Can carbon revenues help transform household energy markets?

This policy brief by the Stockholm Environment Institute examines the role of carbon finance in scaling up improved cookstove projects in India and Kenya. Based on a review of 75 project design documents and 49 stakeholder interviews, the study explores how carbon revenues are used to overcome barriers to adoption and implementation, while highlighting the risks associated with relying on volatile carbon markets.

• In India and Kenya, the majority of carbon-financed cookstove projects are developed by private businesses, including social entrepreneurs, while NGOs lead a smaller proportion: 22% in India and 10% in Kenya.
• Household poverty is a primary barrier to stove adoption, cited by 92% of reviewed project design documents. To address affordability, developers frequently use high-end price subsidies; specifically, 73% of projects in India and 39% in Kenya planned to provide stoves for free, while partial subsidies were used by 24% in India and 35% in Kenya.
• Carbon revenues are used by project developers for various operational needs, including research and development, establishing distribution networks, and providing finance to buyers. Notably, 11 out of 17 interviewed developers used these revenues for after-sales support, such as repairing or replacing broken stoves.
• Many project developers, particularly NGOs and small businesses, face significant financial constraints such as high upfront capital costs and limited access to working capital credit. A majority of interviewed developers relied exclusively on carbon revenues to cover project costs, often using loans backed by expected but not yet generated credits.
• The monitoring, reporting, and verification (MRV) requirements of carbon finance are viewed by some developers as a benefit because they necessitate follow-up with users, which helps ensure long-term stove uptake and allows for business model improvements.
• There is a risk of mismatch between the efficiency-driven requirements of carbon projects and the cultural preferences of users, which can lead to inaccurate predictions of user uptake and deviations in the generation of credits.
• The viability of carbon-financed projects is threatened by minimal demand for carbon credits. Demand for Clean Development Mechanism (CDM) credits is heavily dependent on European Union political and economic decisions, while voluntary market demand from corporations is often cyclical and sensitive to trends in corporate social responsibility.

APA

Lambe, F., Jürisoo, M., Lee, C. M., & Johnson, O. (2014). Can carbon revenues help transform household energy markets? Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-PB-2014-Cookstoves-carbon-finance.pdf

Chicago

Lambe, Fiona, Marie Jürisoo, Carrie M. Lee, and Oliver Johnson. Can carbon revenues help transform household energy markets? Stockholm Environment Institute, 2014. https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-PB-2014-Cookstoves-carbon-finance.pdf.

Wikipedia

{{cite report |last1=Lambe |first1=Fiona |last2=Jürisoo |first2=Marie |last3=Lee |first3=Carrie M. |last4=Johnson |first4=Oliver |title=Can carbon revenues help transform household energy markets? |publisher=Stockholm Environment Institute |date=2014 |url=https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-PB-2014-Cookstoves-carbon-finance.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{lambe2014can, author = {Lambe, Fiona and Jürisoo, Marie and Lee, Carrie M. and Johnson, Oliver}, title = {{Can carbon revenues help transform household energy markets?}}, institution = {Stockholm Environment Institute}, year = {2014}, url = {https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-PB-2014-Cookstoves-carbon-finance.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }