[Stoves] No subsidies in TLUD char peoduction

Tue Dec 5 18:42:55 CST 2017

Dear Paul

Thanks for that excellent and clear explanation.

I treat some 'donations' as an investment because the money is earned back and left as a capital in the business. That can come from an investor, a SoCap investor, a Donor or a bank loan. None of those are subsidies.

The Central Java Pilot stove project made an investment in the development of a distribution system in private hands which was sustainable without further investment. This can be viewed as risk mitigation, it can also be seen as a establishing a delivery system for improved cooking stoves. It was also a test of an innovative finance mechanism to see if unsubsidized high performance products and distribution can be established were there was very little or nothing before. ‎One of the major outcomes was a great improvement in the quality and performance of locally manufactured stoves. There was virtually no direct investment in innovations, it had that outcome.

Thanks for your time
Crispin

Crispins.   see below.              (of interest to some on the Biochar Listserv)

Doc  /  Dr TLUD  /  Prof. Paul S. Anderson, PhD
Email:  psanders at ilstu.edu<mailto:psanders at ilstu.edu>
Skype:   paultlud    Phone: +1-309-452-7072
Website:  www.drtlud.com<https://eur03.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.drtlud.com&data=02%7C01%7C%7Cd05444845c5f4f95ab4008d53bfb31bc%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C636480872416052615&sdata=tbT8OWQNeBxY3tYd3VshLdPAgcQ%2B%2Fvj0VxkXWBRl6UA%3D&reserved=0>

On 12/5/2017 1:39 AM, Crispin Pemberton-Pigott wrote:
Dear Paul

There is nothing controversial or toxic about this question. You have a stove project that has a CDM component – apparently the first CDM project approved for stoves – someone said (which I found an amazing claim).
"Someone" misinformed you.

I am not all-knowng about carbon credits (CC), so we can work together to get full answers.   First, we note that CDM (Clean Development Mechanism) is not the same designation as CER (Certified Emission Reduction) and VER (Voluntary Emission Reduction).    There are stove projects with CC in the form authorized by Gold Standard Foundation (GS) for voluntary credits (VERs).  I do not know if there are other stove projects for which the CC is registered / verified as CER via the UNFCCC which is the only entity that can give the CER designation.  Gold Standard can provide either VER and CER forms of CDM.  The TLUD stove project in West Bengal is with GS CER status.

So I am sending a copy of this message to Olivier Lefebvre who works in this field of stoves and carbon credits.   And maybe my India contacts will inform me further.

Anyway:

>I repeat:  NOT subsidized.
>…if you are willing to help, including to help test the website regarding donations or the purchase GS CER fully certified carbon credits.  )

It is a donation. There are beneficiaries. Something is subsidized. I want to know where the CDM money goes. I do not care where it goes , I just want to see the whole financial picture.
The donations that go through the NFP that I have established are for sponsoring a Champion TLUD woodgas stove in West Bengal, so it subsidizes those stoves for appropriately low-income families. (We are just getting started.  Apart from my own money, there are now two donations that total $90 form persons who have been willing to help us test the processing of  donations.  We will also need to test for the funds to acquire TLUD-based GS CER carbon credits.  We only deal with TLUD-generated carbon credits.   (write to me off line if willing to assist.)  )

The donations do not subsidize the char collection business.

Note:  The major TLUD stove projects in West Bengal are managed by the Germany-based entity called   atmosfair   You can see their information at   https://www.atmosfair.de/en/home<https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.atmosfair.de%2Fen%2Fhome&data=02%7C01%7C%7Cd05444845c5f4f95ab4008d53bfb31bc%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C636480872416052615&sdata=kGGesuOFHXPRB9zuZ6Rgkp%2FS246XiyEWFNXx69gs%2B5A%3D&reserved=0>       There you can purchase carbon credits to offset airline travel.

The specific info about the TLUD projects in India are at:
 https://www.atmosfair.de/en/energieeffizienz/indien_holzvergaserofen_cdm<https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.atmosfair.de%2Fen%2Fenergieeffizienz%2Findien_holzvergaserofen_cdm&data=02%7C01%7C%7Cd05444845c5f4f95ab4008d53bfb31bc%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C636480872416052615&sdata=rmhtrrspXP2SB7TClBhCXl5umKZVyDa8S8rNd3ZNxaY%3D&reserved=0>

atmosfair uses it funding to get the stoves from the factories (as explained in the Deganga report).  So those stoves are subsidized for the households.   But the money is recovered via the sales of carbon credits during 7 years.

Question:   Is it a subsidy if the person pays in the form of signing away his or her rights to the carbon credits that will be earned by the use of the stove?    Or is it a form of "micro-finance" with repayment handled by the dealer in the carbon credits?   And if the monetary return to the CC dealer is greater than the initial value of the stove, is that not basically equivalent to the charging of interest on a micro-finance loan?

This will inform my first question which is: can the [char purchase] project continue if this money source [of carbon credit sales] is cut off.
Answer:  Yes.

I was not thinking of your request for $40 per stove, I was thinking of the CDM money which according to Sujatha, was necessary to buy the char at a viable price and sell it to the foundry.
You either misunderstood Sujatha or she was incorrect.

If the value as a coal replacement is adequate to cover the cost of collection and delivery, then it is viable without the CDM money. If it is needed, then it is not.
It is viable.

Is this clear? There is external money flowing into the project. I expressed no opinion about whether or not it was good or bad. The question is whether or not it can continue indefinitely without that money.
There are two separate business operations.   We are discussing the CHAR PURCHASE business, not the overall stove project.

If it can, the next assessment of risk is what change might take place and how that would affect the viability. If the change wrought indeed made it unviable financially, what steps can be take to mitigate the risk?
I addressed that in my previous message.   The risk is a weakness of operational management if the CC business stops, and I said there seems to be sufficient mid-level management to hold the char purchase business together.

This is normal due diligence. We are not allowed to take unconscionable risks and risks have to have a mitigation plan. Stove char is a business and needs a business plan.
Almost right.   It would be good to have a well layed out business plan.   But the plan is not as polished as the Western world might like it to be.  Personally, I am glad that things are functional and participants know their roles and do them.  To have a great business plan (formal sense) would require talent and money.   Volunteers are welcome to do the business plan task.

If it depends on a subsidy, say so, and let us know that it is an essential element, and we will prepare for it. We will justify it to governments or donors if we can.
Repeat:  The char purchase program has no subsidy whatsoever and employes about 100 people in the Deganga area alone.

And I repeat my comment from above:    Is it a subsidy if the person pays in the form of signing away his or her rights to the carbon credits that will be earned by the use of the stove?    Or is it a form of "micro-finance" with repayment handled by the dealer in the carbon credits?   And if the monetary return to the CC dealer is greater than the initial value of the stove, is that not basically equivalent to the charging of interest on a micro-finance loan?

Are we discussing something that is a truly different approach to the financing of large numbers of cookstoves?   It seems to be working well with the TLUD stoves that are earning 4 carbon credits per year of verified usage.

All comments and assistance will be gratefully accepted.

Paul

Regards
Crispin

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