Green Finance for Efficient Cooking Stoves

EcoMicro is a technical cooperation program aimed at implementing green finance projects through microfinance institutions (MFIs) in Latin America and the Caribbean. Econoler, in consortium with Développement international Desjardins (DID), was chosen to assist the Fundación Paraguaya (FP), a microfinance institution admitted into the program, in implementing green finance projects in women-led micro-enterprises and households.

The consortium performed the following three tasks: (1) providing assistance in the development and introduction of a credit product to finance the purchase of efficient cooking stoves and possibly other energy-efficient equipment; (2) providing a diagnosis for FP’s lack of energy efficiency and assisting with the development of internal policies to ensure environmental sustainability through the implementation of energy efficiency measures in FP’s daily operations; and (3) assessing the vulnerability of FP’s portfolio to climate change and assisting with the development of a tool to manage potential risks.   To carry out the first task, which was the most important for this assignment, Econoler and DID assisted FP in:   1) conducting a market research study to identify the most appropriate EE technologies to be financed at FP’s clients’ premises, namely efficient induction cooking stoves, and technology providers. The efficient cooking stove was particularly attractive not only for saving energy but also for its other benefits compared to wood or coal stoves, including improving indoor air quality, health, cleanliness, and time-saving especially for women, who represent 99% of FP’s clients. 2) designing a tailored EE finance product and program and operation manual, including the risk assessment and management at the time of granting loans. The program also included the design of a carbon emission reduction tracking tool. 3) providing training to FP staff on EE, the new EE finance product (marketing, rationale, risk assessment, etc.), and the carbon emission reduction tracking tool. 4) providing training to FP’s clients on EE, clean cookstoves and the new EE finance product. 5) providing ongoing support to FP throughout the process of launching a pilot program for the new EE finance product in 4 branches. 6) designing a rollout strategy in all of FP’s 19 branches, building on the lessons learned from the pilot program.   By the end of the pilot program in April 2017, the Fundación Paraguaya financed 383 efficient induction cooking stoves in 4 branches over a period of 3 months, surpassing its objectives of 300. The program attracted 15% of new clients and generated 83 million Guaranis in annual energy savings and 75 tCO2 of annual emission reduction.   To carry out the second task, Econoler and DID provided FP with assistance in (1) developing and implementing an internal sustainable environmental and energy policy, (2) implementing an awareness-raising campaign about the new policy among FP’s staff, (3) establishing a baseline to determine FP’s energy consumption and carbon footprint and (4) identifying and implementing energy-saving measures in FP’s facilities such as changing air-conditioning units.   To carry out the third task, the consortium collaborated with FP in (1) assessing the vulnerability of FP’s portfolio to climate change and (2) developing a methodology to manage any potential climate change vulnerability-related risks, including environmental and social risks.   FP launched its rollout strategy in the following months and by June 2019, FP financed more than 3,000 efficient cooking stoves, generating 650 million Guaranis in annual energy savings and 645 tCO2 of annual emission reduction.   At the end of the project, Econoler also prepared a case study of the project and presented it to various stakeholders.