The partnership will be MicroEnergy Credit’s first in both Senegal and Madagascar and will expand clean energy access to MicroCred’s microfinance clients in those countries. Senegal and Madagascar both suffer from deforestation and energy poverty, creating a need for clean energy products. The partnership will allow clean energy products to go to scale at affordable costs to clients beginning in 2012.

XacBank’s Vice President of Retail Banking, Delgerjargal Bayanjargal and MicroEnergy Credit’s CEO, April Allderdice, participated in the session, Accessing Carbon Finance through Clean Energy Lending Programs, which detailed how microfinance institutions can scale clean energy lending programs.

The way it works is quite simple. You or I log into the website and purchase a “carbon credit”-denominated in tons of CO2 emissions avoided. Those funds then enable microentrepreneurs to take a loan for a clean energy investment. The microentrepreneur pays back the loan in small installments—often less than what they previously paid for the dirty energy source. And the clean energy investment reduces pollution, helping to mitigate climate change.

In Mongolia, for example, low income people live in yurts, called gers. By purchasing an insulating “blanket” they can reduce by half the amount of coal they need to burn to stay warm in the winter. This creates a carbon emissions reduction—and it makes their home warmer and more economical. When you buy a carbon credit from a yurt dweller in Mongolia, those funds are used by the microfinance institution –a bank called XacBank–for education campaigns so that more ger owners can learn about the benefits of energy efficient blankets and the financing program that makes them affordable.

The website is called http://yurtcozy.org, and it will be announced at Copenhagen on December 17th.

Yurtcozy helps microentrepreneurs switch to clean energy. As in microfinance they take a loan to improve their quality of life and escape poverty. In this case the cost savings come from reduced expenditures on kerosene, coal, and wood. The products they purchase include solar lighting systems, improved stoves and biogas digesters.

When you purchase a carbon offset on the Yurtcozy site, you know who you are helping. In fact, you can see a map with the GPS location of each microentrepreneur who has purchased a clean energy system.

How does this relate to the cap and trade debate? The mechanism builds on the same principles of the Kyoto Protocol, and leverages partnerships with some of the original architects of the carbon markets including the non-profit, Environmental Defense and the carbon trading firm, EcoSecurities. Yurtcozy is different because it allows people to connect as individuals. Because the clean energy investors are all individual microentrepreneurs, you know exactly who you have helped and how.

Rather than establishing emissions caps, Yurtcozy relies on individuals and teams to set their targets for how much climate change they will reduce.

HSBC along with Spandana and MEC has embarked on a project to provide clean energy alternatives to clients of Spandana, a Hyderabad based microfinance institution MFI. MicroEnergy Credits is a US Based social enterprise and has worked with several MFIs globally to help them launch and scale clean energy programs. A grant from HSBC will enable Spandana to receive technical assistance from MicroEnergy Credits to develop and roll out a clean energy product portfolio suited to the needs of its clients. MEC will in turn link Spandana’s microfinance clients to the global carbon credit markets and enable them to trade carbon credits earned by adopting clean energy.

Speaking on the occasion, Naina Lal Kidwai, Group General Manager and Country Head, HSBC India said “We believe that this innovative approach will offer clean energy through renewable resources, helping to green the Indian economy. Early findings of a survey conducted in the Bhandara region are encouraging; these indicate a high response rate among rural women to accept new technologies for use of renewable energy resources. We see great potential to scale up this initiative, thereby creating greater impact across India.”

“I’m proud to partner with HSBC and Spandana in their effort to enable the microenterprise sector in India join the global effort to stop climate change and also bring the benefit from the carbon markets to micro entrepreneurs” said April Allderdice, CEO of MicroEnergy Credits Corp.

Ms. Padmaja Reddy, Founder, Spandana said “Through this partnership, we are able to offer affordable and environmentally-friendly lighting technologies to our clients. At Spandana, we are committed to enhancing the overall quality of our clients’ lives, and the solar torch light loan is one of many products that we consider to be essential and with the potential to improve the lives of our clients. The learning’s from this pilot have been useful for us as we explore the possibility of making available a wider range of financial and non-financial products and services to our clients.”

The project aims to impact around 1 million households. By the end of the Project Spandana staff will have the capacity to manage an energy product portfolio that is scalable on a sustainable basis. This will have the impact of making credit for clean energy access available to Spandana’s growing client base. Households that adopt these products will reduce dangers to health and burdens on women for biomass fuel collection, allowing them to pursue additional income-generating activity.

Plenary Session of the MicroCredit Summit

MEC presents at the Microcredit Summit in Cartagena with Muhammad Yunus and others.

On June 10th over 60 participants crowded in a small room in Cartagena Colombia for an intimate conversation with a Nobel Peace Prize winner about microfinance and the environment.

Microfinance and the environment had been a panel session topic at each of the past three Microcredit Summits, thanks to the leadership of the non-profit organization Green Microfinance. The attendance at this session of the Latin America and Caribbean Regional MicroCredit Summit reflected a growing momentum and interest in the environment among the microfinance community.

Nobel Prize winner Muhammad Yunus chaired the panel—lending his endorsement to the notion that microfinance does have a relationship to the environment. In fact he made the point that microfinance is merely the reason we are all together, but that protecting the environment must be a key factor in any endeavor.

That Muhammad Yunus is a strong environmental advocate comes as no surprise to me; I met him when I moved to Bangladesh in 1996 to help the Grameen Bank start its renewable energy enterprise, Grameen Shakti. For over a decade the Grameen Bank has made significant investments in bringing affordable clean energy technologies to its clients including solar home systems, biogas digesters, and efficient stoves. 

Bill Yager of Green Microfinance kicked off the panel with a presentation that explained in clear terms and moving visuals the severity of the global environmental crisis, as well as concrete examples of green technologies that are affordable solutions.

Gabriel Solorzano, from Banex, Nicaragua, followed with a challenging presentation, that used humor to shake the participants out of complacency, and ask real questions about unforeseen consequences of loans which are approved every day. For example, what is the chemical content of the pesticides used by a farmer with a microloan? How safe are the scaffoldings used by a small construction SME? He also shared an important regional initiative to establish environmental standards for microfinance banks.

April Allderdice followed up with an introduction to the MicroEnergy Credits’ Microfinance Carbon Program, which allows Microfinance Banks to receive revenues from the carbon markets when they lend for clean energy.

 The audience was enthusiastic with questions ranging from the technical: “can you use jatropha biodiesel engines for agricultural coops?”, to market-oriented: “what clean energy options exist for urban markets.”

An overarching theme of the questions was a focus on the tactical rather than philosophical—the audience at this MicroCredit Summit seems poised to take action, and now they want to know how.