Envirofit: Leveraging Carbon Markets and Innovation to Enhance Integrity and Impact
Founded in 2003, Envirofit is a global company whose products and technology serve over 15 million people with clean cooking solutions fueled by gas and biomass. Envirofit recently received authorization for the first clean cooking project to transfer carbon credits from Ghana to Switzerland under Article 6 of the Paris Climate Agreement.
The Clean Cooking Alliance (CCA) spoke with Envirofit Co-founder and President Tim Bauer about the project in Ghana and discussed how Envirofit has changed over its 20+ years.
This interview is part of a series of conversations CCA is having with business leaders across the clean cooking sector.
Clean Cooking Alliance (CCA): Can you tell us about Envirofit’s products and services?
Tim Bauer (Bauer): Envirofit has innovated a three-pronged approach to delivering impact. The first is technology development: we’ve developed a suite of energy products ranging from commercial to household cooking products, covering firewood, charcoal, and gas fuels, including SmartGas (Envirofit’s patented pay-as-you-cook™ technology). The second aspect is project development, particularly for carbon credits, which has become a crucial component to financing the energy access puzzle. Our third pillar is business model innovation. We are committed to innovation in products, market approaches, and services that move people up the energy ladder. When we develop a bespoke project, we can tie all three pieces together.
CCA: Which technologies make up the bulk of your business?
Bauer: Historically, the lion’s share has been solutions for solid fuel users. Right now, our business is probably 60-70% biomass-based but we are seeing significant growth in cooking solutions using liquefied petroleum gas (LPG). SmartGas is the game changer that our markets need: it will enable tens of millions to access a clean, modern fuel.
CCA: How do you see LPG’s role as a transitional fuel?
Bauer: The bottom line: LPG is a very low greenhouse gas contributor, and when used to replace inefficient biomass in cooking, LPG reduces total carbon emissions by more than 90%. LPG provides gains on at least seven Sustainable Development Goals and significant co-benefits compared to traditional biomass stoves. Transitioning people away from solid fuels, where possible, requires immediate heavy lifting in terms of supply and distribution infrastructure, as well as the stove, cylinder, and hardware needs at a household level. We can, and should, “fuel this transition” with LPG. But ultimately, we can put any number of sustainable fuel molecules into this value chain.
CCA: Who are Envirofit’s customers?
Bauer: On one side, our customers are users of our technologies: people trapped in the energy poverty cycle and those who are moving up the energy ladder. On the other side, it’s buyers of carbon credits, whether that’s a country, a corporation, an impact investor, or an environmental, social, and governance initiative.
CCA: What makes Envirofit different from others in the clean cooking ecosystem?
Bauer: We’ve always believed that delivering real impact has to be commercially driven to be sustainable. Without an aspirational product or a business model that drives demand, there is no way to scale beyond what little donor funding may exist. The same goes for technology adoption: “give-away” products don’t deliver the same type of lasting, scalable impact compared to when end-users purchase the product, even at a subsidized price.
As a pioneer and often a first mover in clean cooking, Envirofit has had to innovate, experiment, and even fail to help grow the sector. We draw from that experience to do it better the next time, while always being very self-critical and listening to what our consumers and partners are saying.
We believe that manufacturing components can, and should, happen wherever the greatest efficiency of scale can be gained. True technology transfer and development happens in producing the actual product — in this case, the cookstove — which is why we have localized production and can do this in virtually any market we serve. As a result, skills such as welding, assembly, and quality control, as well as knowledge of the product components, are developed locally, which drives superior post-sales service. This knowledge transfer then provides the opportunity for continued product development — pivoting the product to the market’s specific user needs.
CCA: Tell us more about Envirofit’s project in Ghana under Article 6 of the Paris Climate Agreement.
Bauer: We registered our first carbon programs under the UNFCCC’s Clean Development Mechanism in 2011. We leveraged pre-financing debt against the sale of future carbon credits, which is what capitalized the business model of producing, distributing, and selling ultra high-quality stoves at a subsidized price. Once we delivered and sold those credits, we could pay back the remaining debt. That model ultimately became the foundation for most carbon programs in the clean cooking industry, as well as for our recent program in Ghana.
When Article 6 came along, we and our partners at ACT Commodities saw significant potential with the Klik Foundation, the Swiss Government, and Ghana’s Carbon Market Office, to develop a new project. Together, we’ve built on that momentum. In 2024, we are likely to issue the first cookstove credits approved for Internationally Transferred Mitigation Outcomes. Interestingly, the Ghanaian government will generate significant revenue from this project, which is a first for our industry and the sector.
CCA: What challenges did you encounter along the way?
Bauer: Project development under Article 6 is rigorous as well as time- and labor-intensive. It’s taken nearly three years to reach this point — much longer than the 6-9 months it typically takes to register a project with Verra or Gold Standard. That timing has a number of knock-on effects, including implications for operations and cash flow. While the extended timeline was challenging, now that the registration and financing are in place, our factories and sales teams are expanding at a rapid pace.
The longer lead-time is owed to the fact that this type of program requires 100% alignment between the host country and the buyer country — unlike a carbon project for the voluntary market, which requires neither. This means the number of stakeholders is significantly higher, requiring considerable coordination, innovation, and, ultimately, compromise. That process was eye-opening but also refreshing, as it ensured we would be delivering the highest quality, most reputable credits to our buyers. We’ve taken this additional rigor and implemented it across our carbon portfolio, allowing us to differentiate our carbon credits from “business as usual” cookstoves credit programs.
CCA: What made you decide to focus on Ghana for this first project?
Bauer: In all honesty, it was the existing momentum between the host and buyer governments, which gave us the confidence to bring in debt financing. Ultimately, any debt needs to be backed by collateral which, in this case, is the purchase agreement of carbon credits.
The host country, and its infrastructure, is the first critical step, and Ghana is uniquely poised for Article 6 because of its government’s strong commitment. A huge amount of effort went into developing the framework, ratified by parliament, so that we could start with a project concept and ultimately issue a certified credit with a corresponding adjustment. Ghana invested in tracking systems, in their Carbon Market Office and staff, and in travel to coordinate with the buyer country. Lots of host countries could learn from Ghana’s example. I’m hoping that, by the end of 2025, we’ll see dozens of these types of projects, by different developers, ready to issue credits.
CCA: What have you taken away from this experience when it comes to future projects under Article 6?
Bauer: Integrity remains the biggest challenge to the cookstove carbon market. As carbon credit prices rise, many new entrants see cookstoves programs as a way to make a “quick buck” and are often only focused on revenue generation, not lasting impact or co-benefits. Envirofit’s mission is to get high-quality cookstoves into the hands of customers who need them, supported by an ecosystem of sustained quality. Carbon credits provide an important financial mechanism to deliver on that mission, but they are not our end goal; the impact is the end goal.
Envirofit strives to go above and beyond what the methodologies require to deliver the highest integrity credits and to differentiate ourselves. This, of course, comes at a cost. Buyers’ quest for high integrity credits isn’t always matched with a willingness to pay. For buyers who truly care about the standard of credits and monitoring the co-benefits of clean cooking, we’re hoping to see a transition to a higher price for credits — and, in some cases, that’s already happening. If you want to be a project developer in this space, you’re going to have to step up your monitoring regime and rigor. The new 4C methodology that CCA is working on is going to require that transition, which is positive for us and the sector.
CCA: Where do you see Envirofit headed over the next 5 to 10 years?
Bauer: Company growth is a priority for us, but the ultimate motivator for our stakeholders and shareholders is impact. Alongside growth in our biomass stove programs, we see really exciting opportunities in moving people beyond biomass to clean LPG and renewable gaseous fuels, where these fuels are available — we will lead the market on that front.
At the recent Summit on Clean Cooking in Africa, every African delegate who spoke was clear that they want, and need, LPG. We agree, and we believe affordable access to LPG has to be a major driver in eliminating energy poverty. Envirofit’s next generation SmartGas technology will be in the market this year and scaling up in 2025.
We understand the fossil fuel pushback. The only way we will ever get to a renewable energy stream is by having LPG be a key component of that energy transition. Demand from the customer drives investments in cylinders, filling plants, storage, and production. With that infrastructure in place, you can fill any molecule in that bottle: LPG, renewables, or a blend.
Envirofit’s mission is to help transition people up the energy ladder. Our work in the commercial cooking sector has delivered numerous co-benefits. Think about commercial cooking facilities, where women show up to work at 4:30 in the morning, burning 10 bags of charcoal a day in “bonfire-type” piles where the heat and smoke are tremendous. By switching the fuel to LPG, these women can sleep an extra hour and a half; they can get their kids out the door to school; they don’t have to walk to work at 4:00 in the morning, through potentially dangerous areas; and they avoid significant pollution and heat exposure. Aside from fuel costs, these co-benefits are arguably more important to the customer than anything else. Clean cooking is a fundamental need, and that’s vital if you want to move people out of energy poverty.
CCA: Do you have any advice for companies developing clean cooking technologies and business models?
Bauer: You need to be able to pivot your business model and product line. We’ve always been very flexible to different approaches and partnerships. Envirofit recently turned 20 years old, and we definitely don’t have the same business as the year we started. The worst thing you can do is walk in thinking you know the answer. Let the user tell you what they want and don’t be so tied to your design or business model that you can’t listen.
