Page 1 - Can Subsidies be a Tool for Strengthening the Improved Cookstoves Market?
P. 1
April 2015
The Energy and Resources Institute
Can Subsidies be a
Tool for Strengthening
the Improved
Cookstoves Market?
CONTENTS 1 Policy Issue
2
• Policy Issue 4 The Unnat Chulha Abhiyan (National Biomass Cookstoves Programme)
• Defining the Role of Subsidies for has set an ambitious target of deploying 2.75 million improved biomass
cookstoves in the 12th Five-Year Plan Period, with a plan outlay of
Improved Cookstoves `294 crores.1 One of the financial provisions of the programme is to subsidize
• Policy Recommendations up to 50 per cent of the cost of the stove2, with an additional 10 per cent of the
total cost paid to masons for construction of earthen stoves. Subsidies have
Author an undeniable role in supporting the nascent improved biomass cookstoves
S Arun, Area Convener and Associate Fellow, market, with majority of the buyers having low paying capacities. However,
Rural Resources Management, TERI imprudent subsidization of improved cookstoves may distort the market by
devaluing the product, discourage uptake of the stove once subsidies dry up,
Dr Ibrahim H Rehman, Director, Social and may lead to leakage or misdirection of programme funds. Subsidization
Transformation, TERI was one of the policy mechanisms for deployment of improved cookstoves
in the erstwhile National Programme for Improved Cookstoves—with
Acknowledgements discouraging results.3 Long-term success of government-run improved
This discussion paper is the result of a project cookstove programmes can be gauged by viability of the market created for
supported by the Department for International improved cookstoves after the programme’s closure.4 Utilizing subsidies as a
Development, Government of UK on policy mechanism for deployment of improved cookstoves requires striking
dissemination of clean energy technologies in a balance between strengthening the improved cookstoves market and
India and Africa. enhancing the affordability of the product through subsidization.
The Energy and Resources Institute This policy brief draws from the experience of TERI’s improved cookstoves
Darbari Seth Block, IHC Complex, dissemination programme, supported by the Department for International
Lodhi Road, New Delhi- 110 003 Development, Government of UK (see box).
Tel. 2468 2100 or 4150 4900 1 Available at http://mnre.gov.in/file-manager/dec-biomass-cookstoves/programme-biomass-
Fax. 2468 2144 or 2468 2145 cookstoves_unnat_chulha_abhiyan-2013-2014.pdf
w w w . t e r iIndia +91 Delhi (0) 11 i n . o r g 2 Up to 50% of cost of cookstoves with maximum ceiling of `400 for natural draft and `800 for
forced draft for the years 2013–14 and 2014–15; and, up to 40% of cost of cookstoves with
maximum ceiling of `300 for natural draft cookstoves and `600 for forced draft cookstoves
for the years 2015–16 and 2016–17.
3 Sinha, Bhaskar. The Indian stove programme: An insider’s view—the role of society, politics,
economics and education. Boiling Point 48(2002): 23–26.
4 Smith, Kirk R., et al. One hundred million improved cookstoves in China: How was it
done?. World Development 21.6(1993): 941–961.
The Energy and Resources Institute
Can Subsidies be a
Tool for Strengthening
the Improved
Cookstoves Market?
CONTENTS 1 Policy Issue
2
• Policy Issue 4 The Unnat Chulha Abhiyan (National Biomass Cookstoves Programme)
• Defining the Role of Subsidies for has set an ambitious target of deploying 2.75 million improved biomass
cookstoves in the 12th Five-Year Plan Period, with a plan outlay of
Improved Cookstoves `294 crores.1 One of the financial provisions of the programme is to subsidize
• Policy Recommendations up to 50 per cent of the cost of the stove2, with an additional 10 per cent of the
total cost paid to masons for construction of earthen stoves. Subsidies have
Author an undeniable role in supporting the nascent improved biomass cookstoves
S Arun, Area Convener and Associate Fellow, market, with majority of the buyers having low paying capacities. However,
Rural Resources Management, TERI imprudent subsidization of improved cookstoves may distort the market by
devaluing the product, discourage uptake of the stove once subsidies dry up,
Dr Ibrahim H Rehman, Director, Social and may lead to leakage or misdirection of programme funds. Subsidization
Transformation, TERI was one of the policy mechanisms for deployment of improved cookstoves
in the erstwhile National Programme for Improved Cookstoves—with
Acknowledgements discouraging results.3 Long-term success of government-run improved
This discussion paper is the result of a project cookstove programmes can be gauged by viability of the market created for
supported by the Department for International improved cookstoves after the programme’s closure.4 Utilizing subsidies as a
Development, Government of UK on policy mechanism for deployment of improved cookstoves requires striking
dissemination of clean energy technologies in a balance between strengthening the improved cookstoves market and
India and Africa. enhancing the affordability of the product through subsidization.
The Energy and Resources Institute This policy brief draws from the experience of TERI’s improved cookstoves
Darbari Seth Block, IHC Complex, dissemination programme, supported by the Department for International
Lodhi Road, New Delhi- 110 003 Development, Government of UK (see box).
Tel. 2468 2100 or 4150 4900 1 Available at http://mnre.gov.in/file-manager/dec-biomass-cookstoves/programme-biomass-
Fax. 2468 2144 or 2468 2145 cookstoves_unnat_chulha_abhiyan-2013-2014.pdf
w w w . t e r iIndia +91 Delhi (0) 11 i n . o r g 2 Up to 50% of cost of cookstoves with maximum ceiling of `400 for natural draft and `800 for
forced draft for the years 2013–14 and 2014–15; and, up to 40% of cost of cookstoves with
maximum ceiling of `300 for natural draft cookstoves and `600 for forced draft cookstoves
for the years 2015–16 and 2016–17.
3 Sinha, Bhaskar. The Indian stove programme: An insider’s view—the role of society, politics,
economics and education. Boiling Point 48(2002): 23–26.
4 Smith, Kirk R., et al. One hundred million improved cookstoves in China: How was it
done?. World Development 21.6(1993): 941–961.
