Enhancing Project Integrity: MicroEnergy Credits’ Engagement with BeZero on Mongolia Program Rating

7th May 2024

As the voluntary carbon market landscape continues to evolve, the most important conversation continues to be around integrity, of carbon projects as well as carbon claims made by corporates. The emergence of rating agencies in the market is a welcome step towards enhancing the credibility of carbon programs and trust within the market. MicroEnergy Credits shares this vision of the rating agencies and is dedicated to upholding the highest standards of integrity and transparency in our carbon program, and our active collaboration with BeZero Carbon on the rating of our Mongolia program exemplifies this commitment.

Let’s delve deeper into the nuances and different aspects of BeZero’s rating process as it pertains to our Mongolia program, as understood through active engagement between MEC and BeZero:

  1. Pioneering Efforts Acknowledged: BeZero recognized our Mongolia program as being the first of its kind in an area where efficient heating furnace options were previously unavailable. This acknowledgment highlights the innovative nature of our program.
  2. High Ranking VPAs: BeZero noted that the VPAs in MEC’s Mongolia program rank impressively within the sector of household device projects. At the time of assessment[i], BeZero recognised that MEC Mongolia projects face a lesser risk of over-crediting than 80% of projects assessed in the household devices category and a lesser risk of non-permanence than 78% of household devices projects assessed. BeZero has stated that within all rated household devices projects, the MEC projects[ii], with their BB rating, sit at the higher end of the distribution.

Rating Distribution of Rated Household Devices Projects by BeZero

  1. Effective Risk Management: BeZero recognized our approach to managing over-crediting risks through seasonal Kitchen Performance Tests (KPTs), demonstrating our commitment to ensuring that our projects align with robust monitoring practices, in line with sector science. MEC carries out Kitchen Performance Tests in both dry and wet seasons to establish any difference in use. The conservative value between the wood used in any of these seasons is used for calculating the emission reductions.
  2. Transparent Additionality: MEC has provided comprehensive information on program additionality, publicly available on its website, addressing concerns and prompting updates to the rating brief. Our detailed investment analysis has been instrumental in resolving ambiguities and enhancing transparency.
  3. Ongoing Work by BeZero on the Vintage Split Model: Currently, BeZero does not follow a vintage split model, and evaluates projects across all vintages in one sweep.This means that a monitoring report from 2013is bringing down the rating of a vintage 2019 credit, even though there have been many monitoring reports in the interim that showed the issue had been resolved.  There is a monitoring report from 2013 from the beginning of the program that showed that end users were loading the furnaces improperly. MEC solved the problem in the same year with an end-user campaign (made possible with the help of carbon finance). Subsequent auditsshowed good practices. BeZero has acknowledged this, although the rating does not reflect this improvement. BeZero's near-future plans to assess projects by vintage are expected to provide a more accurate representation of our program's evolution.
  4. Addressing Additionality Concerns: BeZero acknowledged that the MEC projects are not common practice and are indeed additional. However, BeZero did not give the project the highest rating for additionality because the project used a subsidy provided by government actors as a separate co-financing.  BeZero alleges that the subsidy could have caused the efficient furnaces to later become common practice. BeZero acknowledged that co-financing is a common best practice in the development sector. Not allowing the subsidy would have meant less climate action, as at-risk communities need the added impetus of co-financing and subsidies to adopt new clean energy technologies. Moreover, subsidies for a project do not make the generated verified emission reductions from the project any less valuable. We hope that BeZero will adopt a different approach in the future to accepting cofinancing without decreasing a project rating.
  5. Commitment to Continuous Improvement: BeZero has acknowledged improvements observed in the second crediting period of our program, due to MEC's enhanced monitoring protocols.

At MEC, we remain steadfast in our commitment to rigorously upholding the integrity of our carbon programs. While the rating for our Mongolia project remains unchanged for now, engagement with BeZero and efforts to address the current rating are ongoing. The process has provided invaluable insights that will continue to inform our future endeavours. MEC is committed to actively considering, and where possible, following best practice developments in sector science, for instance, the Guidance for Developers by the Berkeley Carbon Trading Project to ensure the highest project implementation and assessment standards in all its programs.

[i] 9th August 2023

[ii] (except GS2688) which was given a lower rating because a single monitoring report out of several annual reports - the first monitoring report from 2012 - is no longer available, having been deleted by MEC’s carbon consultant.

MEC Africa Program: All You Need to Know

MicroEnergy Credits – Microfinance for Solar Lamps & Efficient Cookstoves

Grouped Project under Verra

In line with our commitment to transparency and integrity, we are providing a comprehensive list of all the information about our Africa clean energy program here.

This initiative aims to ensure that stakeholders have access to program details and documentation in an easy-to-use way.

In the rural areas in Kenya, the predominant means of cooking are traditional cookstoves that use charcoal or wood as fuel. The smoke and fumes from these inefficient stoves contribute heavily to indoor air pollution, and affect human health. In rural areas of Kenya there is either no grid connection or frequent power outages and low voltage so rural households must use kerosene for indoor lighting, which also contributes to indoor air pollution.

Under the project activity, MEC works with project partners to develop a successful and diversified clean energy-lending program. The clean energy program addresses typical barriers for low-income clients including education, price, finance, and supply and aftersales service. MEC trains project partners to implement the clean energy lending program, as well as a robust and transparent carbon credit monitoring and tracking system to quantify and record the volume of carbon emission reductions created through the clean energy program.

Audited Documents

Additionality:

Over-crediting

Co-benefits of the program

MEC India Clean Energy Program (GS11450): All You Need to Know

MICROENERGY CREDITS – MICROFINANCE FOR CLEAN ENERGY PRODUCT LINES – INDIA

PoA ID GS 11450

In line with our commitment to transparency and integrity, we are providing a comprehensive list of all the information about our India clean energy carbon program here.

This initiative aims to ensure that stakeholders have access to program details and documentation in an easy-to-use way.

The program promotes three broad categories of Clean Energy Products (“CEP”):

Comprehensive information about the program:

I. Audited Documents:

II. Additionality:

III. Over-crediting:

IV. Co-benefits of the program: Fostering community empowerment

How Does MEC Incorporate the Research from UC Berkeley (Gill-Wiehl et al) in its Work? 

As a project developer, MEC read Gill-Wiehl’s original research with interest. We are always trying to keep on the cutting edge using the best possible methodologies. Technology is continuously changing and we are evolving with it. As our CEO April Allderdice writes here, the methodologies will continue to change and improve over time. Moreover, it is our company's value that constructive criticism is a valuable catalyst for progress.  The great news is that MEC has already been applying most of the suggestions for monitoring integrity. Here are some of the suggestions from the paper that MEC is already implementing:

MicroEnergy Credits Carbon Program: Stringent Measures Ensuring No Over-Crediting of Emission Reductions

Over-crediting in the context of carbon reduction/avoidance projects pertains to issuing more emission reductions than are achieved or attributable to a project. To mitigate this potential risk, MicroEnergy Credits (MEC) adopts various safeguards throughout project implementation.

These range from program-level safeguards aligned with the IC-VCM’s Core Carbon Principles to technology-level safeguards based on the latest science, research, and best practices.

Measures in place to avoid over-crediting

MEC’s projects have a robust sampling approach for all three technologies i.e. improved cookstoves, water purification systems and distributed solar lamps/solar home lighting systems.  The sampling approach is designed keeping in mind the heterogeneity in the population across geographical sub-divisions of the specific project boundaries, and the associated differences in the parameters monitored for GHG impact quantification.

Samples are randomly chosen from specific geographical sub-divisions where products are implemented, thereby ensuring that a random subset of a population is selected, meaning that the samples are representative of the cooking/water consumption/lighting practices in the state.  This stratified approach yields unbiased estimates of population parameters and accounts for differences in the way these technologies and resulting services are used.

Monitoring of certain parameters for improved cookstoves and water purification systems are designed in a manner to account for the effects of seasonal variation. For improved cookstoves, the quantity of fuel consumed for cooking (both in baseline and project scenarios) is conducted both in dry and wet seasons. The conservative value between the two seasons is considered for calculating the emission reductions.  Similarly, for water purification systems, the quantity of water consumed per person per day also considers season variation ensuring that the results are conservative.

As a general practice, MEC cross-checks the fixed monitoring parameter values with credible literature or the latest available government data to ensure the results are aligned. A few examples are cited below:

  1. The quantity of fuel used for cooking (parameters Pb and Pp) is cross-checked against the University of Berkeley’s report “Cooking the books: Pervasive over-crediting from cookstoves offset methodologies” to ensure that the service level caps prescribed are never crossed.
  2. For the quantity of water consumed per person per day (parameter QPWy), the value is cross-checked against the WHO report “Technical Notes on Drinking Water, Sanitation and Hygiene in Emergencies.
  3. Similarly, the value for the parameter the proportion of the population already using safe water (parameter Cb) is cross-checked against the Jal Jeeval Mission (JJM), an initiative by the Government of India and Central Pollution Control Board (CPCB) water quality testing reports under their National Water Quality Monitoring Programme (NWQP).

In addition to the methodological requirements, MEC also conducts quarterly monitoring for solar lighting systems and annual monitoring for improved cookstoves and water purification systems.

  1. Every quarter of the calendar year, MEC partner organizations conduct monitoring to check whether the solar lighting system is operational. This is done for all the products part of the project.
  2. All the products (solar lighting system, improved cookstove, and water purification system) are checked by partner organizations in the last month of the calendar year to check the usage status.

If the products are found non-operational in any quarter (for solar) and end of the calendar year (for all technologies) then emission reduction is not claimed for those households.

These measures are deployed in addition to the monitoring frequencies prescribed for certain parameters in the applied methodology resulting in any systemic issues with adoption and usage of these products as well as being able to provide timely after-sales service.

For improved cookstoves, MEC has defined “use” vs “non-use” in the project design document to determine which household should be considered eligible for crediting. During monitoring, if any household is found not using the project stove daily or the stove is found not in use through visual inspection then emission reduction is not claimed for those households. This is a more conservative approach than what other projects in the sector use where a “user” could be a household that uses the stove up to once a week. Similarly, for the water purification system, if a household has not used the water purifier once in two days, then emission reduction is not claimed for those households. 

MEC uses the CDM tool 30 version 4.0 to calculate the fNRB. The fNRB value calculated uses the value of 0.5 tonnes per annum for calculating wood harvest as a measure of conservativeness.

MEC employs a robust database management team that develops customized data model algorithms and proprietary software that surgically scans and eliminates any duplicate records of end-users through multiple levels of data modeling checks. To implement these checks successfully, MEC engages with partner organizations to submit an extensive monthly database of loan records corresponding to clean energy product sales.

Click here to learn more about our data management system.

Image by Freepik

Ensuring No Over-Crediting of Emission Reductions Due to Double Counting: Stringent Data Management and Exclusive Partnership Contracts

MicroEnergy Credits (MEC) is committed to the ICVCM’s Core Carbon Principles and ensuring that emission reductions from its program are not double counted. According to IC-VCM, the “GHG emission reductions or removals from the mitigation activity shall not be double counted, i.e., they shall only be counted once towards achieving mitigation targets or goals” (ICVCM, 2023).

Double counting covers double issuance, double claiming, and double use. Double claiming and double use are risks managed by standards that certify the projects. MEC’s projects are certified by reputed standards like Gold Standard and Verra which have mechanisms in place at their registry level to ensure that double claiming does not occur. Double Issuance occurs when two or more carbon credits co-exist for one GHG emission reduction or removal, under the same or different carbon-crediting or other programs. MEC takes stringent measures to ensure that there is no double issuance of credits from a single household or that no other entity is issuing credits from the same project. MEC employs a robust database management team that develops customised data model algorithms and proprietary software that surgically scans and eliminates any duplicate records of end-users through multiple levels of data modeling checks. To implement these checks successfully, MEC engages with partner organisations to submit an extensive monthly database of loan records corresponding to clean energy product sales. Moreover, MEC’s contract agreement with partnering organisations includes a rigorous exclusivity clause for the carbon project implementation within a specified geographical area.

Checking for duplicate records

Duplicate records can happen due to human error in entering records or erroneous data submission. Since MEC’s carbon program follows a market-driven approach, every end-user of the clean energy product is accessing affordable financing options from a partner microfinance institution (MFI). Therefore, all clean energy product loans have a unique transaction number. In the monthly data submitted by MFIs, MEC checks all transaction records in the entire database and eliminates all duplicate transaction numbers as double entries or erroneous records. This way, we can eliminate any human error or the possibility of erroneous data submission that may inflate the emission reduction calculations and generate more carbon credits than the actual. This method might sometimes even lead to under-crediting, which preserves the principle of conservativeness in the calculation of carbon credits.

Double-layer scrutiny with checks for overlapping records.

MEC works with several MFIs across different crediting periods, which means that there is a possibility that a single end-user may be a client of multiple MFIs at the same time. Sometimes end users may access a cross-sale loan from multiple MFIs for the same technology device. End users can also access an MFI for multiple loans for similar technologies across different loan periods. There is a risk that an end-user might end up with more than one solar light, improved cookstove, or water purifier during the same crediting period. While one may argue that an end-user may need multiple units of similar devices and may be using them regularly, by the principle of conservativeness in carbon credits, only the first unit may be eligible for calculation of carbon credits as that unit is reducing emissions over the baseline under a business-as-usual scenario. Therefore, it becomes imperative that all succeeding and overlapping devices of the same technology type are eliminated while calculating the emission reductions from the carbon program.

MEC applies a second layer of checks (beyond duplicate entries) for overlapping user account identifications by carefully identifying patterns and matches in all historical customer identifier data fields. MEC sends all overlapping records to partner MFIs for clarification, and only upon submission of satisfactory evidence does MEC include such records in the current monitoring period, otherwise these records are eliminated.

MEC also eliminates the possibility of overlapping loan products across partner MFIs by scrutinizing the entire database across different partners by applying partial matching algorithms on end-user demographic microdata. This helps us scan out overlapping sales, which we send for clarification to different partner organizations for a common data field. MEC eliminates all overlapping records from the database and only includes unique records in the emission reduction calculations.

MEC has developed a proprietary data warehousing and processing software called the Credit Tracker, which applies all these complex data modeling algorithms to ensure that the data integrity is maintained by elimination of over-crediting due to double counting across the entire program in the defined geographical area. Our Credit Tracker software is ever-evolving, and the current version is upgraded with state-of-the-art big data algorithms to identify noise across a heterogeneous database of over 9 million households across the globe.

Distinction between MEC's CER and VER portfolio

MEC ensures that the emission reductions from its projects and the related climate impacts are counted only once. MEC ensures that there is no double issuance because:

  1. There is no overlap between the CDM monitoring periods and GS/Verra monitoring periods for any of these PoA/projects.
  2. There are no issued CERs that have been converted to GS-VERs or VCUs.

Exclusivity clause

The concept of exclusivity is deeply embedded in the partnership agreements between MEC and partnering MFIs. MEC signs partnerships with MFIs on the ground that all clean energy projects by the partnering entity shall only be registered under MEC’s carbon program. This ensures that no partnering MFI can claim carbon funding from any other project developer while being a part of MEC’s carbon projects. Through continuous training and engagement with partners, MEC implements the concept of exclusivity in all carbon projects to avoid any possibility that two or more mitigation activities have overlapping GHG accounting boundaries in the carbon market which could lead to double issuance. This enables us to implement a market-wide check and balance since MEC is the trusted carbon program partner to all major MFIs in the geographical area.

MEC’s stringent data management and exclusive contracts can set out a market-wide standard for upholding the integrity of carbon credits and eliminate doubts that different market participants may have on the issue of over-crediting due to double counting.

MEC India Program - Microfinance for Inverter LED Lamps: Project Design Document

The purpose behind MEC’s Grouped Project “Microfinance for Inverter LED lamps in India” is to reduce fossil-fuel based electricity consumption in the rural households across India by introducing more energy efficient inverter LED lamps to replace incandescent lightbulbs (“ICLs”). An inverter LED contains a light bulb coupled with a battery system (typically Li-Ion type) such that the LED bulb will operate on mains power supply during availability and will switch to battery power when main supply is not available (for e.g., in a blackout situation). This makes the inverter LED more versatile and useful than a normal LED bulb. The inverter LEDs distributed under the grouped project will replace ICL lamps in households, which would have resulted in GHG emissions due to usage of ICL. Thus, the grouped project will lead to mitigation in GHG emissions and a range of other sustainable development benefits in the project region. The distribution of SLS is not mandated by Indian law and the grouped project is a voluntary initiative.

Click here to see the project design document.

Click here to see the project details on the Verra registry.

MEC Response To Down To Earth Article on Household Projects in Voluntary Carbon Market in India

Recently, Down To Earth magazine published an article based on a report by the Centre for Science and Environment on the state of the Voluntary Carbon Market in India. The article was well intentioned in that it calls for transparency and community centricity in the industry and shines light on the scope for improvement which is a valuable gift to the sector. However, it omits important context that requires a deeper dive into several factors, the absence of which may predispose readers to an erroneous or misleading set of conclusions.

MicroEnergy Credits (MEC) is a social enterprise that has become a leading developer of high quality carbon projects in India. MEC was not contacted by DTE or CSE for information or comments on its projects. The report does not discuss any of MEC’s projects. However, it mentions MEC’s name, and it discusses activities adjacent to MEC’s carbon programs. Since it strives to preserve sector expertise and transparency, MEC would like to provide some additional clarification.

Community Centricity

MEC is a social enterprise that empowers rural and low income women by connecting them to affordable clean energy products. MEC raises carbon funding from international corporations and sends that funding into India, directly to local community based financial inclusion organizations. MEC works with these organizations to develop sustainable clean energy lending programs.  So far, MEC has channelled over $18M from abroad to support local community organizations in India, including nearly 8M households. The MEC model encourages local economic development by enabling households to access microloans for clean energy rather than giving away products outright. Decades of best practice show that giveaway programs result in products which are not valued and are discarded or remain unused. The vast majority of MEC’s funding to local partners is earmarked for training of community energy officers, client education, last mile distribution, and after sales and customer service to support continued usage of the products. 

Maintaining a sustained relationship with the client and regular monitoring of product usage is an important part of MEC’s carbon program. MEC works with microfinance institutions which typically meet with clients every week or two weeks. These meetings serve the purpose of reinforcing the behaviour change needed for sustained efficient stove adoption. Moreover, these meetings create a timely opportunity for clients to access aftersales service for their products. 

Rural cooking behaviour is a nuanced topic. One way to think about it is that it is a ladder. Ten years ago, most rural households in India used traditional chulhas for cooking. Since then, many of these households have been able to access improved cookstoves that reduce smoke and reduce the amount of wood needed — much of this progress has been achieved with the help of climate finance, and this is one of the successes of the carbon market. Going a step ahead on the ladder, many households have been able to access LPG as a result of successful government policies. In the future these people will be able to use induction stoves powered by electricity. It is MEC’s objective to empower our women clients to climb up this clean cooking ladder by accessing the clean energy technology that works best for them and maximizes their health, wealth, education and resilience. 

Robust Methodology & Transparency

The article alleges that the industry is shrouded in secrecy, and that there are no rules in the voluntary carbon market. However, the carbon market sector has developed a vast set of  methodologies and standards:

An important part of MEC’s program is communicating through the microfinance partners with the end-client that they are a part of the local organizations’ carbon program. This conversation happens at the time the product is purchased and MEC maintains meticulous accounting records of this.

Conservative Emission Reduction Calculations

A significant claim made by the article is regarding the over estimation of emission reduction as the main problem with cookstove projects. 

Even if a household has multiple cooking technologies, that will not create an over estimation of the carbon credits generated. The GS and Verra methodologies are aware of this practice, and therefore require that if the household is using LPG in addition to their improved cookstove, the carbon project must deduct that portion of usage from the emission reduction. This is verified by the auditor at the beginning of the project and in annual third party verifications. Thus, even if a project design document estimates a high emission factor, that does not mean that that full factor can be claimed in issued credits each year. These final annual calculations are publicly available in documents called Emission Reduction sheets.  

Compared to the carbon programs mentioned in the article, MEC’s program is much more conservative. The carbon programs in the article used emission reductions of 2.3 tonnes/year (GGI/ Gold Standard)  and 5.7 tonnes/year (Enking/ Verra) respectively. Meanwhile MEC calculates a more conservative total potential annual emission reduction of 1.2 tonnes/year under the CDM and 2.3 tonnes/year under the Gold Standard. MEC’s carbon credits are more trustworthy than many other project developers, and international companies that fund clean energy through MEC’s program can make a stronger claim on their carbon emission reduction impact.  

MEC’s monitoring parameters are also in line with the sector science. A recent article from the University of California at Berkeley examined overcrediting in the Voluntary Carbon Markets. MEC’s program falls well within the 2-4 MJ/capita/day of useful energy for cooking as identified in that article. 

A wake up call and scope for improvement

While the woman interviewed in the article was not from MEC’s program, her voice is important. It is clear that she was able to access an improved cookstove, and that she was able to have it repaired. However, she did not have a robust awareness that she was part of a carbon program. She was also not satisfied with the aftersales service. MEC believes that it is a sign of progress that she would use both an LPG and an improved stove, as this combination is a common step on the energy ladder and an improvement over improved cookstoves alone. However, she also said she continues to use the traditional chulha, which may indicate a lapse in awareness of the harmful health impacts of smoke. MEC and all players that are committed to accessing carbon funding to create truly sustainable social impact can and must continuously reform our programs to improve awareness and long term behaviour change within our communities. 

MicroEnergy Credits - All About The Mongolia Project


MicroEnergy Credits partnered with XacBank to leverage carbon microfinance to transform the energy landscape of Ulaanbaatar in Mongolia.

MEC and XacBank collaborated to introduce innovative products such as efficient furnaces and home insulation through a microfinance program. Despite significant obstacles, the program has successfully transformed lives in Mongolia. Below are interesting and relevant details about the program.

Read more

Project Additionality to Bolster Integrity of Carbon Credits: Common Practice Analysis in Mongolia Projects


The concept of additionality is a critical component in bolstering confidence in carbon offsets and their integrity. MicroEnergy Credits follows a robust process to ensure that all its carbon projects are strictly additional and have high social impact.

According to the Guide to Using Carbon Offsets, when people talk about the "quality or integrity" of an offset, they are referring to their level of confidence that the use the credit will meet their emission reduction needs. The concept of additionality is a critical component in bolstering confidence in carbon offsets and their integrity. “Additionality”, in the context of crediting mechanisms, refers to emission reductions or removals from a mitigation activity are considered additional if the mitigation activity would not have occurred without the additional incentive provided by the carbon credits. In essence, an additional project means that the project would only be feasible if it received carbon funding from the market-based mechanism. To qualify as a genuine carbon offset, a project's reductions must be "additional" to what would have happened if the project did not exist. Most projects registered against globally accepted greenhouse gas (GHG) project standards adhere to the guidelines for assessment and demonstration of additionality enacted by the respective GHG crediting programs. MEC uses CDM’s ‘Methodological Tool 01: Tool for the demonstration and assessment of additionality’, which is widely used for development of carbon projects.

Common Practice Analysis
The outcome of common practice analysis as per UNFCCC ‘Methodological Tool 01: Tool for the demonstration and assessment of additionality’ and ‘EB 69 Report Annex 8: Guidelines to Common Practice’ proves that MEC’s carbon program is not a common practice in the applicable geographical area.

The calculated applicable capacity or output range is +/-50% of the total design capacity or output of the proposed project activity as per the guidelines to common practices.

Applicable geographic area: MEC’s carbon program in Mongolia (GS2434 and GS11616) is targeted at the low income ger districts of Ulaanbaatar. Back in 2007-10, Ulaanbaatar was the most polluted city in the world during the winter with carbon emissions exceeded 1.2 million tCO2e per year per 100,000 households/Gers(1). Some households were spending 90% of their income buying coal to keep warm in -40°C temperatures. The smoke from burning coal had created the highest global levels of lung disease, heart disease and birth defects.

Measure of emission reduction activities: The proposed project activity reduces emission reduction by catalysing a switch in technology to a more energy efficient technology without changes in energy source. Our team worked with XacBank to identify two products which could address the needs of these communities. One was an efficient furnace that would burn cleanly, eliminating smoke in the home and reducing coal use by 50%. The second was an efficient home insulation, called a ger blanket, which could reduce fuel consumption by an added 50%.

Different technologies: Neither of the technologies were commercially available in Ulaanbaatar at the time of investment decision. Rather, some prototypes had been developed by universities and development research institutions including GIZ (then GTZ).  There were many challenges to overcome to introduce these products. This included developing local supply chains to produce the products which did not exist in the local economy, development of distribution networks, development of financing products, marketing and education in local communities, development of capacity within XacBank beyond traditional banking activities to work in green banking among many others.

Similar projects: At the onset of the space-heating stoves program by MEC, there were no such carbon projects in the applicable geographical area. Even today MEC’s Carbon Program in Mongolia continues to be the only program of activities under household energy efficiency project type under GS/ CDM. Thus, this project as proposed does not fall under “common practice” and is hence additional.

Use of Carbon Funding to overcome barriers to clean energy adoption
MEC uses carbon finance to overcome all of these obstacles, enabling microentrepreneurs to invest in clean energy products. First, MEC works with the microfinance institution to develop an attractive clean energy product offering to its microfinance client base, addressing each of the barriers such as education, price, finance, and supply and aftersales service. Second, MEC trains the microfinance institution to implement the clean energy-lending program. This includes business planning, capacity building, and implementation of marketing, education and supply chain processes. Third, MEC implements a robust and transparent carbon credit monitoring and tracking system to quantify and record the volume of carbon emission reductions created through the clean energy program. Finally, the carbon finance is used to expand and sustain the clean energy program through:

  1. Client education and marketing
  2. Internal training and capacity building
  3. On-lending funds to local SMEs producing the clean energy systems.
  4. Aftersales service and maintenance
  5. Lowering the interest or principal cost to the client.


MEC follows a robust process of ensuring that the project beneficiaries are only low income ger dwellers and households that otherwise cannot have access to the clean energy technologies due economic and financial barriers. The carbon funding is therefore used to overcome these barriers and therefore filling the viability gap in investment decisions. Thus, the carbon credits generated by MEC’s carbon programs have high socio-economic and SDG impacts.

[1] Calculated based on the MCC project reported 13.5 kg of coal consumption daily by traditional stoves in Ulaanbaatar in 2010. Annual coal consumption = 4.93 tonnes (13.5 kg x 365 days). Bituminous coal emission factor as per GHG Protocol is 2.44 tCO2e per tonne of coal. Therefore, annual CO2 emission per household is 12 tCO2e. For 100,000 households/ Gers, annual emission is 1.2 million tCO2e.