A Singapore-based money manager hopes to raise $125 million to give communities in India and Africa energy-efficient stoves while also making money for investors by selling carbon credits.
Impact Capital Asset Management of Singapore will oversee the Improved Cook Stoves Carbon Fund on behalf of EKI Energy Services Ltd. According to ICAM Chief Investment Officer Deepak Mawandia, the India-based EKI would also contribute $25 million to the fund and produce the stoves.
The fund is hoping that as polluting industries look to balance their emissions with offsets produced via CO2-mitigating measures, the demand for carbon credits, which McKinsey & Co. predicts may reach $50 billion by 2030, will help it earn profits for investors. After around two years, the funds will be able to provide 3 million of the cookers to India, Kenya, Ghana, and other countries, according to Mawandia.
According to ICAM, the stoves will still burn the wood that families are using, which will increase adoption, but they will deliver improved combustion, enabling homes to use 50% less fuel and cut hazardous smoke by as much as 40%. According to the fund, each stove can reduce greenhouse gas emissions by up to five tonnes annually. The project can produce up to three million carbon credits annually for every $25 million invested over five years.
ICAM will gradually deploy the stoves to the most vulnerable areas. Up to 750,000 of them will be given away for free to rural residents during each tranche, focusing on those who traditionally cook using three-stone stoves that burn coal, cow dung, and wood.
India, which is 2022 will be the third-largest producer of greenhouse emissions globally by volume, will be the first to benefit. Kenya and Ghana in Africa, the continent with the lowest emissions and contributed the least to global warming, will come after that.
Although EKI is the fund’s initial partner, Mawandia also wants to attract family offices in Singapore, hedge funds, and European impact investors.