Carbon financing announced for CleanStar Mozambique project

By Holly Jessen | November 23, 2011

A multi-million Certified Emissions Reduction (CER) financing agreement was announced Nov. 23 between Bank of America Merrill Lynch and a project to produce ethanol for clean cooking stoves in Africa.

CleanStar Mozambique, a joint venture of CleanStar Ventures and Novozymes, was originally announced Sept. 22. The food and energy business will work with 3,000 smallholder farmers, to help with a transition from slash-and-burn agriculture to sustainable farming. Whatever crops the families do not consume will be sold to CleanStar Mozambique, which will be used to produce food products and cassava-based ethanol, a safe and affordable alternative to charcoal. “In the past few years, we’ve analyzed dozens of clean cook stove ventures with a view to providing carbon financing,” said Abyd Karmali, global head of carbon markets at Bank of America Merrill Lynch. “CleanStar’s business was a standout to us because they have addressed the shortcomings of other attempts to scale-up distribution of stoves, most of which have focused on rural populations and on energy efficiency instead of fuel substitution.”

The agreement with Bank of America Merrill Lynch says that the company can purchase and market CERs, which each represent a metric ton of CO2e reduced. All CERs will be generated in Mozambique and other countries in sub-Saharan Africa through displacing charcoal with clean cooking fuel. Thousands of liable entities with emission reduction obligations can use the CERs under cap-and-trade programs such as the EU Emissions Trading Scheme and the Australian Carbon Pricing Mechanism. CleanStar will use the carbon finance and revenues generated to subsidize the cost of the clean cook stoves for low-income Africans. “Having Bank of America Merrill Lynch on board is extremely positive and underscores the important role that carbon finance can play in transferring advanced technologies to least developed countries,” said Thomas Nagy, executive vice president at Novozymes. “This project will meet demand for quality food products and clean cooking fuel in one of the most impoverished countries of the world and we are proud to see the growing momentum in our venture.”

The 300,000 gallon ethanol production facility is currently under construction in central Mozambique. ICM is partnering with CleanStar Mozambique to build the plant by designing and constructing equipment for the one gallon per minute ethanol plant. That includes producing shop-fabricated and specialty equipment. The company also worked with Victory Energy for a custom built biomass boiler. An engine-generator provided by ICM has been modified to use hydrous ethanol. When the plant is in the start-up phase ICM will send personnel to train the new plant operators.

“We’re thrilled to collaborate with Novozymes and CleanStar Ventures in this project, because we understand the critical importance of improving the health, economic, and environmental conditions of the Mozambicans,” said Dave Vander Griend, president and CEO of ICM. “… Our employees put a tremendous amount of thought into the design in order to determine what equipment will work best for a location that has limited capabilities for overnight delivery. We are very proud to support CleanStar Mozambique in reducing exposure to breathing charcoal smoke through enhanced cooking practices, and improving the health and livelihood for millions of people living in the developing world.”