Date: October 15, 2014
Place: Washington DC, USA
This event was co-organized by E&E GP, Energy Access CoP, ESMAP, and East Asia and Pacific Clean Stove Initiative.
Past government-supported stove programs have often followed public procurement procedures, meaning that public entities have been responsible for setting stove technical specifications and identifying eligible service providers, delivery methods, and end users to receive subsidized stoves. Results are often mixed.
Under the East Asia and the Pacific (EAP) Clean Stove Initiative (CSI), a results-based financing (RBF) framework has been developed to promote clean stoves with the aim to motivate innovation and investments from the private sector and support market sustainability. ESMAP, through its work program on Results-Based Funding for Energy Sector Development, has provided financial and technical support for the design of the Indonesia pilot.
The RBF framework includes three building blocks:
1) defined clean stoves;
2) results-based incentives; and
3) a monitoring and verification system
The RB framework is supported by two pillars
1) institutional strengthening and capacity building; and
2) awareness-raising campaigns.
Although the concept seems straightforward, there are many considerations when it comes to putting the RBF framework into practice:
How to define and measure the results that link to the disbursement of payment to the private sector?
Is the private sector willing to take on the pre-financing risks?
How to define RBF incentives levels? Are they sustainable?
How to balance the verification costs and precision of verification?
What is the best way to channel the RBF incentives? (Through direct government payments, commercial financial institutions, through the private sector, or directly to end users?)
This event covered these issues by presenting how the RBF pilots are designed and implemented in China and Indonesia under the CSI program. The two RBF pilots are using the same framework but the arrangements differ significantly from one another. The following chaired and presented during the event:
Charles M. Feinstein, Director, GEEDR
Yabei Zhang, Senior Energy Economist, GEEDR