Financial backing and carbon credits could be vital for making LPG more affordable as a clean cooking fuel, writes Elaine Mills
Sub-Saharan Africa still has many of the same intractable challenges to overcome if it is to come close to achieving universal clean cooking access, delegates heard at LPG Week in Cape Town, South Africa. But government support, public-private collaboration, grassroots movements and carbon credits could pry open markets.
The IEA is spearheading momentum behind the drive to clean cooking adoption in sub-Saharan Africa, expecting 45pc of the transition to be to LPG. A global transition would result in a net reduction of 1.5bn t of CO2 equivalent by 2030, of which sub-Saharan Africa alone would account for 900mn t, it says. "We can't imagine a more important global initiative in terms of our objectives of development, poverty alleviation, health and prosperity," the IEA's head of sustainable transitions, Daniel Wetzel, said during the World Liquid Gas Association event.
Sub-Saharan Africa consumes less than 4kg/capita of LPG per year, according to South Africa's Department of Mineral and Petroleum Resources. This compares with north Africa's 35kg/yr, including Morocco, which has the highest in the world at 73kg/yr, Argus Consulting data show. The IEA estimates Africa requires investment of $4bn/yr to facilitate clean cooking. The continuing challenge for LPG penetration in southern Africa is "affordability, availability and acceptability", the International Finance Corporation's (IFC's) regional industry manager for manufacturing, Bambo Kunle-Salami, said. An average household needs to spend about $300-400/yr on LPG, while GDP per capita is just over $1,000/yr, he said.
Government backing is essential, as "no LPG has grown on its own organically or reached desired levels [without] government intervention", the UN-backed Global LPG Partnership's East Africa director, Elizabeth Muchiri, said. Subsidies can solve cost barriers but many African governments cannot afford them, Kunle-Salami said. It might also encourage cross-border smuggling, so if used they must be targeted to low-income homes with a clear end goal, he said. Some countries have struggled to scale back their LPG subsidies, Wetzel said. But the IEA expects LPG prices to drop sharply later this decade as global demand peaks, allowing markets to reduce subsidies and emerging markets to expand.
Kenya has distributed subsidised cylinders to low-income homes, scrapped LPG taxes and introduced mandates on new homes to include LPG infrastructure, Muchiri said. Some banks and retailers have offered microfinancing and pay-as-you-go smart meters on cylinders, she said. Ghana has also provided free cylinders and stoves to those most in need, its National Petroleum Authority director Akua Kwakye said. A cylinder recirculation model was introduced so consumers do not own the cylinders, which improves safety and reduces costs, she said.
Logistics and their cost impact are a significant problem in Africa, Kunle-Salami said. "In a healthy market [logistics costs] should be 10-20pc, but in many African countries it is as high as 40-50pc," he said. A lack of storage infrastructure to protect from supply shocks is another issue. This requires significant investment that needs private-public collaboration, Wetzel said. But centralised solutions can only go so far — only grassroots initiatives create trust and acceptance, he added.
Credits where they're due
The IEA thinks carbon credits have huge potential in making LPG more affordable as a clean cooking fuel owing to the emissions savings and certainty of the verification. Such schemes might yield higher-quality credits than many other carbon-offsetting projects, Wetzel said. Many of the firms IFC finances struggle to understand, let alone access, the carbon market, Kunle-Salami said. But agreements on Article 6 at the UN's Cop 29 climate summit on establishing a global carbon market, and inclusion of clean cooking at the G7 and G20 summits, provide more hope such credits can become important, delegates heard.
