Premium for cookstove credits from LDC hits record low

The value of cookstove carbon credits sourced from a least developed country has fallen to its lowest level since Platts -- part of S&P Global Commodity Insights -- began its assessments of the market on Feb. 1, 2023.

The Platts Household Devices LDC project differential was assessed unchanged day on day at 0 cent/mtCO2e on May 15, amid thin trading activity and limited buying interest, having fallen 20 cents/mtCO2e in the previous session.

The differential was assessed Jan. 2 at $1.10/mtCO2e.

Household devices credits sourced from an African LDC were at parity to equivalent credits sourced from an African non-LDC, sources said.

Limited activity

According to an India-based developer, the cookstove segment of the VCM was close to dormant. "Selling activity [is] basically at a halt," the developer said, echoing sentiment from several other market participants in previous sessions.

The Platts Household Devices Current Year price was assessed unchanged at $4/mtCO2e.

Quality concerns directed at cookstove projects was the main factor holding back activity.

According to Andrew Glass, Head of Partnerships at climate market technology company Viridios AI, "standalone cookstove projects have difficulties as corporate retirees want far more data on these projects, so data will be a huge enabler of credibility moving forward."

Some projects had faced criticism for overestimating their benefits, leading to over-issuance of carbon credits.

"Buyers are also not relying on projects with hypothetical baselines," said Glass. "Corporates seem to be currently prioritizing removals [over] avoidance as well as transparent and defensible baselines."

Furthermore, some market participants have pointed to the concentration of cookstove projects in Africa and Asia, with limited appeal to North American buyers.

"Buyers and retirees tend to search for projects in the geography of their operations," said Glass. "It carries gravitas and weight in the ecosystem of their value chain [and it's] good storytelling and links to their social license to operate."

CCP-approved methodologies

Despite "very challenging times," however, the India-based develop said the appearance of CCP-approved methodologies will "from the demand side, [be] a good trigger."

The Integrity Council for the Voluntary Carbon Market, or ICVCM, said May 2 that the first decision on project methodologies from CCP-eligible programs are to be made in June.

CCP-eligibility signals that the programs and methodologies meet the standards for effective governance, transparency, tracking and robust independent third-party validation and verification.

Several efficient cookstove methodologies are undergoing multi-stakeholder assessment by the ICVCM.

Moreover, Glass said a diversified portfolio remained important as it limited a corporate's exposure to a project if it is "discredited for whatever reason".

"When preparing a diversified portfolio, it is important to stress that it is an 'and' conversation rather than an 'or' one -- a combination of sovereign jurisdictions, avoidance, and removal credits," Glass said.

At the International Energy Agency held a Summit on Clean Cooking in Africa in Paris on May 14, governments, companies and development institutions pledged $2.2 billion to invest in clean cooking initiatives across the continent with carbon finance set to play a crucial role.