Medium-term:
Government support
medium term
The long-term prospect of the CCF is to help build a self-sustaining market for clean cooking solutions where: (i) immediate financial bottlenecks have been unblocked; (ii) value proposition of clean cooking fuels and technologies has been clearly demonstrated to market actors; and (iii) viability of clean cooking business models attracts more private investment.
Long-term:
Self-sustaining market
LONG TERM
The proposed project is well-timed to build on the World Bank’s decade-long support to the Government’s energy sector agenda. It will contribute directly to Rwanda’s push toward universal energy access by 2024 and universal access to clean cooking by 2030. We are honored to be a long-term partner in this journey.
Rolande Pryce
Country Manager for Rwanda,
World Bank
“
Clean cooking must be a political, economic, and environmental priority, supported by policies and backed by investments and multi-sector partnerships. To make that kind of change, the level of commitment and the scale of investment matter.
Riccardo Puliti
Regional Director of Infrastructure for West Africa region, World Bank
“
The World Bank’s report, The State of Access to Modern Energy Cooking Services, estimates that not progressing beyond the status quo is costing the world more than $2.4 trillion each year. Women bear a disproportionate share of this cost in the form of poor health and safety, as well as lost productivity.
Makhtar Diop
Managing Director and Executive Vice President, IFC
“
COVID-19 underscores the linkages between cooking, gender, health, environment and climate.
Mari Pangestu
Managing Director for Development, World Bank
“
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Steering the direction of the
global energy transition
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Learn More
The ESMAP trust fund support during July 2017 to June 2020 for ECCH was $8.8 million, including $6 million provided for country grants.
• Slow progress on Sustainable Development Goal 7 indicator for access to clean cooking over the past 5 years which has not kept up with population growth.
• Lack of access to modern energy cooking services currently affects nearly half the world’s population.
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Project:
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Report: Mini Grids for Half a Billion People
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Report: Mini Grids and the Arrival of the Main Grid
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Live Wire Knowledge Brief: “Investing in Mini Grids Now, Integrating with the Main Grid Later: A Menu of Good Policy and Regulatory Option”
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Live Wire Knowledge Brief: “Ensuring That Regulations Evolve as Mini Grids Mature”
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Project Appraisal Document: Nigeria Electrification Project
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KEY WORDS
KEY WORDS
Key Words
Mini Grids, Access to Electricity, SDG 7, Off-Grid Electrification, Rural Electrification, Private Sector
07
MULTIMEDIA
Clean Cooking:
Why it Matters
State of Access to Modern Energy Cooking Services
BANGLADESH OFFERS MODEL OF SUCCESSFUL CLEAN COOKING PROGRAM
The triple G of clean cooking: Green, gender, and good health
Access to Modern Energy Cooking Services: Players and Initiatives Database
Map of studies on modern energy cooking systems and related initiatives
Stepping Up Efforts to Expand Access to Modern Energy Cooking Services
APPROACH
results
The Clean Cooking Fund is organized into two pillars, drawing on the World Bank’s policy dialogue with countries across multiple sectors, ability to mobilize finance, and convening power in collaboration with partners. Gender equality underscores the work of the Clean Cooking Fund, across both pillars on investments, knowledge, innovation and policy coordination.
APPROACH
RESULTS
Country/Regional Investment Program. Pillar 1 co-finances investment projects of the WBG and other MDBs to scale up public- and private-sector investments in the clean cooking sector. Funding will be provided to (i) pay for the verified output, outcome, and impact results to achieve health, gender, and climate benefits from clean cooking interventions, (ii) support the enabling environment through technical assistance and capacity building; and (iii) support project development and preparation. Pillar 1 is expected to leverage at least US$2 billion in investments and support a sizeable number of businesses delivering clean cooking solutions.
Results
Approach
Global Platform for Knowledge, Innovation, and Policy Coordination. Pillar 2 works with development partners to mobilize high-level political commitments for the clean cooking sector at both global and country levels, generate and disseminate knowledge, promote ongoing technology and business innovations, and improve policy coordination. Funding will be provided to (i) support the establishment of the High-Level Group of Leaders for Clean Cooking, Energy, and Health, which is being jointly convened under the Health and Energy Platform of Action (HEPA) and (ii) develop a knowledge platform for publishing and sharing analytical products, promoting cross-country learning and exchange, and taking stock of knowledge gaps and opportunities. Pillar 2 also includes an innovation fund to support (i) technological, business, policy, and financing innovations closely aligned with country and regional investment projects; (ii) co-financing of pilots and technology transfer for projects; and (iii) development of an impact bond market to monetize the health, gender, and climate impacts of projects, which can attract a broad range of capital.
Sparking Opportunities for Women in Clean Cooking. The Clean Cooking Fund will build workstreams across the clean-cooking value chain specifically focused on gender equality. It aims to scale work on women’s employment in clean cooking companies through baseline data collection and engagement with new stakeholders (e.g., professional women’s networks and educational and vocational training institutes). It will map drivers of gender gaps related to female entrepreneurship (e.g., less access to financial or business-development services) and designing interventions to address such issues (e.g., start-up grants).There will be market assessments of products and services, credit access, and sales and distribution, which are focused on the women’s segment. The CCF will quantify and value gender-equitable outcomes (e.g., time savings and drudgery reduction) and down-the-line impacts (e.g., enhanced labor force participation).
The Clean Cooking Fund (CCF) builds on the past successes of the Efficient, Clean Cooking and Heating (ECCH) program (2015-2020), which has contributed development of more than US$440 million World Bank financing across 26 countries targeting more than 47 million people to gain access to improved ECCH solutions. With ECCH’s support through technical assistance and piloting, results-based financing (RBF) has demonstrated to be an effective approach for using public resources to incentivize the private sector for clean cooking market development, with implementation experience in 10 countries.
The goal of the Clean Cooking Fund is to accelerate access to clean cooking by 2030. For FY21-24, the CCF aims to achieve the following targets:
i) 200 million people will gain access to clean cooking resulting from policies, programs and strategies;
ii) 100 million people will gain access to clean cooking resulting from financed projects; and
iii) USD 2 billion investments will be mobilized, including both public and private financing.
An initial pipeline of projects has been developed, amounting to about US$100 million in CCF co-financing and at least the same amount from the World Bank. Within the next 12 months, the World Bank country projects in Uganda, Burundi, Ghana, Mozambique, Niger, and Myanmar will require about $50 million CCF co-financing to leverage another $130 million public and private financing. These projects will help 8.7 million people to gain access to clean cooking which will contribute to a healthier, greener, and more equitable post-COVID recovery.
Together with the WHO, UNDESA and UNDP, the World Bank has co-convened the Health and Energy Platform of Action (HEPA) and has launched the High-level Coalition of Leaders to create political momentum for clean cooking. CCF has also published several global knowledge products: The State of Access to Modern Energy Cooking Services, What Drives the Transition to Modern Energy Cooking Services: A Systematic Review of Evidence, Cooking with Electricity: A Cost Perspective Review and Roadmap, and the Players and Initiatives Database.
Progress towards ensuring access to modern cooking solutions, a key component to achieving Sustainable Development Goal 7 (SDG 7), has been slow. Today, 2.8 billion people globally still cook with traditional polluting fuels and technologies, costing the world more than $2.4 trillion each year, driven by adverse impacts on health ($1.4 trillion), climate ($0.2 trillion), and women ($0.8 trillion from lost productivity).
Building on the Multi-Tier Framework (MTF), the World Bank’s State of Access to Modern Energy Cooking Services (MECS) report finds that 4 billion people around the world still lack access to clean, efficient, convenient, safe, reliable, and affordable cooking energy. Without evolving beyond the status quo, the goal of universal access to MECS will remain out of reach for 4.5 billion people by 2030, jeopardizing not only the achievement of SDG 7, but also inhibiting progress towards related SDGs, particularly good health and well-being (SDG 3), gender equality (SDG 5), and climate action (SDG 13).
Orphaned
Invisible
Expensive
• Access to clean cooking cuts across multiple sectors (energy, health, environment, climate, agriculture, gender, social, rural, and private-sector development), but is not a priority for any of them.
• It is not high on governments' policy agendas, and often lacks institutional champions.
• Women and children, particularly from poor and rural households, are the most affected by Household Air Pollution (HAP).
• Many such households are unaware of the impacts of HAP and are not motivated to invest in cleaner solutions, making the sector unattractive for investors and policy makers.
• Cooking/heating solutions are highly contextual, with no one-size-fits-all solution.
• This means transaction costs are high relative to lending volumes, especially compared to large-scale infrastructure investments.
• Households do not internalize public benefits such as health, climate change and gender equality, making the clean cooking sector less attractive for private investments
