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William Brisson

NEED FOR CLIMATE GLOBAL FINANCE

The quantification of global climate finance needs is defined by a massive "investment gap" between current spending and the trillions of dollars required to meet the Paris Agreement goals. According to a United Nations Conference on Trade and Development (UNCTAD) 2024 report on the New Collective Quantified Goal on Climate Finance, developing countries require approximately $1.1 trillion in climate finance starting in 2025, a figure projected to rise to $1.8 trillion annually by 2030. These estimates, derived from the United Nations Global Policy Model, emphasize that for the transition to be equitable, developed nations would need to provide a target equivalent to roughly 1.4% of their own GDP to support the "just transition" pathways of their developing counterparts.

Our initial idea was to finance our cookstove project through the forward sale of Verified Carbon Reductions issued by a carbon registry called Verra, based in Washington, DC. Below is an outline of how we projected the cash flows for the project to raise the $100,000 needed to deploy cookstoves.

CATALYZING PRIVATE CAPITAL THROUGH THE VOLUNTARY CARBON CREDIT MARKET

One way to bridge the global funding gap is to leverage private capital through the voluntary carbon market. As Nat Keohane noted in a recent post, "The voluntary carbon market, for those not in the weeds of climate action, is a potentially powerful lever to channel capital into programs and projects—overwhelmingly located in the global south—that cut greenhouse gas emissions while supporting sustainable development and local livelihoods."

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As noted in the Voluntary Carbon Markets Joint Policy Statement issued by the White House, the U.S Department of the Treasury and other US agencies, the voluntary carbon market must operate with integrity to make a material contribution in addressing climate change. Specifically, the market must ensure that the reductions underpinning carbon offsets are real, additional and permanent.

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For our cookstove project, we selected Verra as the carbon standard where we would register our project. Once Verra confirms that the project meets the applicable criteria and methodology, the objective is to retain an independent third party to verify (audit) the reductions achieved by our project annually and then receive the Verified Carbon Units in our account.

COOKSTOVE PROJECT: FINANCIAL PRO-FORMAS AND RETURNS  

Spreadsheet Cookstove Project_ Financial Pro-Formas and Returns .png

​Our financial pro forma assumes the following:

  • We raise $100,000 from private investors.

  • Each stove will cost $75 to the project.

  • Each stove will reduce approximately 6.5 MTCO2 per year for eight years.

  • We will sell the Verified Carbon Units issued by Verra at $7 each to a Japanese entity pursuant to a long-term forward sale agreement.

  • We will need to cover various project costs, including project registration costs, sales commissions, credit issuance costs, etc.

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Based on these assumptions, we project that we will deploy 1,333 cookstoves, which will generate 66,397 Verified Carbon Units over eight years. After covering the various project-related costs and sharing a portion of the revenues with our project partner, HELPS, we anticipate returning approximately $200,000 to our investors, resulting in a total unlevered IRR of 17.4%.

CURRENT STATUS OF THE PROJECT

​Although we entered into an agreement in 2023 with a Japanese bank for the sale of Verified Carbon Units from our cookstove project at $7, a number of market developments resulted in a fall in prices for cookstove carbon credits and the Japanese bank terminating our arrangement in 2024.

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The market developments resulted predominantly from the publication of an article in Nature Sustainability that found significant over-crediting of carbon credits to cookstove projects. This article prompted a review of methodologies across all carbon standards to ensure that the quantification models for cookstove project reflect best practices.

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As of November 2025, a number of carbon standards including Verra and Gold Standard have adopted new cookstove methodologies. In addition, these methodologies have gone through a review by the Integrity Council for the Voluntary Carbon Market and received approval for a Core Carbon Principles label.

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Following recent developments, the demand and prices for cookstove carbon credits have increased. For instance, BURN, a manufacturer of efficient cookstoves in Africa, reported on November 25, 2025, that it sold 82,000 cookstove carbon credits issued by Gold Standard. Although the exact prices were not disclosed, it is rumored that the credits sold for over $15 each.

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As our next steps, we plan to register our project under Verra's new methodology. According to this methodology, we anticipate receiving 50% fewer credits for the same number of stoves. However, since the project was financially viable with an offtake price of $7, we are optimistic that we can achieve our financial goals with a price of $15 per credit. The following diagram shows the process we will follow to register the project and apply for and receive carbon credits for sale.

Current Status of the Project.png

TRANSITION OF CDM HELPS PROJECT TO ARTICLE 6.4 CREDITING MECHANISM

As we were working with HELPS in Guatemala, we learned that HELPS cookstove deployment project was still registered under the Clean Development Mechanism (CDM) of the Kyoto Protocol. The CDM is now phased out, but Decision 3/CMA.3a adopted at COP-30 allows the transition of certain CDM projects to Article 6 of the Paris Agreement, provided that certain requirements are met. Thus, we have been working since then to assist HELPS in this transition. As a first step, we helped HELPS file new modalities of communication with the CDM to allow it to gain control of the project. As a second step, we are now assisting HELPS in obtaining a letter of authorization from the Guatemala government.

SOURCES

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  • Intergovernmental Panel on Climate Change. Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change, edited by H. Lee and J. Romero. https://www.ipcc.ch/report/sixth-assessment-report-cycle/.

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  • Newell, Richard G., and Robert N. Stavins. "Cost Heterogeneity and the Potential Savings from Market-Based Policies." Journal of Regulatory Economics, vol. 23, 2003, pp. 43–59. https://doi.org/10.1023/A:1021879330491 

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  • Smith, Adam. The Wealth of Nations. Shine Classics, 2014.

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  • Stavins, Robert N. "Economics of the Environment: Selected Readings." 7th ed., Edward Elgar, 2019.

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